Slide 1: Leadership Lessons of a Challenger
Leadership Lessons of a Challenger Himanshu Kapania Managing Director, Idea Cellular Limited 4th Mar 2014 Public 1
Slide 2: The most important thing is to dream audaciously
Public “ …The most important thing is to dream audaciously, and to pursue that big dream with all the passion and fire within you. Its about reaching for that dream, no matter what and riding even the most gigantic waves of turbulence and disruption, much like a champion surfer… ” – Kumar Mangalam B
Slide 3: Year 2008 – A new journey begins for Idea
Public Year 2008 – A new journey begins for Idea Indian Mobility – a Rs 833 Bn industry in FY08 Revenue Market Share Q1 FY08 30% 28.4% 25% 20% 17.8% 16.7% 15% 13.5% 9.8% 9.6% 10% 4.2% 5% 0% Bharti Voda RCom BSNL Idea Tata Others Idea – a clear challenger at 5th place Source: TRAI published data 3
Slide 4: Finding a Gap & Playing on Strengths
Public Finding a Gap & Playing on Strengths 5 existing players became pan-India GSM operators in 2008 3 new players enter the market Chose to intensify the battle in already crowded urban India Idea chose its contrarian path – ‘Bharat’ Focused on hinterland comprising Idea’s 15 established markets T
Slide 5: Latent unmet demand for basic voice services
Public Latent unmet demand for basic voice services Mobility Subs EoP (Mn) Subs Penetration 76.0% 1,000 70.9% 71.7% 80% 68.0% 900 919 70% o VLR penetration today is at just 60% 800 868 886 700 49.6% 806 60% nationally 50% 600 500 33.7% 584 40% o Factor in multiple-SIMs and it is 400 22.8% 30% furthe
Slide 6: Idea’s strength in Rural Markets
Public Idea’s strength in Rural Markets Industry Mobility Rural Subs Proportion 40.2% 54.4% !DEA Mobility Rural Subs Proportion Large scope of growth for Idea given its strong presence in underpenetrated Rural Markets 6 Source: TRAI published data as of Sep 2013
Slide 7: Potential in voice business that is yet to be captured by the industry
Public I Potential in voice business that is yet to be captured by the industry 7
Slide 8: Next Round – The Data Game
Internal Next Round – The Data Game 886 Mn Indians on Mobile Voice One to One One to Many Internet on Mobile Central Role in the Transition to Digital Lifestyle 8 Source: TRAI published data as of Sep 2013
Slide 9: Next Round – The Data Game: 210 Mn Indians had Internet Access
Internal Next Round – The Data Game In 2013, 210 Mn Indians had Internet Access 188 Mn of them on Mobile Internet! More than 600 Mn waiting to be connected… in next 4-5 yrs 9 Source: TRAI published data as of Sep 2013
Slide 10: APAC Data Penetration vis-à-vis India
Internal APAC Data Penetration vis-à-vis India Smartphone Penetration % Data Users Penetration % 100% 95.0% 95.0% 90% 80% 68.6% 72.0% 70% 62.6% 60% 49.5% 50.4% 49.9% 52.2% 50% 47.6% 44.6% 38.1% 38.8% 37.0% 35.3% 40% 26.0% 29.8% 23.6% 30% 26.1% 20% 16.0% 10.0% 13.0% 10% 0% Korea Japan Malaysia APAC A
Slide 11: Data Adoption increasing among Idea Subscribers
Public Data Adoption increasing among Idea Subscribers 3G Devices on Idea Network (Mn) 3G EOP 3G Devices % Total Subs 15.1 16 14% 12.7 14 12% 10.6 12 9.5 11.7% 8.2 10% 10 10.0% 8% 8 8.5% 7.8% 6% 6 7.2% 8.7 4% 4 5.1 5.5 6.2 2 4.1 2% Data Users (Mn) 0 0% 26% Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 40 28% 25% 35
Slide 12: Rising Data Usage and Revenue for Idea
Public Rising Data Usage and Revenue for Idea Data Revenue Data Rev % GSR (Rs Mn) 9.5% 2G Data Traffic (Mn MB) 3G Data Traffic (Mn MB) 7,000 8.7% 9% 6,000 7.3% 8% 20,840 6.4% 6,169 7% 17,451 5,000 5.6% 5,415 6% 13,791 9,469 4,000 4,616 5% 11,421 7,578 4% 10,040 3,874 6,334 3,000 3% 5,231 3,108 4,512
Slide 13: Data usage is not just an Urban phenomenon
Public II Data usage is not just an Urban phenomenon Rural consumers are discovering data usage And that’s bringing in fast Data growth 13
Slide 14: In 6 Years, Idea moved from No.5 to No.3 in RMS
Public In 6 Years, Idea moved from No.5 to No.3 in RMS High Incremental Revenue Share will continue to drive Idea RMS IRMS Q3 ’08-’14 33.1% 32.3% BHARTI 31.2% 31.3% 30.5% [ +0.8% ] 30.2% 29.7% 29.7% 23.0% VODA 22.3% 22.4% 27.2% 21.2% [ +4.1% ] 20.8% 19.9% 18.9% 16.1% 15.4% 14.8% IDEA 23.0% 14.4% 13.
Slide 15: In fact, Idea is One Among Top 3, Not No. 3
Public In fact, Idea is One Among Top 3, Not No. 3 Growing at 2.5 times over ‘Rest of the Industry’ Ind. YoY Growth – 10.2% Industry Revenue Trends Idea YoY Growth – 20.0% Idea Rev Rest of Ind. Rev Incremental Revenue YoY Rs. Bn Incr Rev Q3'14 vs. Q3'13 Industry Incr Rev: Rs.38.6 Bn Total Ind. Rev 4
Slide 16: Idea Financials - High Growth Trend Continues
Public Idea Financials* - High Growth Trend Continues Rs. Mn. Gross Revenue EBITDA EBITDA % 66,105 20,000 18,436 30.0% 65,355 18,000 17,430 18,135 63,170 16,000 15,037 28.0% 60,951 14,000 12,889 12,615 13,173 28.2% 27.6% 27.4% 12,000 26.0% 10,000 56,135 8,000 24.0% 55,382 24.7% 6,000 53,481 23.6% 23
Slide 17: Investment Efficiency
Public Idea Financials* Improving Investment Efficiency and Strengthening Balance Sheet 17.8% Capex to Sales Ratio RoI Free Cash Flow (incl. Dividend) (Rs. Mn) 11,617 11,092 Investment Efficiency 14.8% 14.8% 13.1% 12.3% 10.7% 11.2% 5,909 5,941 7.8% 7.3% 7.1% Capex: Rs.19.2 Bn ROI = EBIT / Net Block
Slide 18: Width & Depth of Reach remains the Mantra
Public Width & Depth of Reach remains the Mantra Be it Network Coverage… 119,356 107,234 19,128 2G Sites 3G Sites 96,015 17,140 12,825 100,228 90,094 83,190 73,668 66,188 49,856 29,010 10,119 4,763 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Dec '13 …or Distribution presence 1,300,000 transacting retail
Slide 19: Brand Idea Empowers India
Public Brand Idea Empowers India 19
Slide 20: Pure-play mobility operator
Public III Pure-play mobility operator Focusing on basics of building infrastructure Honing our sharp execution skills 20
Slide 21: Idea well positioned with all technologies
Public Idea well positioned with all technologies Current Spectrum Profile Spectrum Utilisation Service Area (Holding in MHz) 900 1800 2100 GSM 3G LTE Maharashtra 7.8 11.0 5.0 √ √ √ Kerala 6.2 11.8 5.0 √ √ √ MP 6.2 8.8 5.0 √ √ √ UP West 6.2 1.8 5.0 √ √ x Andhra Pradesh 6.2 7.8 5.0 √ √ √ Gujarat 6.2
Slide 22: Important to invest in building cutting edge capabilities
Public IV Important to invest in building cutting edge capabilities Equally important to launch technology at ‘right time’ – neither too early nor too late 22
Slide 23: Lessons for ourselves
Public Lessons for ourselves What we believe we do right … o We remain a pure-play mobility player and embrace latest technologies at an opportune time o We continue to believe in the mass-market – bringing mobility solutions within the reach of Bharat o We stick to our basics and continue to hone o
Slide 24: THANK YOU
Public THANK YOU 24