Slide 1: Investor Presentation 1st Quarter FY2019
INVESTOR PRESENTATION 1ST QUARTER - FY2019
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 “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 (10th Year in a row) Transparency International, a global civil society organization, • E
Slide 18: Positioned in the Leaders' Quadrant
POSITIONED IN THE LEADERS’ QUADRANT “LEADER” IN GARTNER MAGIC QUADRANT FOR NETWORK SERVICES, GLOBAL FOR 5TH CONSECUTIVE YEAR • Our products have been getting analyst recognition and are consistently featured in Gartner Magic Quadrant • This year we debuted as a niche player in MQ for managed hybrid
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 4.9% 5.2% 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 2906 2850 668 623 2627 2583 584 1436 1231 238 173 153 1008 824 USD Mn USD Mn 1619 1619 1759 431 450 431 1471 FY15 FY16 FY17 FY18 Q1 FY18 Q4 FY18 Q1 FY19 Y-o-Y Q-o-Q Growth % FY16 FY17 FY18 Growth % YoY QoQ Data 10.1% 0.0% 8.6% Data 0.1% (4.2%)
Slide 23: Performance Highlights | Core – EBITDA
PERFORMANCE HIGHLIGHTS | CORE – EBITDA 397 420 352 355 86.6 86.3 83.0 77 104 52 14 11 62 10 USD Mn USD Mn 293 343 290 303 73 75 73 FY15 FY16 FY17 FY18 Q1 FY18 Q4 FY18 Q1 FY19 Y-o-Y Q-o-Q Margin % FY15 FY16 FY17 FY18 Margin % Q1FY18 Q4FY18 Q1FY19 Data 19.9% 21.2% 17.9% 17.2% Data 17% 16.7% 16.
Slide 24: Performance Highlights | Core – Operating FCF
PERFORMANCE HIGHLIGHTS | CORE – OPERATING FCF 13 72 11 USD Mn USD Mn 51 59 39 36 120 120 10 92 10 FY16 FY17 FY18 Q1 FY18 Q4 FY18 Q1 FY19 Y-o-Y Q-o-Q EBITDA to FCF FY16 FY17 FY18 EBITDA to FCF Q1FY18 Q4FY18 Q1FY19 Data 34.9% 31.9% 39.5% Data 52.9% 47.8% 14.1% Voice 93.9% 95.9% 97.5% Voice 9
Slide 25: Performance Highlights | Portfolio Mix
PERFORMANCE HIGHLIGHTS | PORTFOLIO MIX Gross Revenue Mix EBITDA Mix Operating Free Cash Flow Mix 5.4% 6.5% 7.9% 8.2% 5.3% 7.1% 9.7% 13.4% (12.0%) (11.6%) Data- 50.6% (3.7%) (7.1%) 39.9% - (4.0%) (9.7%) 62.3% 60.9% 0.6% Data- 85.4% - Data- 68.1% 43.2% 4.9% 4.9% 70.2% 44.0% 7.1% Data- 73.8% 46.5% 76.9
Slide 26: Performance Highlights | Data – Gross Revenue
PERFORMANCE HIGHLIGHTS | DATA – GROSS REVENUE 1759 450 1619 1619 431 431 1471 212 0.4 186 208 52 56 0.2 51 0.4 157 - 0.0 - 154 202 255 0.1 346 74 97 89 USD Mn USD Mn 1160 1231 1156 1201 305 297 291 FY15 FY16 FY17 FY18 Q1 FY18 Q4 FY18 Q1 FY19 Y-o-Y Growth % FY16 FY17 FY18 Growth % YoY QoQ Q-o-Q Tradi
Slide 27: Performance Highlights | Data – EBITDA
PERFORMANCE HIGHLIGHTS | DATA – EBITDA 343 303 290 293 - 21 25 75 73 - 2 17 73 4 9 5 USD Mn USD Mn 305 352 328 355 88 90 90 (15) (30) (41) (43) (11) (14) (9) (14) (8) (11) (13) FY15 FY16 FY17 FY18 (34) Q1 FY18 Q4 FY18 Q1 FY19 Y-o-Y Margin % FY15 FY16 FY17 FY18 Margin % Q1FY18 Q4FY18 Q1FY19 Q-o-Q Tra
Slide 28: Performance Highlights | Capital Expenditure
PERFORMANCE HIGHLIGHTS | CAPITAL EXPENDITURE 72.3 9.6 USD Mn USD Mn 263 0.4 237 235 35 51.0 51.7 5 37 50 27.4 3 12.0 87 1 16.5 48 0.4 66 0.1 Y-o-Y 11.7 17.3 Q-o-Q 137 149 35.0 118 22.7 22.0 FY16 FY17 FY18 Q1 FY18 Q4 FY18 Q1 FY19 Data Sustenance Data Growth Voice Others • Q1 capex was at USD 72 Mn; i
Slide 29: Performance Highlights | Net Debt
PERFORMANCE HIGHLIGHTS | NET DEBT 1380 1327 1438 1150 1204 1209 1254 1151 1268 USD Mn Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun'18 Net Debt to EBITDA (x) Cost of Debt % 3.8 3.5 3.6 3.6 3.3 3.4 3.4 4.28% 3.80% 3.87% 3.2 3.41% 3.12% 3.24% 3.30% 3.60% 3.59% 3.2 % x Mar'14 Mar'15 Mar'1
Slide 30: Performance Highlights | TCTSL - Standalone
PERFORMANCE HIGHLIGHTS | TCTSL - STANDALONE 2707 Gross Revenue 2755 EBITDA 2962 486 372 308 Margin % INR Mn INR Mn 16.4% 13.8% 11.2% Q1 FY18 Q4 FY18 Q1 FY19 Q1 FY18 Q4 FY18 Q1 FY19 Headcount (Exit) 4555 4323 3903 Growth % YoY QoQ Count Gross Revenue 1.8% (7.0%) EBITDA (17.3%) (36.7%) Q1 FY18 Q
Slide 31: Performance Highlights | TCPSL - Standalone
PERFORMANCE HIGHLIGHTS | TCPSL - STANDALONE Gross1002 Revenue EBITDA Q1 FY18 Q4 FY18 Q1 FY19 980 Margin % INR Mn INR Mn 968 (177) 3 (37) Q1 FY18 Q4 FY18 Q1 FY19 0.3% (3.8%) (18.1%) ATM Count 17839 16167 15179 8395 Growth % YoY QoQ 8435 8263 Count 9444 7732 6916 Gross Revenue (1.2%) (3.3%) Q1 FY1
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 ❑ Riding on global data growth ❑ Digital Transformation and Cloud adoption to drive the business growth ❑ Transformation driving demand for SD WAN and network virtualisation services ❑ Positioned for the first time by Gartner in its 2017 Magic Quadrant for Managed Hybrid Cloud Hosting,
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