Reliance Communications Limited · NSE:RCOM
Reliance Communications — Investor Presentation (June 2012)
23 slides from Reliance Communications's investor presentation, June 2012
Slide 1: Reliance Communications Subsea cable business
Reliance Communications Subsea cable business June 2012
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Reliance Communications Limited (the “Company”) or any of its subsidiaries, assoc
Slide 3: Subsea cable business
Subsea cable business – Subsea cable business is similar to a leasing business – Three dimensions: connectivity, Metro PoP Area Customer Metro land bandwidth and contract length backhaul links Cable Landing Station Subsea – Point to point prepaid leases repeaters typically of 10-15 years, called IRU
Slide 4: Business highlights
Business highlights 1 Presence in key global markets with strong regional connectivity 2 High entry barriers 3 Strong relationships with a diverse customer base 4 Significant spare capacity and remaining useful life 5 Favourable industry dynamics 6 Sound financial position 2
Slide 5: Overview of subsea cable network
Overview of subsea cable network (a) (a) Global business, with a presence in high growth emerging and developed markets covering US, Europe, Middle East and Asia, including China and India (a) CLS = Cable landing station, IP / Tx PoP = IP points of presence 3
Slide 6: Overview of subsea cable business
Overview of subsea cable business Subsea cable assets spanning over 68,000 Route Kilometers Landing at 46 locations in 26 countries Metropolitan networks in 45 cities across 25 countries Over 85,000 sq. ft. of space for data centres and telecommunications facilities 403 customers including
Slide 7: Our subsea cable network has a presence in 6 out of 8 global data traffic routes
Our subsea cable network has a presence in 6 out of 8 global data traffic routes Routes Middle Middle Cables Trans-Atlantic Intra-Asia East-West East-East India-West India-East FA-1 FEA FNAL FALCON HAWK These routes collectively accounted for 63% of the global data demand as me
Slide 8: Our subsea cable network has significant available capacity
Our subsea cable network has significant available capacity Substantial capacity available for sale (Mar 12) Significant useful life (year end)(a) Trans-Atlantic 14.7% 85.3% Trans-Atlantic 2026 Intra Asia 16.4% 83.6% Intra Asia 2027 Middle East-West 2.2% 97.8% Middle East-West 2031 (b) Middle East-E
Slide 9: Increasing demand for capacity
Increasing demand for capacity Trans-Atlantic (Tbps) Intra-Asia (Tbps) Middle East-West (Tbps) 52.4 78.0 4.0 5.5x 6.7x 6.0x 13.0 9.5 0.6 3.4 1.2 0.1 2005 2011 2016 2005 2011 2016 2005 2011 2016 Middle East-East (Tbps) India-West (Tbps) India-East (Tbps) 5.6 1.7 5.0 7.7x 8.0x 8.8x 0.2 0.7 0.6 0.0 0.0
Slide 10: Competitive dynamics: differing motivations of key competitors
Competitive dynamics: differing motivations of key competitors Cable ownership and indebtedness levels Key competing assets – Typically two types of consortium members; Route Consortium Private In construction / domestic focused operators and regional/global Planning players Consortium – Domestic fo
Slide 11: Forecast: capacity demand growth to exceed price decline
Forecast : capacity demand growth to exceed price decline TeleGeography forecasts Forecast demand growth Forecast price decline (a) (b) (b) Global data traffic routes (2011-2016 CAGR) Historical price decline (2011-2016 CAGR) Trans – Atlantic(c) 43% (12)% (17)% Intra – Asia(c) 41% (20)% (20)% Middle
Slide 12: Financial performance for fiscal year ending Mar-12
Financial performance for fiscal year ending Mar-12 Billed Income of US$330m Stable operating cost structure at US$153m US Dollar denominated revenue Zero Debt Billed EBITDA of US$178m resulting in Billed EBITDA margin of 54% Low marginal tax rate Capex of US$70m which included payment of
Slide 13: Significant capital expenditure completed
Significant capital expenditure completed Design capacity increased to 46.6 Tbps by using 40G technology Added new landing stations and improved existing terrestrial networks in Asia, Middle East and Continental Europe Capital expenditure for Mar-10 and Mar-11 was US$105m and US$191m, respecti
Slide 14: Forecast: key financials
Forecast: key financials Outcome of key assumptions Summary financials (US$m) Mar-13E Mar-14E Mar-13E Mar-14E Utilized lit capacity growth IRU 22.7% 25.1% Billed revenue 352.7 370.0 IPLC 24.4% 37.4% IP 26.9% 40.9% Billed EBITDA 196.1 205.0 Price decline IRU (incremental) (20.5%) (21.7%) IPLC (23.7%)
Slide 15: Appendix I: Design, installed and utilized capacities
Appendix I Design, installed and utilized capacities
Slide 16: Design and installed capacity by route
Design and installed capacity by route Gbps Mar-10 Mar-11 Mar-12 Design capacity(a) Trans – Atlantic 18,720 18,720 18,720 Intra – Asia 10,120 10,120 10,120 Middle East – West 9,800 9,800 9,800 Middle East – East 160 160 160 India – West 9,560 9,560 9,560 India – East 160 160 160 Total 48,520 48,520
Slide 17: Utilized lit capacity by route
Utilized lit capacity by route Gbps Mar-10 Mar-11 Mar-12 IRU Trans – Atlantic 586 686 876 Intra – Asia 1,116 1,139 1,269 Middle East – West 16 30 120 Middle East – East – – – India – West 28 28 28 India – East – – – Total 1,746 1,882 2,293 IPLC Trans – Atlantic 782 963 1,641 Intra – Asia 280 286 294
Slide 18: Appendix II: Summary financials
Appendix II Summary financials
Slide 19: Summary P&L
Summary P&L Summary P&L (US$m)(a)(b) Mar-10 Mar-11 Mar-12 IFRS income(c) 357.2 317.2 325.1 IFRS EBITDA(d) 191.8 164.2 172.3 Net profit / (loss) 114.2 63.7 78.0 (a) Based on IFRS accounting (b) The Subsea Telecommunications Network Business evaluates the performance as one segment i.e. Subsea Telecom
Slide 20: Billed revenue and EBITDA
Billed revenue and EBITDA Billed revenue and EBITDA (US$m)(a) Mar-10 Mar-11 Mar-12 IRU (gross) 61.2 30.0 91.0 IPLC (gross) 111.2 98.5 70.8 IP (gross) 70.2 76.7 115.6 O&M (gross) 59.0 59.5 58.9 Others, net of credit notes 18.2 (13.0) (6.1) Total billed revenue(b) 319.9 251.8 330.3 Billed EBITDA(c) 15
Slide 21: Distributable free cash flow
Distributable free cash flow Distributable free cash flow (US$m) Mar-10 Mar-11 Mar-12 Mar-13E Mar-14E Billed EBITDA 154.5 98.8 177.5 196.1 205.0 Share-based payment (0.2) (1.1) (0.2) Other income 0.2 1.6 2.9 Decrease / (Increase) in trade and other receivables 70.7 (52.6) 17.7 Decrease / (Increase)
Slide 22: Appendix III: Market share by route
Appendix III Market share by route
Slide 23: Market share of 18.8% of utilised lit capacity across the six routes
Market share of 18.8% of utilised lit capacity across the six routes Market share of lit capacity across 6 routes (Gbps)(a) Utilised lit capacity of the Utilised lit capacity of the market subsea cable business Market share Trans-Atlantic 13,036 2,531 19.4% Intra Asia 9,493 1,730 18.2% Middle East-W
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