Slide 1: Investor Presentation 1st Quarter - FY2018
INVESTOR PRESENTATION 1ST QUARTER - FY2018
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
Slide 3: Agenda
AGENDA • BUSINESS OVERVIEW • FINANCIAL OVERVIEW 3
Slide 4: Business Overview
lp TATA COMMUNICATIONS TATA BUSINESS OVERVIEW
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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 5.6% 8.0% Improve − Improve operati
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
Slide 21: Financial Performance
TATA COMMUNICATIONS FINANCIAL PERF 7 a a IRMANCE TTT <p TATA
Slide 22: Performance Highlights | Core – Gross Revenue
PERFORMANCE HIGHLIGHTS | CORE – GROSS REVENUE 2885 2906 2850 666 640 668 2689 1231 270 225 238 1538 1436 1002 USD Mn USD Mn 1619 1688 397 415 431 1347 1471 FY14 FY15 FY16 FY17 Q1FY17 Q4FY17 Q1FY18 Y-o-Y Q-o-Q Growth % FY15 FY16 FY17 Growth % YoY QoQ Data 9.2% 10.1% 4.2% Data 8.5% 3.8% Voic
Slide 23: Performance Highlights | Core – EBITDA
PERFORMANCE HIGHLIGHTS | CORE – EBITDA 392 397 420 397 99 87 77 64 16 74 137 104 14 USD Mn USD Mn 17 293 343 333 83 73 255 57 FY14 FY15 FY16 FY17 Q1FY17 Q4FY17 Q1FY18 Y-o-Y Q-o-Q Margin % FY14 FY15 FY16 FY17 Margin % Q1FY17 Q4FY17 Q1FY18 Data 18.9% 19.9% 21.2% 19.7% Data 20.9% 13.7% 17.0%
Slide 24: Performance Highlights | Core – Operating FCF
PERFORMANCE HIGHLIGHTS | CORE – OPERATING FCF 60 13 72 16 USD Mn USD Mn 98 146 39 120 31 17 26 5 FY15 FY16 FY17 Q1FY17 Q4FY17 Q1FY18 Y-o-Y Q-o-Q EBITDA to FCF FY15 FY16 FY17 EBITDA to FCF Q1FY17 Q4FY17 Q1FY18 Data 8.8% 34.9% 43.7% Data 37.2% 8.2% 53.1% Voice 94.0% 93.9% 94.2% Voice 97.8%
Slide 25: Performance Highlights | Portfolio Mix
PERFORMANCE HIGHLIGHTS | PORTFOLIO MIX Gross Revenue Mix EBITDA Mix Operating Free Cash Flow Mix (3.7%) (7.1%) (9.0%) 4.7% 5.4% 6.5% 7.7% 0.6% Data- 46.7% 4.5% 5.3% 0.3% 0.6% 4.9% 4.3% 20.8% 7.1% 8.9% Data- 62.8% Data- 65.0% Data- 83.9% 37.5% 62.3% 39.9% 64.1% 70.7% 43.2% 76.9% 46.1% 83.9% 88.5% 79.
Slide 26: Performance Highlights | Data – Gross Revenue
PERFORMANCE HIGHLIGHTS | DATA – GROSS REVENUE 1619 1688 1347 1471 415 431 186 208 397 134 157 202 239 51 52 154 53 USD Mn USD Mn 131 59 71 74 1082 1160 1231 1241 305 285 293 FY14 FY15 FY16 FY17 Q1FY17 Q4FY17 Q1FY18 Y-o-Y Q-o-Q Growth % FY15 FY16 FY17 Growth % YoY QoQ Traditional 7.2% 6.1% 0.8%
Slide 27: Performance Highlights | Data – EBITDA
PERFORMANCE HIGHLIGHTS | DATA – EBITDA 343 333 293 83 73 21 17 57 255 6 4 1 2 5 USD Mn USD Mn 2 305 352 351 89 88 251 71 (15) (30) (36) (11) (19) (18) Q1FY17 Q4FY17 Q1FY18 FY14 FY15 FY16 FY17 Y-o-Y Q-o-Q Margin % FY14 FY15 FY16 FY17 Margin % Q1FY17 Q4FY17 Q1FY18 Traditional 23.2% 26.3% 28.6% 2
Slide 28: Performance Highlights | Capital Expenditure
PERFORMANCE HIGHLIGHTS | CAPITAL EXPENDITURE 319 62 63 46 11 USD Mn USD Mn 263 10 6 51 0.4 0.2 35 224 69 5 17 17 17 33 87 4 0.1 63 Y-o-Y 12 Q-o-Q 198 35 36 137 124 23 FY15 FY16 FY17 Q1FY17 Q4FY17 Q1FY18 Data Sustenance Data Growth Voice Others Data Sustenance Data Growth Voice Others • More than 80%
Slide 29: Performance Highlights | Net Debt
PERFORMANCE HIGHLIGHTS | NET DEBT 1380 1327 1438 1150 1204 USD Mn FY14 FY15 FY16 FY17 Q1FY18 Net Debt to EBITDA (x) Cost of Debt % 3.5 3.3 3.5 4.28% 2.8 3.1 3.80% 3.41% 3.12% 3.24% % x FY14 FY15 FY16 FY17 Q1FY18 FY14 FY15 FY16 FY17 Q1FY18 • Core Business Net Debt stood at USD 1.20Bn as against USD 1
Slide 30: Performance Highlights | TCTSL - Standalone
PERFORMANCE HIGHLIGHTS | TCTSL - STANDALONE Gross Revenue EBITDA 2766 2707 424 2427 372 Margin % 294 INR Mn INR Mn 15.3% 13.8% 12.1% Q1FY17 Q4 FY17 Q1FY18 Q1FY17 Q4 FY17 Q1FY18 Headcount (Exit) 4287 4608 4555 Growth % YoY QoQ Count Gross Revenue 11.5% (2.1%) EBITDA 26.5% (12.1%) Q1FY17 Q4 FY
Slide 31: Performance Highlights | TCPSL - Standalone
PERFORMANCE HIGHLIGHTS | TCPSL - STANDALONE Gross Revenue EBITDA 1523 122 1019 980 8.0% Margin % INR Mn INR Mn (75) (177) Q1FY17 Q4 FY17 Q1FY18 (7.3%) Q1FY17 Q4 FY17 Q1FY18 (18.1%) ATM Count 20526 18887 17839 8231 8107 8395 Growth % YoY QoQ Count 12295 10780 9444 Gross Revenue (35.7%) (3.9%) Q1F
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
Slide 33: Key Take Away
KEY TAKE AWAY Favourable sectoral trends – riding on global data growth Expanded Cloud footprint in Europe, Middle East Announced the launch of three new nodes for IZO Private Cloud Service to support enterprises' hybrid cloud adoption while ensuring regulatory compliance IZO Private Cloud n
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