Vodafone Idea Ltd · NSE:IDEA
Vodafone Idea — Idea Cellular — Morgan Stanley Fifteenth Annual Asia Pacific Summit 2016
41 slides from Vodafone Idea's conference presentation, Nov 15, 2016
Slide 1: Intimation of investor conference letter
ADITYA BIRLA November 15, 2016 National Stock Exchange of India Limited BSE Limited “Exchange Plaza’, Phiroze Jeejeebhoy Towers, Bandra - Kurla Complex, Dalal Street, Bandra (E), Mumbai — 400 001 Mumbai — 400 051 Dear Sirs, Sub: Investor Presentation / Intimation of investor conference Ref: “Idea Ce
Slide 2: Idea Cellular Limited
Idea Cellular Limited Confidential 1
Slide 3: Agenda: Indian Mobile Telecom
Indian Mobile Telecom • Idea & Industry The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Idea Digital Services Indian Tower Industry & Opportunities Confidential 2
Slide 4: Indian Mobile Telecom: Idea & Industry
Indian Mobile Telecom • Idea & Industry The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Idea Digital Services Indian Tower Industry & Opportunities Confidential 3
Slide 5: Idea Journey
Idea Journey Past Present Future (FY13 – 31/2 Years Back) (September 2016) (2-3 Years Ahead) 2G only - 11 2G only -5 2G+3G -11 2G+3G - 6 2G+3G - 2 2G+3G+4G - 7 2G+3G+4G -13 2G+4G - 4 2G+4G - 7 Mobile Broadband Service Areas 11 17 22 3G Services 11 13 15 4G Services - 11 20 Mobile Broadband Populatio
Slide 6: Indian Wireless Industry
Indian Wireless Industry Witnessing consolidation in Voice; 4-5 Large Pan India Data Operators Existing Scenario (Year 2008 – 2016) • Mobile Voice Segment characterized by intense competition - 6 to 9 operators in each service area • Mobile Broadband Data – an emerging segment with lower competition
Slide 7: India Subscriber Penetration
India Subscriber Penetration Large headroom for new subscribers addition in India India Mobility Active Subs - VLR (Mn) India Subscriber Penetration - VLR % 1000 936 90% 900 863 • India subscribers on VLR penetration remains 85% 791 800 683 723 80% low @ 73.7% v/s Global average @ 92.1% 700 75% (Glo
Slide 8: Idea gaining highest incremental subscriber Net Adds share
Idea gaining amongst the highest incremental subscriber Net Adds share over last 4 years Industry & Idea VLR Subscriber trend Industry & Idea Net Annual Subs Addition trend (in Mn.) (in Mn.) Idea V LR Subsc riber Industry V LR Subsc riber Idea V LR Subs Market Share Idea Annual S ubs Industry Annual
Slide 9: Idea – The fastest growing Indian Telco for 8 years
Idea – The fastest growing Indian Telco for straight 8 years Consistently outpacing industry growth Industry & Idea Revenue trend Industry & Idea Annual Incr. Revenue trend (in Rs Cr) (in Rs Cr) Idea Revenue Industry Revenue Idea RMS (%) Idea Annual Incr. Revenue Industry Annua l Incr. Revenue Idea
Slide 10: A Clear #2 in Incremental Revenue Market Share
Idea – The fastest growing Indian Telco for straight 8 years A Clear #2 in Incremental Revenue Market Share RMS IRMS (Q1) Q1 FY13-17 FY13-17 FY16-17 32.7% 32.4% 31.1% 31.3% Airtel 30.8% 40.0% 57.8% 30.1% [ +2.6% ] 29.8% Rest of Ind. 28.7% 26.6% 2.9% -11.1% [ -7.7% ] 24.7% 23.3% 23.2% 23.3% Vodafone
Slide 11: Idea 15 Service Areas – Core Strength
Idea 15 Service Areas – Core Strength • Own 2G, 3G and 4G spectrum in 8 Established Service Areas (Leadership) all 8 leadership service areas. RMS RMS Spectrum • Offer 3G services in all 8 Service Service Area Rank2 Q1FY141 Q1FY171 Profile Areas and launched its 4G Kerala 35.7% 42.6% 1 2G/3G/4G ~41%
Slide 12: Idea 7 New Service Areas - Emerging Opportunity
Idea 7 New Service Areas - Emerging Opportunity • Offer 3G service on its own Idea launched services during FY10 in 7 new service spectrum in 2 service areas of J&K areas; combined RMS of 7.0%1 in Q1FY17 and Kolkata. Idea won back 5 MHz spectrum in 1800 MHz frequency • Launched 4G in Tamil Nadu, auc
Slide 13: Idea Mobile Voice & Data Segment Performance
Idea Mobile Voice & Data Segment Performance Gaining both Revenue and Traffic share Voice* Revenue (Rs Cr) Minutes of Usage (Bn Minutes) Ind. Voice* Revenue Idea Voice* Revenue Idea Voice* RMS (%) Ind. Minutes Volume Idea Minutes Volume Idea Minutes Volume Share (%) YoY rev. grow th FY15 FY16 YoY mi
Slide 14: Consistent Revenue & EBITDA growth
Idea delivering consistent Revenue & EBITDA growth CAGR of 14.4% Revenue, 24.9% EBITDA & 9.6% margin improvement over past 4 years Revenue EBITDA EBITDA Margin % (Rs Cr) (Rs Cr) 32.0% 32.2% -1.6% +2.4% 30.5% 29.6% 27.4% +2.2% EBITDA Margin 23.9% +3.5% +7.2% +14.7% 9,300 +19.8% 8,680 8,675 +625 +1,11
Slide 15: Revenue Growth + Scale Benefit = Margin Increase
Revenue Growth + Scale Benefit = Margin Increase; Closing gap with No. 2 EBITDA (Rs. Cr) EBITDA Margin % Incr. EBITDA (4 Operators FY12 FY15 FY16 FY12 FY15 FY16 Years) 1 Idea 4,466 9,768 11,910 22.7% 31.0% 33.1% 45.7% Bharti2 13,669 19,474 21,903 33.9% 37.5% 39.1% 52.2% 3 Voda 8,582 12,613 13,125 26
Slide 16: Idea Financial Trending
Idea Financial Trending Growth in Cash Profits & Net Profits Expanding Cell sites & Capex spends 2,80,000 2G Sites 3G Sites 4G Sites Rs Cr Cash Profit Net Profit • GSM pop. Coverage: 1 Bn, 400k towns & villages 2,50,000 • Wireless Broadband coverage: 430 Mn, 80k towns & villages 216,045 ~232-234k 10
Slide 17: Agenda: Emerging Mobile Data Opportunity
Indian Mobile Telecom • Idea & Industry The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Idea Digital Services Indian Tower Industry & Opportunities Confidential 16
Slide 18: Spectrum Auction 2016 Summary
Spectrum Auction 2016 Summary Total quantum of 1239.6 MHz (unpaired) sold @ Rs. 65,789 Crs 4G 3G Total Payout Payout Operator Coverage (FDD paired) Capacity (TDD unpaired) Total (Paired - quantum* 2100 MHz) (Rs. Cr) ($ Mn) 800 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz (FDDx2) + TDD (FDDx2) + TDD Idea
Slide 19: Pre & Post 2016 Auction
Pre & Post 2016 Auction Quantum & Value of Spectrum owned Quantum (MHz) [(FDDx2) + TDD] in MHz Payout in Auctions (Rs. Cr) Payout Operator Pre Auction 2016 Auction Post Auction Pre Auction* 2016 Auction Post Auction in $ Mn Bharti 1,166.9 217.6 1,384.5 75,095 14,244 89,338 13,334 Vodafone 591.5 365.
Slide 20: Band wise ownership of Auctioned Spectrum
Band wise ownership of Auctioned Spectrum Idea overall spectrum share @ 16% Quantum (MHz) Spectrum Operator FDD TDD Total Share % 800 MHz 900 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz (FDD x 2) + TDD Bharti 79.2 162.5 125.0 450.0 1,183.3 23% RJio 107.5 146.4 600.0 1,107.8 21% Idea 59.0 172.7 80.0 30.0
Slide 21: Competitive Spectrum Footprint
Competitive Spectrum Footprint Pan India Mobile Broadband Spectrum (4G - 20 circles, 3G - 15 Circles) FDD TDD FDD (2x)* GSM (2G) Broadband Carrier Service Areas 900 1800 2100 Total 2300 2500 Total +TDD services 3G 4G Maharashtra 9.0 11.0 5.0 25.0 10.0 10.0 20.0 70.0 √ 2 4 Kerala 6.0 10.0 5.0 21.0 10
Slide 22: Large Potential for Data Penetration in India
Large Potential for Data Penetration in India Smartphone Penetration - as a % of Connections* (3G+4G) Market Pe netration (Connections)* 82.8% 77.4% 145.5% 74.0% 142.1% 70.2% 68.8% 63.4% 130.2% 128.5% 116.5% 51.2% 101.8% 47.4% 45.3% 70.1% 28.8% 62.8% 62.2% 14.5% Usage/Sub (MB)^ Price/GB (USD)^ India
Slide 23: Top Indian Private Operators Building World Class Mobile Broadband Infra
Top Indian Private Operators Building a World Class Indian Mobile Broadband Infra Since January 2016, top Indian Private Mobile Operators are now working at breakneck speeds to create a world class Digital Highway Coverage expansion* 3G & 4G Network Rollout 1.1 Billion Indians to be covered by 3X ro
Slide 24: History to repeat itself
History to repeat itself Mobile data adoption likely to have similar trajectory as that of historic mobile voice penetration in India Industry Reported EoP Subs (Mn.) Industry VLR Subs Phase 1 Phase 2 Phase 3 Phase 4 Introduction of Coverage Exponential Consumer adoption 1,034 mobile telephony 970 e
Slide 25: Steps taken by Idea in Wireless Broadband Business
Steps taken by Idea to participate in Emerging Wireless Broadband Business Gearing to become Pan India 3G/4G provider Planning own range of Digital Services Spectrum: • 3G/4G Coverage (FDD): 219.4 MHz (900/1800/2100) o 1800 MHz: 124.4 MHz across 18 circles (4G) o 900/2100 MHz: 15 + 80 MHz in 16 circ
Slide 26: Agenda: Idea Digital Services
Indian Mobile Telecom • Idea & Industry The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Idea Digital Services Indian Tower Industry & Opportunities Confidential 25
Slide 27: Rising Digital Opportunity
Rising Digital Opportunity Potential for Growth Growing World of Apps & Content • 800 Mn Indian Non-Users yet to go online • Mobile Internet Rural penetration to increase at a faster pace • Gen Z and Millennial to lead this growth Services of the future# Current Penetration among Users Surveyed Expe
Slide 28: Idea Strongly Placed
Idea Strongly Placed To Capitalize Opportunity in Entertainment & Payments Space As per the BCG report on “The Rising Connected Consumer in Rural India” • 75% of the new Internet User growth is poised to come from Rural • Connected Rural customers will increase from 120 Mn in 2015 to 315 Mn in 2020
Slide 29: Proposed Idea Services & Competition
Proposed Idea Services & Competition Digital VoIP & Instant Music Online Service Gaming Messaging Streaming Videos/Movies Online music listeners Online video users: 200 Mobile gamers: 40 – 50 Users 273 Mn (2020) from 27 million (2014) from 54 Mn growing at ~50% Mn (2015) million (Mar 2013) Rs. 10.7
Slide 30: Agenda: Indian Tower Industry & Opportunities
Indian Mobile Telecom • Idea & Industry The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Idea Digital Services Indian Tower Industry & Opportunities Confidential 29
Slide 31: Idea Tower Infrastructure Business
Idea Tower Infrastructure Business Tower Industry & Idea Market Share Idea Total Towers & Tenancies incl. 11.15% share in Indus (as of Sep’16) (as of Sep’16) Count Tenancy 11.15% Particulars Particulars ICISL Total Towers Tenancies Ratio Indus share Total Industry 417,000 767,000 1.84 No. of Towers
Slide 32: Thank you
Thank you 31
Slide 33: Annexures
Annexures Confidential 32
Slide 34: Idea – The fastest growing Indian Telco for 8 years
Idea – The fastest growing Indian Telco for straight 8 years Consistently growing at 2X the pace of industry Industry & Idea Revenue trend Industry & Idea Annual Incr. Revenue trend (in Rs Cr) (in Rs Cr) Idea Revenue Industry Revenue Idea RMS (%) Idea Annual Incr. Revenue Industry Annual Incr. Reven
Slide 35: Consistent Revenue & EBITDA growth
Consistent Revenue & EBITDA growth CAGR of 16.3% Revenue, 27.8% EBITDA & 10.4% margin improvement over past 4 years Revenue EBITDA EBITDA Margin % (Rs Cr) (Rs Cr) 33.1% 31.0% +2.2% EBITDA +3.2% Margin 27.7% 23.7% +4.0% 22.7% +1.0% +14.0% 35,967 +19.1% +4,412 31,555 +17.3% +5,051 26,504 +14.8% +3,909
Slide 36: Idea - Key Operating Trends
Idea - Key Operating Trends Realized Rate per Minute Minutes of Use on Network Paisa Billion ARPM Voice ARPM 800 45.0 786.0 45.9 47.0 700 44.7 45.3 * 683.4 40.0 600 41.3 +3.6% 587.8 35.0 500 532.1 400 453.1 +15.0% 30.0 394.8 37.5 36.2 +1.2% 300 385.2 34.8 32.7 33.1 +2.5% 25.0 200 20.0 100 Q2FY13 Q2F
Slide 37: Auction 2016 - Prudent Spectrum Acquisition
Auction 2016 - Prudent Spectrum Acquisition Pan India Broadband Spectrum Spectrum Won (in MHz) Payout (Rs Crs) Circle FDD TDD 1800 2100 2300 2500 1800 2100 2300 2500 Total Andhra Pradesh - - - 10.0 - - - 680 680 Assam 5.0 - - 10.0 200 - - 20 220 Bihar 5.0 5.0 - 10.0 310 430 - 60 800 Gujarat 8.4 - -
Slide 38: Band wise ownership of spectrum
Band wise ownership of spectrum Idea overall spectrum share @ 13% Quantum (MHz) Spectrum Operator FDD TDD Total Share % 800 MHz 900 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz (FDD x 2) + TDD Bharti 116.4 225.9 125.0 450.0 1,384.5 20% RJio 107.5 146.4 600.0 1,107.8 16% BSNL/MTNL 45.0 138.2 66.2 110.0 28
Slide 39: Board Members
Board Members Mr. Kumar Mangalam Birla – Chairman (Non-Executive) Mr. Arun Thiagarajan – Independent Director Mr. Kumar Mangalam Birla is the Chairman of Idea and Aditya Birla Group. Mr. Arun Thiagarajan is served as part-time Non-Executive Independent He chairs the Boards of the major Group Com
Slide 40: Board Members
Board Members Mr. Sanjeev Aga – Non -Executive Director Mr. Akshay Moondra - Whole Time Director & CFO Mr. Sanjeev Aga served as the Managing Director of Idea for the period CA and Licentiate CS with over 27 years of industry experience November 1, 2006 to March 31, 2011. Mr. Aga earlier held po
Slide 41: Management Team
Management Team Deputy Managing Director, aged 60 years o B.Tech. from IIT Delhi and Post Graduation from Indian Institute of Chief Operating Officer, aged 56 years Management Ahmedabad with over 34 years of industry o around 29 years of experience spanning FMCG and Telecom. Held experience acro
Idea Cellular — Morgan Stanley Fifteenth Annual Asia Pacific Summit 2016 on 6ix