Slide 1: Investor Presentation 2nd Quarter - FY2018
INVESTOR PRESENTATION 2ND 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
<p TATA COMMUNICATIONS TATA “a : —— BUSINESS OVERVIE
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 to $69Bn
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 PERFORMANCE ee ap TATA
Slide 22: Performance Highlights | Core – Gross Revenue
PERFORMANCE HIGHLIGHTS | CORE – GROSS REVENUE 2885 2906 2850 673 668 656 2689 1436 1231 1002 267 238 223 1538 USD Mn USD Mn 1471 1619 1688 407 431 433 1347 FY14 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Y-o-Y Q-o-Q Growth % FY15 FY16 FY17 Growth % YoY QoQ Data 9.2% 10.1% 4.2% Data 6.5% 0.5% Voic
Slide 23: Performance Highlights | Core – EBITDA
PERFORMANCE HIGHLIGHTS | CORE – EBITDA 392 397 420 397 98 87 88 77 64 17 137 104 14 16 USD Mn USD Mn 293 343 333 81 73 72 255 FY14 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Y-o-Y Q-o-Q Margin % FY14 FY15 FY16 FY17 Margin % Q2FY17 Q1FY18 Q2FY18 Data 18.9% 19.9% 21.2% 19.7% Data 19.8% 17.0% 16.6%
Slide 24: Performance Highlights | Core – Operating FCF
PERFORMANCE HIGHLIGHTS | CORE – OPERATING FCF 60 13 72 USD Mn USD Mn 16 98 146 39 120 16 22 26 7 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Y-o-Y Q-o-Q EBITDA to FCF FY15 FY16 FY17 EBITDA to FCF Q2FY17 Q1FY18 Q2FY18 Data 8.8% 34.9% 43.8% Data 27.4% 53.1% 10.4% Voice 94.0% 93.9% 94.2% Voice 94.2
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.
Slide 26: Performance Highlights | Data – Gross Revenue
PERFORMANCE HIGHLIGHTS | DATA – GROSS REVENUE 1619 1688 431 433 1471 407 1347 186 208 52 50 157 53 0.0 0.1 134 239 61 74 86 USD Mn USD Mn 154 202 131 1082 1160 1231 1240 292 305 297 FY14 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Y-o-Y Growth % YoY QoQ Q-o-Q Growth % FY15 FY16 FY17 Traditional 1.7% (2.
Slide 27: Performance Highlights | Data – EBITDA
PERFORMANCE HIGHLIGHTS | DATA – EBITDA 343 333 293 81 255 21 73 72 1 17 2 USD Mn USD Mn 2 3 4 352 351 6 251 305 90 88 82 (15) (30) (36) (10) (11) (9) (2) (8) (7) FY14 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Y-o-Y Margin % Q2FY17 Q1FY18 Q2FY18 Q-o-Q Margin % FY14 FY15 FY16 FY17 Traditional 30.8% 28.7%
Slide 28: Performance Highlights | Capital Expenditure
PERFORMANCE HIGHLIGHTS | CAPITAL EXPENDITURE 319 75 66 10 46 USD Mn USD Mn 263 0.3 6 6 1.0 12 35 224 51 69 5 10 33 87 4 17 63 0.1 Y-o-Y 12 Q-o-Q 48 52 198 137 124 23 FY15 FY16 FY17 Q2FY17 Q1FY18 Q2FY18 Data Sustenance Data Growth Voice Others • More than 80% of the Capex is spent on Data Business •
Slide 29: Performance Highlights | Net Debt
PERFORMANCE HIGHLIGHTS | NET DEBT 1380 1327 1438 1150 1204 1209 USD Mn Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Net Debt to EBITDA (x) Cost of Debt % 3.6 3.5 3.4 3.4 4.28% 3.3 3.80% 3.41% 3.30% 3.12% 3.24% 3.2 % x Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 •
Slide 30: Performance Highlights | TCTSL - Standalone
PERFORMANCE HIGHLIGHTS | TCTSL - STANDALONE Gross Revenue EBITDA 2462 2664 2707 372 338 Margin % INR Mn INR Mn 197 13.8% 12.7% 8.0% Q2FY17 Q1FY18 Q2FY18 Q2FY17 Q1FY18 Q2FY18 Headcount (Exit) 4479 4555 4531 Growth % YoY QoQ Count Gross Revenue 8.2% (1.6%) EBITDA 71.3% (9.2%) Q2FY17 Q1FY18 Q2F
Slide 31: Performance Highlights | TCPSL - Standalone
PERFORMANCE HIGHLIGHTS | TCPSL - STANDALONE Gross Revenue 95 EBITDA 1524 6.2% (17) 980 (177) Margin % 937 INR Mn INR Mn Q2FY17 Q1FY18 Q2FY18 (1.8%) (18.1%) Q2FY17 Q1FY18 Q2FY18 ATM Count 20971 17839 16798 8808 8395 Growth % YoY QoQ 8116 Count 12163 9444 8682 Gross Revenue (38.5%) (4.3%) Q2FY17 Q
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 Connected the recently-launched Seabras-1 cable system to its Wall, NJ cable landing station and its global network, offering the most direct link between the financial centres of New York City and São Paulo Additionally,
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