Indus Towers Limited · NSE:INDUSTOWER
Indus Towers — Bharti Infratel — Investor Presentation (January 2019)
33 slides from Indus Towers's investor presentation, Jan 8, 2019
Slide 1: Company presentation
Company presentation 8th January 2019 Building and Sharing Vital Infrastructure Slide: 1 of 33
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 Com
Slide 3: Agenda
Agenda • Changing telecom landscape • Impact on Operator & Tower companies Regulatory landscape • Opportunities • Bharti Infratel 2.0 Slide: 3 of 33
Slide 4: Changing telecom landscape
Changing telecom landscape 1G 2G 3G 4G 5G 1980 1991 2001 2009 2019 Global N/A 1995 2008 2014 2020 India 900 MHz 900 MHz 850MHz, 1800 <1 GHz, 1-6 Spectrum 1800 MHz 2100 MHz MHz, 2300MHz GHz, >6 GHz Speeds 64 kbps 2 Mbps 200 Mbps >1 Gbps Latency 500 -1000 ms 50 - 200 ms 25 – 100 ms <= 1 ms With M2M an
Slide 5: Trends
Trends • Voice to data demand • Increasing data speeds • Technology cycle shrinking • Band to ‘Bandwidth’ for higher speeds • Bandwidth only in higher bands; i.e. need higher frequencies • Better user experience necessitates lower latency demands • Favorable regulatory environment for Infrastructure
Slide 6: Impact
Impact • Uniform high speeds require site densification • Higher frequency signals travel lesser distances • Fiber a necessity to backhaul • Capex requirements going up and hence sharing is imperative • Service differentiation would be the key Slide: 6 of 33
Slide 7: User speed reduces with distance from site
User speed reduces with distance from site >100 Mbps 100 Mbps 10 Mbps 0.1 Mbps Site densification needed to give uniform speeds for applications Slide: 7 of 33
Slide 8: More sites required for coverage on higher frequency
More sites required for coverage on higher frequency 2G Spectrum 3G / 4G Spectrum High bandwidth 5G likely to be in 3.5Ghz frequency bands Source: Analysys Mason Slide: 8 of 33
Slide 9: High backhaul capacity needs call for Fiber
High backhaul capacity needs call for Fiber Backhaul Capacity per BTS Drivers for fiber • Microwave capacity limitations 2G 2 – 4 Mbps • Low latency demands 3G 12 – 30 Mbps • Losses due to large distances • Poor wireline availability 4G 30 – 120 Mbps • More data is consumed indoors 5G > 1 Gbps % Fib
Slide 10: Increasing investment by operators
Increasing investment by operators Spectrum Outlay 2010 2012 2014 2015 2016 Cumulative Spectrum (Rs bn) 1,063 94 672 1,099 658 3,585 (USD bn) 15.9 1.4 10.1 16.4 9.8 53.7 Capital FY19 (H1 FY15 FY16 FY17 FY18 investment annualized) Non-Spectrum * (Rs. Bn) 219 280 296 337 372 (USD Bn) 3.3 4.2 4.5 5.1 5
Slide 11: Pan India 4G launch
Growth trends with 4G launch 9GB for data customers Pan India 4G launch With increasing penetration of 4G and implementation of 5G, a bigger leap is expected Source: TRAI reports Slide: 11 of 33
Slide 12: Consolidation in operator landscape…
Consolidation in operator landscape… Dec 2013 11 down to 4 Dec 2018 Larger and stronger operators to take on data led opportunities Slide: 12 of 33
Slide 13: Operator consolidation impact on Bharti Infratel
Operator consolidation impact on Bharti Infratel 27,769 Churn since Q1 FY17 in consolidated Bharti Infratel 9,813 8,562 5,657 2,711 1,179 1,387 1,048 186 271 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Worst behind us, industry impact significantly higher Source:
Slide 14: Leading to consolidation in tower market
Leading to consolidation in tower market Key Players OpCo owned towers Other players Changing landscape as we head towards more independent tower companies Slide: 14 of 33
Slide 15: Changing regulatory landscape
Changing regulatory landscape Slide: 15 of 33
Slide 16: National Digital Communications Policy 2018
National Digital Communications Policy 2018 India’s transition to a digitally empowered economy and society by fulfilling Vision ICT needs of citizens and enterprises by establishment of a ubiquitous, resilient and affordable Digital Communications Infrastructure and Services. • Connect India: Creat
Slide 17: Impact on tower companies
Impact on tower companies 60% towers fiberization Cabling (IBS) for Accelerated rollout of buildings compulsory fiber in government through NBC premises Incentives and Common service exemptions for tower Key takeaways ducts alongside roads construction / highways Scope enhancement of IP1s to include
Slide 18: Opportunities
Opportunities Slide: 18 of 33
Slide 19: Multiplier effect on data consumption
Multiplier effect on data consumption ∞ No Limit Limit Usage / user Usage / user Limit No. of users No. of users Growth in voice usage Growth in data usage Capacity = No. of users Usage per user Data, unlike voice, is not limited by number of subscribers or usage Slide: 19 of 33
Slide 20: Mobile subscriptions forecast
Mobile subscriptions forecast 3.5 Bn 4G subscriptions against <2Bn 4G subscriptions as envisaged in 2014 4G technology adoption exceeded expectations by over 2X Source: Ericsson Mobility Report November 2018 and 2014 Slide: 20 of 33
Slide 21: Different kinds of sites
Different kinds of sites Improve macro More spectrum, Multi Carrier, MIMO, Advanced Antennas, etc Densify Higher Additional Macro data rates Higher capacity Add “Small Cell” Very high data rates Macro + ”Small Cells” Very high capacity Slide: 21 of 33
Slide 22: How densification will play out
How densification will play out Improve Densify Add Area traffic density Improve Densify Improve Dense Urban Suburban Rural urban Slide: 22 of 33
Slide 23: Working towards a service differentiation
Working towards a service differentiation Existing sites 180k 200k > 220k Would have to catch up / rationalize Market growth will be led by macro densification and small cells Source: Company fillings, Street estimates, News reports Slide: 23 of 33
Slide 24: New type of opportunities will emerge
New type of opportunities will emerge Current opportunities › Macro densification Small cell › In-building solutions (IBS) Macro › Smartly placed “small cells” Small cell IBS Adjacent opportunities Wi-Fi IBS › Wi-Fi complementing 3GPP Cluster of access small cells › Fiber backhaul for high capacity
Slide 25: Bharti Infratel 2.0
Bharti Infratel 2.0 Slide: 25 of 33
Slide 26: Company Strategy
Company Strategy Promote Passive Infrastructure Sharing Capitalize on opportunities of Organic Growth and Data growth, Digital India, Smart Acquisition Opportunities Cities Initiatives of Government Achieving Cost Efficiencies Increasing Revenue and Capital Across Tower Portfolios Productivity Slide
Slide 27: Investment Thesis
Investment Thesis Demonstrated Operational and Financial Performance Insulated from Major Concerns - Largest Indian Towerco with $-Re, Leverage, Import over 1.9x Sharing Factor Dependence Operator Agnostic Way to Benefit from Experienced Management Team Data Growth Regulatory Environment High Standa
Slide 28: Bhopal Smart City: Architecture
Bhopal Smart City: Architecture Energy saving from LED Item Deployed lighting Intelligent energy-saving Smart Pole 150 Monetisation: lighting • Revenue from mobile LED Lights 21000 service providers • Wi-Fi City owned Use of Free • Fibre secure data frequency/ WiFi Hotspot 100 • Advertisement proces
Slide 29: Smart City expertise
Smart City expertise Setting up of infrastructure which will include poles, micro sites and fiberized backhaul PPP long term contracts Shared ICT infrastructure is the key enabler of the smart city Smart Cities to throttle us ahead to capitalize on new opportunities Slide: 29 of 33
Slide 30: Opportunities for Infratel
Opportunities for Infratel • Existing areas of business Maximizing organic business Small Cell In Building Solutions • New areas Fiber sharing Wi-Fi Smart cities BTS Hotel Managed services • Selectively evaluate inorganic growth 5G will bring opportunities for NetCo and Data Center S
Slide 31: Thank you
Thank you 8th January 2019 Building and Sharing Vital Infrastructure Slide: 31 of 33
Slide 32: Glossary
Glossary Term Definition 3GPP 3rd Generation Partnership Project Bn Billion BTS Base Transceiver System CCTV Closed Circuit Television DAS Distributed Antenna System FY Fiscal Year GDP Gross Domestic Product IBS In-Building Solutions ICT Information and Communication Technology IoT Internet of Thing
Slide 33: Glossary
Glossary Term Definition MIMO Multiple Input Multiple Output MoU Minutes of Usage Ms Milliseconds M2M Machine to Machine NDCP National Digital Communications Policy NetCo Network Company OFC Optical Fiber Cable Rs / Re Rupees Towerco Tower Company USD United States Dollar Wi-Fi Wireless Fidelity Sli
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