Tata Communications Limited · NSE:TATACOMM

Tata Communications — Q3 FY2018 Earnings Presentation

34 slides from Tata Communications's earnings presentation, February 2018

  1. Slide 1: Investor Presentation 3rd Quarter - FY2018

    INVESTOR PRESENTATION 3RD QUARTER - FY2018

  2. Slide 2: Safe Harbour

    SAFE HARBOUR SOME OF THE STATEMENTS HEREIN CONSTITUTE “FORWARD-LOOKING STATEMENTS” THAT DO NOT DIRECTLY OR EXCLUSIVELY RELATE TO HISTORICAL FACTS. THESE FORWARD-LOOKING STATEMENTS REFLECT OUR INTENTIONS, PLANS, EXPECTATIONS, ASSUMPTIONS AND BELIEFS ABOUT FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCER

  3. Slide 3: Agenda

    AGENDA • BUSINESS OVERVIEW • FINANCIAL OVERVIEW 3

  4. Slide 4: Business Overview

    <p TATA COMMUNICATIONS TATA “a : —— BUSINESS OVERVIE

  5. Slide 5: Delivering a New World of Communications

    DELIVERING A NEW WORLD OF COMMUNICATIONS TM POWERING THE PLATFORM ECONOMY, THE INTERNET AND GLOBALISATION Over 25% of the world’s We have the only wholly-owned internet traffic uses our subsea cable network that circles network (Over 12,000 the globe petabits) We’re a leading player in managed hosti

  6. Slide 6: Growth Story

    GROWTH STORY TRANSFORMING FROM AN INDIAN PSU TO A DIGITAL ENABLEMENT PLAYER Transformation Growth Innovation World’s 1st LTE roaming peering with Telecom Italia Sparkle 100G connectivity to carriers & Partnered with Salesforce to VSNL, VSNL International, CIPRIS, Tata enterprises across the US & Eur

  7. Slide 7: Global Reach – Providing Connectivity Across the World

    GLOBAL REACH – PROVIDING CONNECTIVITY ACROSS THE WORLD Over 40 Entities across the globe Global Backbone “Ring Around the World” Leadership 25% of in Global World’s SIP internet Trunking routes 7

  8. Slide 8: Products and Services

    PRODUCTS AND SERVICES PROVIDER OF ENTERPRISE & WHOLESALE DATA SERVICES & WHOLESALE LONG DISTANCE VOICE SOLUTIONS Data Services Virtual Intl Private Internet Private Mobility Inmarsat Line Leased Line Traditional Network Services Ethernet National Private Line Internet Protocol - Transit Managed Mana

  9. Slide 9: Market Overview

    MARKET OVERVIEW TECHNOLOGY IS A GAME CHANGER 70% of large and mid-sized enterprises are likely to rework their networking setups over the next three years Network Function Virtualisation 37% of IT budgets are spent on cloud and cloud-related services (NFV) Big Data and Explosion of 4.4 million IT jo

  10. Slide 10: Business Themes Supporting Digital Transformation

    BUSINESS THEMES SUPPORTING DIGITAL TRANSFORMATON DIGITAL TYPICALLY DELIVERS VALUE ACROSS 4 IMPACT AREAS FOR BUSINESSES Driving their digital transformation on a global scale, organisations need best-in-class global Borderless infrastructure and tools. They will power organisations’ expansion into ne

  11. Slide 11: Our Customers

    OUR CUSTOMERS ~ 7,000 CUSTOMERS GLOBALLY: ~2,000 SERVICE PROVIDER CUSTOMERS & ~5,000 ENTERPRISE CUSTOMERS 60% of S&P 500 66% of the Fortune 500 69% of PWC 100 41% of FTSE 350 Banking/ Media/ Healthcare/ Service Manufacturing E-Commerce IT/ITES Services Technology Financial Entertainment Pharmaceutic

  12. Slide 12: We Address ~$46 Bn Out of a $1.1 Tn Telecom Market

    WE ADDRESS ~$46 BN OUT OF A $1.1 TN TELECOM MARKET SERVICEABLE ADDRESSABLE MARKET REPRESENTS PORTION OF THE TELECOM MARKET WHICH WE CAN CAPTURE Telecom: SAM: $1,100Bn $46Bn $1 Bn $1 Bn $45 Bn $1 Bn $82 Bn $2 Bn $1 Bn $86 Bn $2 Bn $13 Bn $359 Bn $3 Bn $108 Bn $5 Bn $154 Bn $9 Bn $265 Bn $8 Bn Total C

  13. Slide 13: Target Addressable Market Expanding from $46Bn in 2017 to $69Bn in 2020

    OUR TARGET ADDRESSABLE MARKET IS EXPANDING FROM $46BN IN 2017 TO $69BN IN 2020 US $69Bn in 2020 CAGR 14% US $46Bn 9 9 in 2017 4 MNaaS 2 71% 2 5 4 44% 3 26% Mobility - 1 2 0 1 4 Healthcare – 1 2 1 IZO – 2 (4) 1 7 33% UCC 2 26% Banking Solutions – 1 3 Media – 1 Growth driven by Innovation 1 Cloud in n

  14. Slide 14: Helping Consumers Remain Agile, Adaptable, and Responsive

    HELPING CONSUMERS REMAIN AGILE, ADAPTABLE, AND RESPONSIVE POWERING THE DIGITAL ECONOMY AND HELPING OUR CUSTOMERS AND PARTNERS ACCELERATE THEIR GROWTH BY DEVELOPING INNOVATIVE BUSINESS SOLUTIONS Innovating Together New business Crowdsourcing ideas from 8,500 strong workforce & units e.g. IoT Internal

  15. Slide 15: Investing for the Future

    INVESTING FOR THE FUTURE MOVE is 3 Products built on the Tata Global Network SIM CONNECT Global Mobile Connectivity for Humans – Providing Global Visibility, Security and Control to MNCs IOT CONNECT Global Connectivity for Machines and Things – Fully Programmable Global IoT connectivity and services

  16. Slide 16: Leveraging Our Positioning

    LEVERAGING OUR POSITIONING Cloud and Data Centre Solutions − Connecting businesses to 8 main cloud platforms in 20 locations across 3 continents − Our data centres meet and exceed TIA 942 standards and offer 99.982% uptime − 10,000+ installed racks, and more than 5,000 virtual instances Managed Mana

  17. Slide 17: Third Party Endorsements, Awards and Recognition

    THIRD PARTY ENDORSEMENTS, AWARDS AND RECOGNITION CONTINUOUS IMPROVEMENT India's largest corporations: Tata Communications at Frost & Sullivan India ICT Awards: #68 • Enterprise Data Service Provider of the Year (9th Year in a row) Transparency International, a global civil society organization, • Ho

  18. Slide 18: Positioned in the Leaders' Quadrant

    POSITIONED IN THE LEADERS’ QUADRANT “LEADER” IN GARTNER MAGIC QUADRANT FOR NETWORK SERVICES, GLOBAL FOR 4TH CONSECUTIVE YEAR • TCL and Verizon are the only “Leaders” showing significant improvement • TCL’s global SIP trunk offering, IZO internet WAN across 82 countries and plans for SD- WAN have bee

  19. Slide 19: Shareholder Value Creation

    SHAREHOLDER VALUE CREATION FOCUS ON MAXIMIZING LONG TERM INTRINSIC VALUE FOR SHAREHOLDERS − Recalibrate Investments Drive Shareholding pattern − Co-create with partners Capital Efficiency − Strong discipline and governance around capital allocation and expenditure 6.2% 5.4% Improve − Improve operati

  20. Slide 20: Corporate Social Responsibility

    CORPORATE SOCIAL RESPONSIBILITY TECHNOLOGY DRIVING SOCIAL CHANGE “ “ By financially including women around the globe, we take an important step towards poverty alleviation, equality and economic prosperity. Walt Macnee, Vice Chairman, Mastercard • Tata Communications and MasterCard joined forces to

  21. Slide 21: Financial Performance

    TATA COMMUNICATIONS FINANCIAL PERFORMANCE ee ap TATA

  22. Slide 22: Performance Highlights | Core – Gross Revenue

    PERFORMANCE HIGHLIGHTS | CORE – GROSS REVENUE 2885 2906 2850 2689 647 656 635 1436 1231 1002 246 223 190 1538 USD Mn USD Mn 1619 1688 401 433 445 1347 1471 FY14 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Y-o-Y Q-o-Q Growth % FY15 FY16 FY17 Growth % YoY QoQ Data  9.2%  10.1%  4.2% Data  11.1%  2.9% Voi

  23. Slide 23: Performance Highlights | Core – EBITDA

    PERFORMANCE HIGHLIGHTS | CORE – EBITDA 392 397 420 397 88 95 77 81 104 64 11 137 12 16 USD Mn USD Mn 293 343 333 70 72 83 255 FY14 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Y-o-Y Q-o-Q Margin % FY14 FY15 FY16 FY17 Margin % Q3FY17 Q2FY18 Q3FY18 Data 18.9%  19.9%  21.2%  19.7% Data 17.4%  16.6%  18.7%

  24. Slide 24: Performance Highlights | Core – Operating FCF

    PERFORMANCE HIGHLIGHTS | CORE – OPERATING FCF 60 11 72 USD Mn USD Mn 11 98 146 16 38 120 26 26 7 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Y-o-Y Q-o-Q EBITDA to FCF FY15 FY16 FY17 EBITDA to FCF Q3FY17 Q2FY18 Q3FY18 Data 8.8%  34.9%  43.8% Data 37.9%  10.4%  45.4% Voice 94.0%  93.9%  94.2% Voice 91.5

  25. Slide 25: Performance Highlights | Portfolio Mix

    PERFORMANCE HIGHLIGHTS | PORTFOLIO MIX Gross Revenue Mix EBITDA Mix Operating Free Cash Flow Mix 4.7% 5.4% 6.5% 7.7% 4.5% 5.3% (3.7%) (9.0%) 7.1% 8.9% 0.6% (7.1%) 20.8% Data- 46.7% 0.3% 0.6% 4.9% Data- 65.0% 4.3% Data- 62.8% 37.5% 39.9% Data- 83.9% 62.3% 43.2% 70.7% 46.1% 64.1% 76.9% 83.9% 88.5% 79.

  26. Slide 26: Performance Highlights | Data – Gross Revenue

    PERFORMANCE HIGHLIGHTS | DATA – GROSS REVENUE 1619 1688 433 445 1471 401 1347 186 208 50 54 0.1 157 51 0.1 134 239 65 0.1 86 90 USD Mn USD Mn 154 202 131 1082 1160 1231 1240 286 297 302 FY14 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Y-o-Y Growth % YoY QoQ Q-o-Q Growth % FY15 FY16 FY17 Traditional  5.7% 

  27. Slide 27: Performance Highlights | Data – EBITDA

    PERFORMANCE HIGHLIGHTS | DATA – EBITDA 343 333 293 83 255 1 21 17 70 72 2 3 6 7 USD Mn USD Mn 2 352 351 251 305 78 82 95 (15) (30) (36) (9) (9) (10) (2) (7) (9) FY14 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Y-o-Y Margin % Q3FY17 Q2FY18 Q3FY18 Q-o-Q Margin % FY14 FY15 FY16 FY17 Traditional 27.2%  27.6% 

  28. Slide 28: Performance Highlights | Capital Expenditure

    PERFORMANCE HIGHLIGHTS | CAPITAL EXPENDITURE 319 75 46 10 USD Mn USD Mn 263 0.3 6 57 35 224 51 12 69 5 11 33 7 0.6 4 1.0 87 63 13 24 Y-o-Y Q-o-Q 52 198 137 124 30 21 FY15 FY16 FY17 Q3FY17 Q2FY18 Q3FY18 Data Sustenance Data Growth Voice Others • Q3 capex was at USD 57 Mn; on a YTD basis, the capex wa

  29. Slide 29: Performance Highlights | Net Debt

    PERFORMANCE HIGHLIGHTS | NET DEBT 1380 1327 1438 1150 1204 1209 1254 USD Mn Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Dec'17 Net Debt to EBITDA (x) Cost of Debt % 3.6 3.6 3.5 3.4 3.4 4.28% 3.3 3.80% 3.41% 3.30% 3.60% 3.12% 3.24% 3.2 % x Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'14 Mar'15

  30. Slide 30: Performance Highlights | TCTSL - Standalone

    PERFORMANCE HIGHLIGHTS | TCTSL - STANDALONE Gross Revenue 2944 EBITDA 2617 2664 404 365 338 Margin % INR Mn INR Mn 14.0% 12.7% 13.7% Q3FY17 Q2FY18 Q3FY18 Q3FY17 Q2FY18 Q3FY18 Headcount (Exit) 4524 4531 4363 Growth % YoY QoQ Count Gross Revenue  12.5%  10.5% EBITDA  10.6%  19.6% Q3FY17 Q2FY18 Q3F

  31. Slide 31: Performance Highlights | TCPSL - Standalone

    PERFORMANCE HIGHLIGHTS | TCPSL - STANDALONE 1214 Gross Revenue EBITDA 937 911 (17) (18) Margin % INR Mn INR Mn Q3FY17 Q2FY18 Q3FY18 (89) (1.8%) (2.0%) (7.3%) Q3FY17 Q2FY18 Q3FY18 ATM Count 20048 16798 16340 8456 Growth % YoY QoQ 8116 8317 Count 11592 8682 8023 Gross Revenue  (25.0%)  (2.8%) Q3FY17

  32. Slide 32: Investment Thesis

    INVESTMENT THESIS Data led Growth Valuation Arbitrage Lean Balance as compared to Sheet Global Peers Value Creation Global through huge Land Management Team Assets Regulatory Regular Dividend Environment Pay-out Favourable Internal Transformation 32

  33. Slide 33: Key Take Away

    KEY TAKE AWAY  Favourable sectoral trends – riding on global data growth  Digital Transformation and Cloud adoption to drive the business growth  Connected the recently-launched Seabras-1 cable system Tata Communications’ global network, offering the most direct link between the financial centres

  34. Slide 34: Thank You

    THANK YOU tatacommunications.com © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries. 34 34

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