Indus Towers Limited · NSE:INDUSTOWER
Indus Towers — Bharti Infratel — Investor Presentation (May 2014)
31 slides from Indus Towers's investor presentation, May 2014
Slide 1: Investor Presentation May 2014
Investor Presentation May 2014 1 of 31
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by Bharti Infratel Limited (the “Company”) for use in presentations by the Company
Slide 3: Table of Contents
Table of Contents Company Overview Industry Overview Business Model Strengths In Summary 3 of 31
Slide 4: Company Overview
Company Overview 4 of 31
Slide 5: Bharti Infratel – Who We Are?
Bharti Infratel – Who We Are? A Leading Tower Infrastructure Operator Pan India Presence across all 22 Telecommunications Circles Indus Towers – JV between Bharti Infratel, Vodafone and Aditya Birla Telecom Top 3 Operators – Anchor Customers & Relationships with all other Operators Marquee promoter
Slide 6: Bharti Infratel Overview
Bharti Infratel Overview Corporate Structure Public(1) Vodafone Idea #2 Wireless Operator(4) #3 Wireless Operator(4) 20.7% 42% 100% 79.3% Bharti Infratel Indus Towers 42% 16% Aditya Bharti Airtel Birla 83,368 Towers(2) Telecom 113,008 Towers(3) #1 Wireless Operator(4) #1 Tower Company(5) #2 Tower Co
Slide 7: Performance at a Glance
Performance at a Glance 83,368 towers and 167,202 co-locations(1) Market share in terms of installed tower base, FY12 35,905 towers of Bharti Infratel and 47,463 towers from 42% stake in Indus (1) Infratel + Indus(1) : 37.8% Others 10.6% Indus 29.0% Viom FY14 Consolidated Revenue of US$1,787 m(2) 11
Slide 8: Pan India Footprint: Leading Positions Across India
Pan India Footprint : Leading Positions Across India Pan India presence ⁻ Opportunities for voice growth in rural areas given rural penetration of 43.67%(1) ⁻ 3G/4G services to drive data consumption ⁻ Given inadequate wire-line infrastructure, wireless services expected to cater to new demand Bhart
Slide 9: Industry Overview
(, Industry Overview
Slide 10: Operator Industry Dynamics
Operator Industry Dynamics Market Concentrated in Hands of Select Players Market has a large number of players however the top 3 operators constitute c70% of the total telecom market Aircel, 5.4% Others, 3.5% Tata Teleservices, Bharti Airtel, 7.4% 30.5% BSNL (incl MTNL), 6.6% COM, 7.50% Idea , 16.1%
Slide 11: Continuing Voice Led Growth
Continuing Voice Led Growth Growth opportunities remain in rural and semi urban voice market Rural penetration still ~ 40% - significant headroom Both coverage and capacity requirements to fuel tower and co-location demand Lower ARPUs further necessitate sharing for ensuring operational efficiency W
Slide 12: Data Revolution Unfolding
Data Revolution Unfolding • Favorable demographics –Median Age of India’s population ~26 years • Broadband penetration ~1%1 • Urban Internet penetration ~6%2 India added 27.1 mn users to overtake Japan as the world’s third largest internet population during Q4 FY14 Wireless: Preferred access for Dat
Slide 13: Increasing Operator Focus on Data
Increasing Operator Focus on Data Operator Investment in Licenses Investments by Anchor Operators 3G/4G auctions held in June 2010 led to significant investments of over 3G Circles 4G Circles $20.1bn(1) by telecom operators. 13 4 + 4 (5) 2G auctions which concluded in February 2014 also saw anot
Slide 14: Growing Smartphone Penetration
Growing Smartphone Penetration The India smartphone market grew by 229% year YoY (MN units) (INR ‘000s) in the 3Q13, with a total volume of 12.8mln shipped 60 14 13.0 11.9 11.6 11.6 50 11.2 12 10.7 10 40 8 Price points to bring penetration higher– smartphone 30 penetration to increase to 60% by 2017
Slide 15: Data Growth Forecasts
Data Growth Forecasts Growth in Data Volumes Could Lead to Significant Upside Decreasing smartphone prices, availability of affordable data plans will lead to growth in data users by 42% 500 Technology in India (m) Total Wireless SIMs by 3G SIMs 4G SIMs 400 12 CAGR: 42.3% 4 300 2 200 1 412 329 100
Slide 16: Impact of Data Growth on Tower Industry
Impact of Data Growth on Tower Industry Expansion of 3G / 4G Networks by Operators will necessitate demand for towers Propagation on higher frequency band weaker Data usage to drive co-location growth 3G/4G only sites to drive tower demand Propagation effects in different bands Tower Multipl
Slide 17: Business Model Strengths
(, Business Model Strengths
Slide 18: Business Model Strengths
Business Model Strengths 1 A Leading Tower Infrastructure Operator 2 Visibility of Future Revenues Through Long Term Contracts 3 Demonstrated Operational and Financial Performance 4 Regulatory Environment Favorable 5 Experienced Management 18 of 31
Slide 19: A Leading Global Tower Infrastructure Operator
1 A Leading Global Tower Infrastructure Operator Indian Tower Companies(1) Global Listed Tower Companies(1) Sharing Ratio: 1.99(2) 1.00 1.84 2.38 1.29 2.40 2.00 2.00 1.75 1.75 160 140 120 65 Bharti Infratel + 42% equity interest in Indus 100 Towers (‘000s) 80 60 40 83 69 50 20 42 ~40 33 30 23 15 8 8
Slide 20: Long Term Contracts with Visibility of Future Growth
2 Long Term Contracts with Visibility of Future Growth Key Features of Master Service Agreements (MSAs) Tenor Long term (5 to 15 years) with built in escalations (2.5% p.a) Termination Penalty Significant exit penalties A base rental rate is applicable, based on the following factors: Base Ren
Slide 21: Demonstrated Operational and Financial Performance: Towers and Co-locations
3 Demonstrated Operational and Financial Performance Stable tower growth… 85,000 83,368 82,083 CAGR: 3.1% Towers(1) 80,000 78,442 79,064 75,000 73,921 70,000 FY 2010 FY 2011 FY 2012 FY 2013 FY2014 …coupled with an increase in co-locations 1.57 1.75 1.85 1.90 1.99 180,000 167,202 CAGR: 7.6% Co-locati
Slide 22: Demonstrated Operational and Financial Performance: Revenues and EBITDA
3 Demonstrated Operational and Financial Performance Strong revenue growth… Strong Operating Leverage Revenues(1)(2) (US$m) CAGR: 8.4% Normalized CAGR 2,000 1,695 1,787 Y-o-Y Growth 1,560 to 100 1,403 1,500 430 170 569 1,000 78.5% 500 410 150 409 - 142 390 12.4% FY 2011 FY 2012 FY 2013 FY 2014 383 …
Slide 23: Well Defined Dividend Policy
3 Demonstrated Operational and Financial Performance …Coupled with a Well Defined Dividend Policy Aim to balance growth capital needs and distribution to shareholders Target payout to be higher of – − 100% Dividends received from Indus, or − 60-80% of Bharti Infratel PAT (excluding DDT) Subject
Slide 24: Quarterly Performance Reposed Significant Growth
3 Quarterly Performance Reposed Significant Growth Revenue1 (US$m) EBITDA1 (US$m) 16% YoY 191 4% YoY 460 186 451 178 441 443 173 433 164 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 OFCF1,3 (US$m) AFFO1,4 (US$m) 163 12% YoY 15% YoY 161 117 155 110 122 89 80 143 141 Mar-13 Ju
Slide 25: Regulatory Environment Favourable
4 Regulatory Environment Favourable The Cabinet Committee on Infrastructure has included “Telecommunication towers” as a infrastructure sub-sector in the master list Potential Benefits Impact Accelerated depreciation Encourages further investments in expanding the telecom infrastructure to rural are
Slide 26: Experienced Management Team
5 Experienced Management Team Joined Bharti Infratel in March 2008 as Director Work experience of 29 years Akhil Gupta Certified Chartered Accountant and fellow member of ICAI. Completed an advanced management program at Chairman Harvard Business School. Has received various awards including
Slide 27: CSR, Awards and Recognition
CSR, Awards and Recognition Awards and Recognition "Renewable Energy Solutions for Telecom Tower Sites" was awarded at 14th National Award for Excellence in Energy Management 2013 Awarded the "Most Innovative Energy Saving Product" by the Confederation of Indian Industry Consumer Service Innovatio
Slide 28: In Summary
(, In Summary
Slide 29: Company Strategy
Company Strategy Promote Tower Sharing Capitalize on the Rollout of New Technologies Organic Growth and Acquisition Opportunities and Data Services Achieving Cost Efficiencies Across Increasing Revenue and Capital Productivity Tower Portfolios 29 of 31
Slide 30: Investment Thesis
Investment Thesis Demonstrated Operational and Financial Performance Insulated from Major Concerns - $-Re, Continuing Voice led Growth Leverage, Import Dependence Operator Agnostic way to benefit Experienced Management Team from Data Growth High Standards of Corporate Regulatory Environment Favorabl
Slide 31: Investor Presentation
Investor Presentation May 2014