Reliance Communications Limited · NSE:RCOM
Reliance Communications — Investor Presentation (August 2009)
61 slides from Reliance Communications's investor presentation, August 2009
Slide 1: Reliance Communications Investor Presentation
Reliance Communications Investor Presentation August 2009
Slide 2: Forward looking statements – Important Note
Forward looking statements – Important Note This presentation and the discussion that follows may contain “forward looking statements” by Reliance Communications Ltd (“RCOM”) that are not historical in nature. These forward looking statements, which may include statements relating to future results
Slide 3: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 3 of 61
Slide 4: Complete range of telecom services
Reliance Communications Complete range of telecom services 5th largest wireless operator in the world (customer base in a single country) Only Indian company to offer nationwide both CDMA & GSM services Wireless Largest network covering a billion people in India Services offered includes Mob
Slide 5: Strategy
Reliance Communications Strategy Objectives Action Plans Customer Latest congestion free Next Generation network for highest quality Growth Attractive plans & offers More revenue streams from new product launches Revenue Growth Increased revenue from new service streams like GSM (share of VA
Slide 6: 5th largest telecom operator in the world
Reliance Communications 5th largest telecom operator in the world (China Mobile is the largest operator with 488 mn subscribers) 140 133 105 100 Subscriber (in mn) 87 78 80 76 72 66 70 54 48 35 0 o l ) ar rti o m M TS se di a l OM izo n a om e lC Co M om (I n gu RC r Bh nic mp o elk in Ve D ne C aU
Slide 7: India's No. 1 network is now also India's most trusted service brand
Reliance Communications India’s No. 1 network is now also… …”India’s most trusted service brand” – Economic Times Wireless | Infratel | Globalcom | Enterprise | Home 7 of 61
Slide 8: Recent performance
Reliance Communications Recent performance Financial Performance Balance Sheet Strength 1QFY10 Q-o-Q Y-o-Y (Rs. Mn) Assets 960,000 Revenue (Rs. Mn) 61,452 0.4% 15.5% EBITDA (Rs. Mn) 24,525 2.9% 9.0% Networth 377,000 Net Profit (Rs. Mn) 16,366 12.5% 8.3% Gross Debt 315,000 EBITDA Margin 40% +1.0ppt -
Slide 9: Financial Highlights
Reliance Communications Financial Highlights Key Financial Parameters (Rs. Mn) Revenue EBITDA Net Profit 9% 229,485 5% 3 9% 60,449 2 5 93,050 +1 54,005 + 190,678 + 81,989 144,683 57,208 31,637 107,664 24,762 4,438 FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 Consistent & Substantial i
Slide 10: Cost management with stable margins
RCOM Financials Cost management (% of revenue) with stable margins… Margins 40.8% 40.2% 38.9% 40.0% Network expenses 100% - Increase in network cost due to expansion of coverage & GSM 90% launch 18.2% 19.9% 80% 22.2% 22.5% - Opex of other new businesses like DTH, Vanco, etc % of Total Revenue 70%
Slide 11: Profitability
RCOM Financials Profitability EBITDA Margin Net Profit Margin 50% 30% RCOM Bharti 25% 40% Bharti RCOM 20% 30% Idea 15% 20% 10% Idea 10% 5% 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 Among the highest margins in the industry in spite of the launch of several new businesse
Slide 12: Capex intensity coming down significantly
RCOM Financials Capex intensity coming down significantly… Capital Expenditure (Rs. Crore) 30,000 20,000 Rs. Crore Bharti 10,000 RCOM 0 FY06 FY07 FY08 FY09 FY10 Note: FY2010 capex amount is the company’s guidance in the earnings call Source: Company reports …moving towards FCF positive Wireless | In
Slide 13: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 13 of 61
Slide 14: Targets the largest untapped population in the world
Wireless Business Targets the largest untapped population in the world Low wireless penetration… …Leading to strong revenue growth 140% 25% 126% 120% 20% 20% 100% 90% 92% 87% 81% 15% 15% 80% 60% 51% 10% 34% 7% 40% 5% 5% 4% 20% 2% 0% 0% 0% India China Brazil Japan US France UK Japan UK France US Chin
Slide 15: Mobile subscribers in India to cross 600 mn in 2 years
Wireless Business Mobile subscribers in India to cross 600 mn in 2 years… 700 60% 425 12.1 422 Mobile Subscribers (mn) 11.6 Penetration 50% Subscriber additions (mn) 600 50% 12.0 400 42% 500 % 15.2 44 596 40% 400 AGR 33% 496 375 13.7 C 30% 357 300 22% 386 350 20% 200 14% 256 9% 325 10% 100 161 96 0
Slide 16: RCOM: One of the fastest growing wireless companies globally
Wireless Business RCOM: One of the fastest growing wireless companies globally Among India’s top 2 operators with 80 mn wireless subscribers - Prepaid subscriber additions drive growth - 94% of total subscribers Key Performance Indicators - EBITDA margins among the highest in the industry - 39%.
Slide 17: Net adds market share
Wireless Business Net adds market share Pre RCOM GSM launch Post RCOM GSM launch Net adds market (Jul – Dec 2008) Net adds market (Jan – Jun 2009) Net Adds (mn) Mkt share Net Adds (mn) Mkt share 20 30% 20 30% 16 25% 16 25% 12 20% 12 20% 8 15% 8 15% 4 10% 4 10% 0 5% 0 5% RCOM Bharti Vodafone Idea RCO
Slide 18: Shall replicate success with nationwide GSM service
Wireless Business Mobility 80 million Happy customers Wireless Data Fixed Wireless Market leadership in all segments * PCO *CDMA … shall replicate success with nationwide GSM service Wireless | Infratel | Globalcom | Enterprise | Home 18 of 61
Slide 19: Seamless coverage wherever you go
Wireless Business 24,000 Towns 600,000 Villages 1 Billion Indians CDMA GSM Seamless coverage wherever you go Wireless | Infratel | Globalcom | Enterprise | Home 19 of 61
Slide 20: Unbeatable choice and value proposition
Wireless Business India’s billion people can now expect an unbeatable choice and value proposition across…. 1. Coverage 2. Quality 3. Customer Choice 4. Handset Range 5. Service Breadth 6. Int’l Roaming 7. Value Added Services Reliance GSM – Set to redefine mobility landscape in India Wireless | Inf
Slide 21: GSM network exploits huge capex and opex synergies
Wireless Business GSM network exploits huge capex and opex synergies Radio bn < 15% investment Electronics $ 10 Retail Network ~ US Sales & Leveraged for Distribution Multiple businesses t: incl. CDMA +GSM BPO + Call Center ntran 3G Ready IT Systems Infrastructure ew e Billing + CRM + SAP 85% of cap
Slide 22: Dual network offers additional market share levers
Wireless Business Dual network offers additional market share levers Existing growth Industry monthly net adds of 8 - 10 mn GSM subscribers momentum Impetus from network expansion in semi-urban/ rural areas Broad Market Segmentation Corporate Requirement Retail/Family Cross technology Similar CU
Slide 23: Drivers for additional revenue market share
Wireless Business Drivers for additional revenue market share Participation in rapidly growing ~US$ 1 bn International international in-roaming market in-roaming revenue Currently enjoyed by few GSM incumbents Extremely profitable segment GSM non-voice revenue contribution ~10% with SMS cont
Slide 24: Most comprehensive wireless portfolio
Wireless Business Most comprehensive wireless portfolio Technology Advantages CDMA GSM Unlimited usage plans Spectrum efficiency PCO & FWP Mobile internet dominance Wireless Data capacity ATM & PoS Multimedia/Video capability Near 3G experience GSM ecosystem - 75% of Handset range at all price point
Slide 25: Best positioned to serve all customer segments
Wireless Business Best positioned to serve all customer segments Segment Need Technology Supporting factors Light pockets -Low handset prices GSM/EDGE -Presence of 2nd hand handsets -Primarily incoming & -SIM Distribution reach low outgoing Business and -E-mail GSM/EDGE -Mid and High end handset ran
Slide 26: Netconnect Broadband Plus
Reliance Communications Netconnect Broadband Plus Competitive differentiation Fastest internet broadband service of up to 3.1 Mbps in India’s top 35 cities Seamless handover & connectivity through CDMA 1X in over 23K towns and 6 lakh villages covering 90% of the Indian population Wide reach co
Slide 27: Service Innovations: First to reach the market
Wireless Business Service Innovations: First to reach the market Unlimited local & STD calls Mobile TV Yahoo on Reliance Micro-billing Internet on the move MBanking MPay MBlog Wireless | Infratel | Globalcom | Enterprise | Home 27 of 61
Slide 28: Multi-channel customer delivery system
Wireless Business Multi-channel customer delivery system World-class design , fit out & ambience at 2,000 exclusive retail showrooms on High streets/Malls High Quality Reach & National footprint through 5,000 distributors & 1 million retailers 5,000+ Direct & indirect outbound sales force to c
Slide 29: Wireless Financial Performance
Wireless Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 50,000 19,000 18,489 47,931 46,000 45,015 44,119 16,859 43,356 17,000 16,623 16,616 16,629 41,187 42,000 15,000 38,000 34,000 13,000 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 EBITDA Margin 80% 60% 40
Slide 30: Wireless EBITDA margin comparison
RCOM Financials Wireless EBITDA margin comparison EBITDA margins 45% New launches - FY2009 40% RCOM GSM - 14 circles RCOM 35% Bharti – Nil 30% Bharti Vodafone – 7 circles 25% Idea Idea – 2 circles Vodafone 20% 1H FY08 2H FY08 1H FY09 2H FY09 Source: Company reports, Analyst report Margins to
Slide 31: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 31 of 61
Slide 32: Infrastructure Tenancy Slots – Market
Reliance Infratel Infrastructure Tenancy Slots – Market RITL Ground based tower 2G, 3G & BWA 700,000 400,000 200,000 RITL Roof top tower 2008A 2009A 2010E Source: Industry Estimates Wireless | Infratel | Globalcom | Enterprise | Home 32 of 61
Slide 33: Infrastructure sharing – All drivers are in place
Reliance Infratel Infrastructure sharing Pressure on site sharing Growth drivers GSM and 3G roll outs Operator imperatives Active sharing Access large rural allowed population Growth Regulation USO scheme for Spectrum scarcity vs. sharing coverage infrastructure Speed of deployment Key
Slide 34: Infrastructure overview
Reliance Infratel Infrastructure overview Operational in all 22 circles ~50,000 multi-tenancy towers as on June 30, 2009. Anchor customer (Reliance Communications) driven strategy Current captive tenancy of 1.6x post our GSM launch; will further increase with the 3rd party tenants agreements
Slide 35: Offerings across network value chain
Reliance Infratel Offerings across network value chain Integrated network service provider Active sharing Other B2B Services Passive Sharing ROAMING RAN Backhaul NMS Carriage IT / IDC VAS / BPO Tower sharing 2G Connectivity Mobile NW NLD IT Managed Service/ Intra- circle from BTS to
Slide 36: Competitive Positioning: Unmatched capability to provide integrated service offering
Reliance Infratel Competitive Positioning: Unmatched capability to provide integrated service offering Service offerings of operators also considered Passive Active sharing Other B2B services RITL competitors Infrastruc Equip- Back- ILD/ ture** NMS VAS IT BPO ment haul NLD Operator owned tower Co.s
Slide 37: RITL-Etisalat DB Infrastructure deal
Reliance Infratel RITL-Etisalat DB Infrastructure deal Wireless | Infratel | Globalcom | Enterprise | Home 37 of 61
Slide 38: Highlights of the Partnership
Reliance Infratel Highlights of the Partnership Wireless | Infratel | Globalcom | Enterprise | Home 38 of 61
Slide 39: What it means for the Partners
Reliance Infratel What it means for the Partners…  Key Agreement – leverages  It enhances RCOM group RCOM’s capabilities for a revenues by Rs 10,000 Cr. swift & cost efficient roll‐out  Enables focus on Market,  Opportunity for Customer and Service monetization of assets & orientation Strategy i
Slide 40: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 40 of 61
Slide 41: Business structure
Globalcom Business Business structure Completed restructuring of our services under four core business segments of Data, Voice, WiMax and NLD Data Voice WiMAX NLD Accelerate growth into $290 Billion communications market by providing comprehensive voice, video & data network services Wireless | In
Slide 42: Market potential
Globalcom Business Market potential Past scope of services Business Unit 2008F Global Market Demand ($bn) Typical margins $2.2 bn 35%–55% WiMAX $1.5 bn $185 bn 15%-25% NLD 20%–40% Data $100 bn 15%–35% Voice Sources: Telegeography, Ovum, Gartner Research Addressable market revenue is ~US$ 290 bn with
Slide 43: Voice Business
Globalcom Business Voice Business Global Reach Innovative Product Leadership Position Suite Retail services in U.S., Reliance Global Call Market share of 30% for Canada, U.K., Australia, - International Calling Service ILD wholesale inbound New Zealand, Hong Kong traffic - Web based service de
Slide 44: Voice Business - Plan to drive profitable growth
Globalcom Business Voice Business - Plan to drive profitable growth Value adds to drive retention and usage - Loyalty and reward program Continued - Money transfer services Product Entertainment and content features Innovation - Launch new products like: - Web based Audio and Video Conferencing
Slide 45: Data Business
Globalcom Business Data Business Unmatched Blue Chip Customers Leadership Position Capabilities Global presence in over 60 Diverse base of over 200 Ranked amongst top 5 in countries. World’s largest carriers, ISPs and content Global Network Service IP optical network providers. Providers by Ga
Slide 46: Data Business - Plan to drive profitable growth
Globalcom Business Data Business - Plan to drive profitable growth Enhance revenue contribution from higher margin value added services Vertical “Sell to, sell through, sell with” channel partners to Expansion extend the customer franchise Expand Geographical Coverage: - Reach of cable network
Slide 47: Globalcom Financial Performance
Globalcom Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 20,000 18,803 18,844 6,000 16,915 16,783 5,025 15,260 4,515 4,315 15,000 4,000 3,608 3,222 10,000 2,000 5,000 0 0 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 EBITDA Margin 50% 40% 30% 26.7% 24.0% 20%
Slide 48: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 48 of 61
Slide 49: Underserved market: Provides strong growth opportunity
Enterprise Business Underserved market: Provides strong growth opportunity Broadband market segment revenue (US$ bn) US$ 13 bn bn 8 $ US + US$ 5.5 bn FY2008 FY2012 Household SMB + SME Enterprise Source : Industry Report Indian Market to grow to US$ 13 bn in the next 3 years Wireless | Infratel | Glo
Slide 50: RCOM: Best positioned to drive growth
Enterprise Business RCOM: Best positioned to drive growth >50% market share in highest growth data Atlantic products like IDC, Centrex solutions, VPN, etc Fiber Ring Meshed Core 1 Million buildings connected across top 44 cities to our fiber network, to cross 1.5 mn by Pacific next year end Ha
Slide 51: IDC: Largest in India with >60% market share
Enterprise Business - IDC IDC: Largest in India with >60% market share Six data centres with level 3+ accreditation – more than 300,000 sq ft of facilities space Hosting >20,000 systems and >1400 terabyte of information Geographic redundancy Wide & complex application hosted - Core Banking,
Slide 52: Enterprise Financial Performance
Enterprise Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 8,000 4,000 7,075 6,842 6,542 3,160 6,023 2,941 2,994 5,603 3,000 2,714 2,760 6,000 4,000 2,000 2,000 1,000 0 0 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10 EBITDA Margin 80% 60% 48.4% 48.8% 42.2% 44.
Slide 53: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 53 of 61
Slide 54: Indian Market: DTH household penetration
Home Business Indian Market (as of June’09) 200 Household (mn) 150 100 50 0 2007 2008 2009 2010E 2011E 2012E 2013E DTH 2 5 12 20 28 37 45 C & S 70 83 90 98 105 108 110 Ca ble Da rk 47 41 33 26 22 20 18 (Mn) 2007 2008 2009 2010E 2011E 2012E 2013E Total TV HH 119 129 135 144 155 165 173 DTH (%)Share 2
Slide 55: Big TV (DTH) - Commercially launched
Home Business Big TV (DTH) - Commercially launched Key service differentiators - More channel choice - Pure Digital viewing - 32 Cinema channels - Easy program guide - Quick channel select - Interactive applications (iNews, iGames, iCricket, etc) - Superior MPEG 4 technology Pioneering HD experi
Slide 56: BIG TV Services: Complete suite of services
Home Business BIG TV Services: Complete suite of services BroadcastTV and Radio EPG / Mini EPG Mosaic Portal Information News Stock Entertainment Game VoD / MoD / PVR Karaoke / Photo Album Services Advertisments Interactive Promotion Dedicated Advertiser Location Messaging SMS / MMS Mail Polling / V
Slide 57: Distinct Edge over Competition
Home Business Distinct Edge over Competition PRODUCT Cable Dish TV Tata Sky Airtel Sun Direct BIG TV Technology Analog MPEG 2 MPEG 2 MPEG 4 MPEG 4 MPEG 4 No. of Video 80-90 208 172 204 165 172 channels Exclusive movie 1-2 7 5 32 12 0 channels Program Guide Nil Traditional Traditional Traditional Tra
Slide 58: Interactive Services
Home Business Interactive Services iStock iCricket iGames iAstro iCooking iNews Wireless | Infratel | Globalcom | Enterprise | Home 58 of 61
Slide 59: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 59 of 61
Slide 60: Key Takeaways
Looking ahead Key Takeaways Drivers for growth Impact Continuous improvement in subscriber and revenue market share Increases the Revenue generating ability Further improvement in capacity utilization and capital productivity High EBITDA margin Greater emphasis on network quality, Businesses i
Slide 61: Thank you
RELIANCE Anil Dhirubhai Ambani Group Thank you
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