Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — Merger or Acquisition (March 2017)
23 slides from Vodafone Group Public's merger presentation, Mar 20, 2017
Slide 1: Vodafone India – Idea merger
Vodafone India – Idea merger Investor presentation 20 March 2017
Slide 2: Disclaimer
Disclaimer Forward Looking Statements Certain information contained in this document constitutes “forward-looking statements”, which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, “target” or “believe” (or t
Slide 3: Vodafone India and Idea: benefits for all stakeholders
Vodafone India and Idea: benefits for all stakeholders Input A new champion of ‘Digital India’ Clear customer benefits • Accelerate 4G/4G+/5G services across India • Complementary footprint creates leading • Sustained and efficient investment to create network coverage and capacity a world class Ind
Slide 4: Vodafone and Idea: the largest Indian telco
Vodafone and Idea: the largest Indian telco Largest telecom operator: Extensive distribution channels and #1/#2 RMS in 21 out of 22 circles1 unparalleled service infrastructure • Over 2m retailers • 19k branded stores and 28k contact centre agents Highly complementary footprint Full digital services
Slide 5: Vodafone and Idea post completion
Vodafone and Idea post completion Idea Promoters1 26.0% Public 28.9% Vodafone Group 45.1% Indus Towers 42% Merged entity Mobility Towers Payments Bank Other Subs / JVs • Both mobility businesses • Standalone towers2 (tenancies) • Idea Money • You Broadband3 – Idea: 8,886 (15,418) • Vodafone M-Pesa •
Slide 6: Partnership with international expertise and telecoms scale
Partnership with international expertise and telecoms scale Technology Leading conglomerate • Key shaper of technology standards, • One of India’s most respected key GSMA decisions, chairmanship of and largest conglomerates the NGMN Alliance1 with over 150 years of heritage • Innovator in mobile pay
Slide 7: Vodafone and Idea are highly complementary assets
Vodafone and Idea are highly complementary assets Leadership position across India… …and across almost all circles Circles where Vodafone / Idea hold #1 or #2 positions based on RMS, Q3 FY 2017 RMS, Q3 FY 2017, pre Reliance Jio charging1 Combined market position1 Metro Mumbai 33% 9% 42% #1 Kolkata 3
Slide 8: Largest customer base with a competitive spectrum portfolio
Largest customer base with a competitive spectrum portfolio Customers As at Q3 FY 2017 (m) Spectrum Total spectrum holdings post Oct-2016 auction (MHz)1 395 1,850 320 1,489 191 891 1,235 205 984 958 191 183 891 883 100 205 72 958 387 53 2 2 3 Vodafone- Vodafone- Idea Idea Customer market share (Q3 F
Slide 9: Market leader in revenue and EBITDA
Market leader in revenue and EBITDA Gross revenue1 FY 2016 (US$bn) EBITDA FY 2016 (US$bn) 3.7 3.3 12.1 9.8 1.8 5.4 2.0 1.8 6.7 5.4 3.4 2.0 6.7 2.7 1.9 0.5 n.a. 2 3 Vodafone- Vodafone- Idea Idea Gross revenue market share (FY 2016) 40% 32% 22% 18% 11% 9% 6% Scope for margin improvement through increa
Slide 10: Digital champion enabled by combined network and spectrum
Digital champion enabled by combined network and spectrum Significant spectrum investments… (US$bn) …enabling leading spectrum capacity (#) Spectrum investment Apr-2010 to date Number of broadband carriers (3G + 4G)1 21.0 163 150 138 13.0 11.8 9.2 7.1 74 73 4.4 2.7 2 2 Vodafone- Vodafone- Idea Idea
Slide 11: Substantial cost and capex synergies
Substantial cost and capex synergies Synergy areas Description • Rationalisation of combined site requirements (more than 20%) following network consolidation Network & IT • Avoidance of duplicative 4G network expansion and upgrades, re-deployment of over-lapping equipment • Material longer-term IT
Slide 12: Limited regulatory dis-synergies
Limited regulatory dis-synergies Dis-synergy areas Description NPV (US$m) Liberalisation of spectrum • Liberalisation cost on Vodafone India spectrum in 13 circles ~500 Breach of • Need for spectrum surrender or sale where spectrum caps are breached spectrum caps <0 • Opportunity to sell excess spec
Slide 13: Transaction overview
Transaction overview • Vodafone to combine its subsidiary Vodafone India (excluding its 42% stake in Indus Towers) with Idea Cellular Proposed • Immediately post merger, Vodafone to receive a 50% stake in Vodafone-Idea (approximately 3,630m1 shares) transaction • Concurrent with completion, Vodafone
Slide 14: Equalisation mechanism: Vodafone and Aditya Birla Group
Equalisation mechanism: Vodafone and Aditya Birla Group Standstill period 45.1% Year Year Year 26.0% 1 2 3 Year Years • Aditya Birla Group can buy up to 9.5% from Vodafone to equalise its shareholding at 35.5% • Valuation of US$14.1 billion for 100% of the 4 5-9 combined companies’ equity, equivalen
Slide 15: De-leveraging expected before and after closing
De-leveraging expected before and after closing Vodafone-Idea leverage profile Net debt / LTM EBITDA Debt breakdown Pro forma debt breakdown, Q3 FY 2017 (as at December 2016) 20% 4.4x 4.1x Spectrum debt Financial debt 80% 3.0x Capital structure and dividend policy Vodafone and the Aditya Birla Group
Slide 16: Unlocking further value through tower assets
Unlocking further value through tower assets Vodafone-Idea Vodafone Group Indus Towers stake Number of tenancies1 Q3 FY 17 Number of tenancies1 Q3 FY 17 • Largest MNO shareholder in India’s largest tower company • Superior financial track record Own towers1 Own towers1 11.15% stake2 42% stake2 7% FY
Slide 17: Implications for Vodafone Group financial reporting
Implications for Vodafone Group financial reporting • IFRS requires de-consolidation of Vodafone India immediately post announcement1 • After completion, India to be accounted for as a joint venture: – JV reported under the equity method – Net debt de-consolidated, improving pro-forma leverage ratio
Slide 18: Summary
Summary Creating a stronger champion for Digital India, enabling broadband access in both rural and metro areas to provide digital services to all Indians Merging into a listed asset with a deep spectrum position to compete with other market leaders US$10 billion NPV from synergies drives significan
Slide 19: G&A
G&A
Slide 20: Appendix
Appendix
Slide 21: Enhanced spectrum position to meet future capacity needs
Enhanced spectrum position to meet future capacity needs Pan India 3G and 4G offerings Circle share of No of Carriers industry gross Total Spectrum Circles revenue (%)1 Holding (MHz) GSM 3G 4G FDD 4G TDD 3G+4G JAMMU & KASHMIR Maharashtra 9% 122.8 22.8 3 3 6 12 Kerala 5% 114.8 24.8 2 4 5 11 Gujarat 6
Slide 22: Transaction economics
Transaction economics Implied valuations Implied multiples Idea Vodafone India Idea Vodafone India x 2 x 45.1% Equity value1 US$3.9bn + US$579m US$4.1bn Mobile enterprise value US$10.8bn US$12.4bn Net debt2 US$7.9bn US$8.2bn LTM EBITDA4 US$1.7bn US$1.9bn + US$369m Enterprise value US$11.8bn US$12.4b
Slide 23: Vodafone Group financials excluding India
Vodafone Group financials excluding India €m FY 2016 H1 FY 2017 Group India(1) Group ex. India(2) Group India(1) Group ex. India(2) Key financials Revenue 55,930 6,161 49,825 27,054 3,015 24,058 Organic Service Revenue Growth 1.5% 5.0% 1.1% 2.3% 5.9% 1.8% EBITDA 15,840 1,815 14,025 7,906 892 7,014 E