Slide 1: Analyst Meet cover letter to stock exchanges
ADITYA BIRLA June 27, 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: Analyst Meet Ref: “Idea Cellular Limited” (IDEA / 532822) Pursuant to regul
Slide 2: Idea Cellular Limited Telecom Analyst Meet, Mumbai
Idea Cellular Limited Telecom Analyst Meet, Mumbai 27th June 2016 1
Slide 3: Presentation Segments
Presentation Segments Industry & Idea Snapshot Mobile Voice Segment Mobile Data Segment Idea – Beyond mobility! Spectrum Landscape Idea – Consistent Performance on back of key strengths 2
Slide 4: Industry & Idea Snapshot
Industry & Idea Snapshot
Slide 5: Idea gaining amongst the highest incremental subscriber Net Adds share
Idea gaining amongst the highest incremental subscriber Net Adds share over last 4 years In Million FY12 FY13 FY14 FY15 FY16 Industry EoP VLR 682.9 723.0 790.9 862.6 936.5 Industry Incr. VLR 112.0 40.0 67.9 71.8 73.8 Idea EoP VLR 105.3 120.2 137.9 161.4 183.9 Idea Incr. VLR 22.0 14.9 17.7 23.5 22.5
Slide 6: The fastest growing Indian Telco for straight 8 years
Idea – The fastest growing Indian Telco for straight 8 years A Clear #2 in Incremental Revenue Market Share In Rs. Cr. FY12 FY13 FY14 FY15 FY16 Industry Gross Revenue 1,38,445 1,51,234 1,65,335 1,83,161 1,93,008 Industry Incr. Revenue 18,600 12,789 14,101 17,827 9,847 Industry Growth % 15.5% 9.2% 9.
Slide 7: The fastest growing Indian Telco for straight 8 years
Idea – The fastest growing Indian Telco for straight 8 years A Clear #2 in Incremental Revenue Market Share RMS IRMS FY’12-’16 FY12-16 FY15-16 33.7% 32.4% 31.4% Airtel 30.5% 30.7% 35.5% 44.8% 30.2% [ +1.6% ] 29.9% 28.5% 30.2% Rest of Ind. 26.6% 8.5% -9.6% [ -7.1% ] 23.1% 23.3% 23.1% Vodafone 22.1% 2
Slide 8: Mobile Voice Segment
Mobile Voice Segment 7
Slide 9: India Subscriber Penetration
India Subscriber Penetration Large headroom for new subscribers addition in India Mobility Active Subs - VLR (Mn) Subscriber Penetration - VLR % 1000 936 90% 900 863 85% • India VLR penetration remains low @ 73.7% 791 800 723 v/s Global average @ 92.1% (Global subs: 7.3 683 80% 700 Bn, Active: 6.8 B
Slide 10: Mobile Voice Segment Performance
Idea Mobile Voice Segment Performance Gaining both Revenue and Traffic share Voice* Revenue (Rs. Cr) Ind. Voice* Revenue Idea Voice* Revenue Idea Voice* RMS (%) 45,000 20.0% • Idea continues to outperform Industry Voice 40,000 39,945 39,481 (+others including VAS) revenue growth 37,205 18.6% 19.0% 3
Slide 11: Deep Mobile Voice Infrastructure, Expanding Coverage
Idea has Deep Mobile Voice Infrastructure, continues Expanding Coverage Brand Presence in nearly 4 lac towns & villages covering 1 Billion Indian Population 132-134K 1,26,833 2G sites EoP 1,12,367 1,04,778 90,094 83,190 FY12 FY13 FY14 FY15 FY16 FY17 E Incremental 2G sites 6,904 14,684 7,589 14,466 5
Slide 12: Wireless Voice Industry to transition to a consolidated state
Wireless Voice Industry to transition from a fragmented to a consolidated state Existing Scenario • Mobile Voice Segment characterized by intense competition - 8 to 10 operators in each service area Major recent developments impacting industry • Only Top 3 operators have successfully renewed all the
Slide 13: Mobile Data Segment
Mobile Data Segment 12
Slide 14: Mobile Data – The Next Big Opportunity in India
Internal Mobile Data – The Next Big Opportunity in India Mobile Internet Market 332 Million Internet users Penetration: 32.0% 312 Mn Approx. 312 Million 600 Mn Wireless Internet users Penetration 30.9% more users to adopt Mobile Data Services 912.1 Mn Active Indians on Mobile Voice 120 Million India
Slide 15: Large Potential for Data Penetration in India
Large Potential for Data Penetration in India Smartphone Penetration - as a % of Connections* (3G+4G) Market Penetration (Connections) - as a % of • India: ~85 Mn Smartphones added in last FY* Population* 79.1% 77.8% • Idea smartphone pen% – 34.5% (60.4 Mn) – 69.6% 69.0% 143.2% 65.6% March ‘16 128.5
Slide 16: Building a World Class Indian Mobile Broadband Infra
Building a World Class Indian Mobile Broadband Infra Pride of country and envy of world Top Indian Private Mobile Operators are now working at breakneck speeds to create a world class Digital Highway Coverage expansion* Network Rollout 1.1 Billion 3X roll out Indians to be covered • FY15: 40k by wir
Slide 17: Mobile data adoption likely to follow mobile voice trajectory
Mobile data adoption likely to have similar trajectory as that of historic mobile voice penetration in India History to repeat itself Industry Reported EoP Subs (Mn.) Industry VLR Subs Phase 1 Phase 2 Phase 3 Phase 4 Introduction of Coverage Exponential Consumer adoption 1,034 970 mobile telephony e
Slide 18: Mobile Data Segment Performance
Idea Mobile Data Segment Performance Gaining both Revenue and Traffic share Data Revenue (Rs. Cr) Ind. Data Revenue Idea Data Revenue Idea Data RMS (%) 10,000 24.0% • Faster than Industry mobile data revenue growth 9,000 8,703 8,000 20.7% 22.0% YoY rev. grow th Q3FY15 Q3FY16 7,000 6,607 18.8% 26.9%
Slide 19: Building wide & deep Mobile Broadband Infrastructure
Idea in midst of building wide & deep Mobile Broadband Infrastructure Massive expansion in 3G & launch of 4G services in CY16 3G Sites EoP 4G Sites EoP ~100,000 Addition of nearly 35,000 sites in FY16, expected to add similar number of sites in FY17 on current spectrum 64,703 14,643 50,060 30,291 21
Slide 20: Deploying Fibre and PoPs at an increasing pace
Deploying Fibre and PoPs at an increasing pace every year Fibre (kms) PoPs (nos.) 9.5 – 10k 7,220 5,000 • Aggressive investment in Fibre to continue • Reaching the golden mark of 1 Fibre PoP 2,308 2,500 for every 10 mobile broadband sites 130-135k 1,15,500 93,400 82,000 74,000 FY13 FY14 FY15 FY16 FY
Slide 21: Expect 4–5 serious players in Mobile Broadband segment
Expect 4–5 serious players in Mobile Broadband segment to compete fastest growing Mobility revenue segment Existing Scenario • Mobile Broadband Data – an emerging high growth segment with lower competition – 2 to 3 serious operators in each of the service areas Major recent developments impacting in
Slide 22: Idea – Beyond mobility!
Idea – Beyond mobility! 21
Slide 23: Tower Infrastructure Business
Idea Tower Infrastructure Business Tower Market & Idea Total Towers & Tenancies including 16% share in Indus Count Tenancy 16% Indus Combined Particulars Particulars ICL/ICISL Towers Tenancies Ratio share entity Total Industry* 4,15,000 7,60,000 1.83 No. of Towers 9,836 19,181 29,017 Idea ** 29,017
Slide 24: Entry into Digital Content Services
Idea’s entry into Digital Content Services Idea Music Idea Games Idea Videos Idea TV Idea News Idea Mags Idea Storage Discussions in progress…FY17 launch 23
Slide 25: Digital Wallets and Payments Bank
Idea Digital Wallets and Payments Bank • Mobiles being used to pay for goods, services, digital content, P2P transfers at physical (PoS) or remote (internet transactions) locations • Aditya Birla Nuvo Limited (ABNL) got In-principle approval from RBI for Payments Bank. Idea holds 49% stake in a Join
Slide 26: Spectrum Landscape
Spectrum Landscape 25
Slide 27: Spectrum – Key 'Raw Material'
Spectrum – Key ‘Raw Material’ • Spectrum most important ingredient for Mobile telephony services infrastructure • Historically, India has been a spectrum starved society Per Service Area 700 MHz 800 MHz 900 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz Total March 2016 12.5 - 15 15 - 22 30-35 15 40 115.5
Slide 28: Spectrum Auctions so far…
Spectrum Auctions so far… • Idea acquired ~237 MHz of spectrum, committing over Rs. 480 billion from 2010 to 2015 May'10 Nov'12/Mar'13 Feb'14 Mar'15 Total Payout - 2010 to 2015 in Rs. Bn Renewal Data Renewal Data Renewal Data Renewal Data Renewal Data Total Idea - 58 20 - 28 77 227 74 275 208 484 Ot
Slide 29: Building a Competitive Spectrum Profile
Idea building a Competitive Spectrum Profile Current Spectrum Profile (in MHz) Capability to Offer Circles 1800 900 1800 LTE 2100 Total GSM 3G LTE GSM Maharashtra 4+5 4 5.0* 5 23 Kerala 6 10 5 21 • Competitive portfolio of 3G M.P. 7.4 2 5 5 19.4 and 4G capable spectrum – Punjab
Slide 30: Harmonization activity completed – Awaiting DoT allocation
Harmonization activity completed – Awaiting DoT allocation of partial spectrum • Availability of 1800 MHz spectrum in the entire service area from an earlier partial state in - Maharashtra & Goa: key markets of Pune and Nasik to get 4G LTE offering - Punjab: key markets of Ludhiana and Amritsar to g
Slide 31: Spectrum Auctions 2016 – Availability
Spectrum Auctions 2016 – Availability More than 2,000 MHz of spectrum available across bands Total Spectrum Availability (MHz) 1800 MHz ^ Circle 2100 2300 2500 700 MHz 800 MHz 900 MHz Harm onization + Total Expiry Total MHz MHz* MHz* Unsold Andhra Pradesh 35.0 6.3 - 4.4 - 4.4 20.0 20.0 40.0 125.7 As
Slide 32: Idea – Consistent Performance on back of key strengths
Idea – Consistent Performance on back of key strengths 31
Slide 33: Delivering Robust Revenue & EBITDA growth
Delivering Robust Revenue & EBITDA growth CAGR of 16.5% Revenue, 26.8% EBITDA & 10.4% margin improvement over past 4 years Revenue EBITDA EBITDA Margin % (Rs. Cr) (Rs. Cr) +2.0% 36.2% EBITDA +3.0% 34.2% Margin 31.3% +4.6% 25.8% +0.8% 26.6% +14.0% 35,981 +19.1% 31,571 +4,410 +18.1% +14.9% 26,519 +5,0
Slide 34: Increasing data contribution driving higher EBITDA margin
Increasing data contribution to revenue driving higher EBITDA margin Data as a % to Service Revenue EBITDA Margin % 33.1% 31.0% 9.4% Margin improvement 27.7% 23.7% 19.4% +4.9% +5.7% 14.6% 13.9% increase in +3.3% 8.9% Data contribution 5.6% FY13 FY14 FY15 FY16 • Projected Mobile Data contribution to
Slide 35: Financial Trending
Idea Financial Trending Rs Cr Growing Cash Profit Rs Cr Capex Trends 8,000 7,769 10,120 10,000 8,482 6,000 8,000 6,435 4,046 6,000 4,000 3,683 3,568 4,697 3,360 4,000 3,608 2,000 2,000 0 0 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Gross Block+CWIP Net Block+CWIP Rs Cr Net Debt Net Debt to EB
Slide 36: Innovative Distribution & Servicing Model
Innovative Distribution & Servicing Model A Wide Distribution Channel to capitalize on Rapid Network Expansion 1.6 Million Transacting Retailers 1 Million Data Selling O/Ls 33,000+ Distributors 8,000+ Idea Service Stores 54,000+ DSEs across formats Digital Sales & Service: 15,500+ agents, Servicing
Slide 37: Brand Philosophy
Brand Philosophy From Category Building in Voice Segment to Establishing Relevance of Data segment • Need for Mobile Voice services well established, consumers understood the proposition • However, limited awareness and digital illiteracy create hurdles to ‘Internet adoption’, and therefore Mobile D
Slide 38: Brand Philosophy
Brand Philosophy Reposition Idea to move the Idea Mobile Internet TG up First Time for Idea For them , Online life = Real Life Creating/Curating/ Connecting online content High ARPU Traditionally high end, elite & knowledge workers Mid to High end Smartphones ( Rs. 15k +) Focus Geos : Metros/LTC Ide
Slide 39: Financials Projections by Analysts
Financials Projections by Analysts In Rs. Crs FY17 FY18 FY19 FY20 FY21 Gross Revenue Market Consensus 2,16,401 2,35,593 2,57,967 2,83,030 3,06,409 Growth 12.1% 8.9% 9.5% 9.7% 8.3% Data Revenue Average 52,712 70,718 93,102 1,16,108 1,41,485 Growth 38.4% 34.2% 31.7% 24.7% 21.9% Based on information sh
Slide 40: Thank you
Thank you