Indus Towers Limited · NSE:INDUSTOWER
Indus Towers — Bharti Infratel — Investor Presentation (May 2015)
36 slides from Indus Towers's investor presentation, May 2015
Slide 1: Investor Presentation
Investor Presentation May 2015
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by Bharti Infratel Limited (the “Company”) for use in presentations by the Company
Slide 3: Table of Contents
Table of Contents Company Overview Industry Overview Business Model Strengths In Summary 3 of 36
Slide 4: Company Overview
(, Company Overview
Slide 5: Bharti Infratel – Who We Are?
Bharti Infratel – Who We Are? A Leading Tower Infrastructure Operator Pan India Presence across all 22 Telecommunications Circles Indus Towers – JV between Bharti Infratel, Vodafone and Aditya Birla Telecom Top 3 Operators – Anchor Customers & Relationships with all other Operators Marquee promoter
Slide 6: Performance at a Glance
Performance at a Glance 85,892 towers and 182,294 co-locations(1) Market share in terms of installed tower base, FY12 37,196 towers of Bharti Infratel and 48,696 towers from 42% stake in Indus (1) Infratel + Indus(1) : 37.8% Others 10.6% Indus 29.0% FY15 Consolidated Revenue of US$1,867m Viom 11.2%
Slide 7: Pan India Footprint: Leading Positions Across India
Pan India Footprint : Leading Positions Across India Pan India presence ⁻ Opportunities for voice growth in rural areas given rural penetration of 46.56%(1) ⁻ 3G/4G services to drive data consumption ⁻ Given inadequate wire-line infrastructure, wireless services expected to cater to new demand Bhart
Slide 8: Industry Overview
(, Industry Overview
Slide 9: Operator Industry Dynamics
Operator Industry Dynamics Market Concentrated in Hands of Select Players The Indian market is dominated by the top 3 operators: BIL's Anchor Tenants Others BSNl+MTNL Aircel 3.5% 5.6% 5.6% Bharti Airtel Rcom 31.0% TTSL 7.2% 6.2% Idea Cellular 17.5% Vodafone 23.4% Anchor tenants : 71.9% RMS Non-discr
Slide 10: Data Revolution Unfolding
Data Revolution Unfolding • Favorable demographics –Median Age of India’s population ~26 years • Broadband penetration ~1%1 • Urban Internet penetration ~6%2 India added 27.1 m users to overtake Japan as the world’s third largest internet population during Q4 FY14 Wireless: Preferred access for Data
Slide 11: Continuing Voice Led Growth
Continuing Voice Led Growth Growth opportunities remain in rural and semi urban voice market Rural penetration still ~ 46% - significant headroom Both coverage and capacity requirements to fuel tower and co-location demand Lower ARPUs further necessitate sharing for ensuring operational efficiency W
Slide 12: Increasing Operator Focus on Data
Increasing Operator Focus on Data An operator agnostic business model, superior network footprint and service quality standards allow Bharti Infratel to capitalize on the growth in the data market Operator Investment in Licenses Investments by Anchor Operators5 3G/4G auctions held since 2010 led t
Slide 13: Growing Smartphone Penetration
Growing Smartphone Penetration Increasing Smart Phone Shipments in the Indian Market The India smartphone market grew by 13% (on a y- o-y basis) in Q4 2014, with a total volume of 22.5m shipped 100% 90% 19% 22% 28% 29% 32% 80% 35% 70% 60% Price points to bring penetration higher– smartphone 50% pene
Slide 14: Data Growth Forecasts
Data Growth Forecasts Growth in Data Volumes Could Lead to Significant Upside Decreasing smartphone prices, availability of affordable data plans will lead to growth in data users by 42% 500 Technology in India (m) Total Wireless SIMs by 3G SIMs 4G SIMs 400 12 CAGR: 42.3% 4 300 2 200 1 412 329 100
Slide 15: Phases of Data led Tower Revenue Growth
Phases of Data led Tower Revenue Growth Airtel has 100 sites in Delhi Due to Propagation effect Total Towers available with Circle (900 + 1800 Mhz) for 2G Airtel will need 150 sites on Indus in Delhi - 135 coverage 2100 MHz for 3G Loading all the existing Loading Revenue for STAGE 1 100 sites with 3
Slide 16: Business Model Strengths
(, Business Model Strengths
Slide 17: Business Model Strengths
Business Model Strengths 1 A Leading Tower Infrastructure Operator 2 Visibility of Future Revenues Through Long Term Contracts 3 Demonstrated Operational and Financial Performance 4 Implementation of Green Initiatives 5 Experienced Management 17 of 36
Slide 18: A Leading Global Tower Infrastructure Operator
1 A Leading Global Tower Infrastructure Operator Indian Tower Companies(1) Global Listed Tower Companies(1) Sharing Ratio: 2.11(2) 1.00 1.84 2.38 1.45 1.9 2.4 1.9 1.7 0.9 160 140 120 67 Bharti Infratel + 42% equity interest in Indus 100 Towers (‘000s) 80 60 40 86 69 67 43 20 42 ~40 41 27 20 11 10 0
Slide 19: Long Term Contracts with Visibility of Future Growth
2 Long Term Contracts with Visibility of Future Growth Key Features of Master Service Agreements (MSAs) Tenor Long term (10 to 15 years) with built in escalations (2.5% p.a) Termination Penalty Significant exit penalties A base rental rate is applicable, based on the following factors: Base Re
Slide 20: Business Model Unique to India
2 Business Model Unique to India Key Features of Master Service Agreements unique to India unlike US Tower Cos Purpose Key Feature Result • It is not economically rewarding for the operators No Operator in India is building towers on Disarming The Operators to build new towers themselves their own n
Slide 21: Demonstrated Operational and Financial Performance: Towers and Co-locations
3 Demonstrated Operational and Financial Performance Stable tower growth… 90,000 CAGR: 3.0% 85,892 Towers(1) 85,000 83,368 82,083 80,000 78,442 79,064 75,000 73,921 70,000 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 …coupled with an increase in co-locations 1.57 1.75 1.85 1.90 1.96 2.11 200,000
Slide 22: Demonstrated Operational and Financial Performance: Revenues and EBITDA
3 Demonstrated Operational and Financial Performance Strong revenue growth… Strong Operating Leverage 2000 1867 Revenues(1)(2) (US$m) CAGR: 10.7% 1732 Indexed to 100 CAGR 1636 1360 1512 1500 1121 1000 56.5% 500 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 … expanding margins… 900 CAGR: 16.0% 802
Slide 23: Focus on Delivering Shareholder Value
3 Focus on Delivering Shareholder Value Bharti Infratel is focused on delivering return to its shareholders through multi-pronged strategy Pursuit of viable value accretive inorganic growth Bharti Infratel is focused on identifying opportunities for inorganic growth that are value accretive and fe
Slide 24: Performance Since IPO
3 Performance Since IPO Operating Metrics Revenue1 (US$m) 1.91 2.11 Tower 471 Growth: 6.5% 182,294 Growth: 15.3% 154,296 Co-Lo Growth 80,656 18.2% 85,892 409 Sep-12 Mar-15 Sep-12 Mar-15 Towers Co-Locations Average Sharing Factor Revenue EBITDA1 (US$m) PAT (US$m) 80 240 49.00% 19.40% 19.00% 213 47.00
Slide 25: Quarterly Performance Reposed Significant Growth
3 Quarterly Performance Reposed Significant Growth Co-locations Revenue1 (US$m) 185,000 490 182,294 180,000 Y-o-Y Growth: 9.0% 178,748 480 Y-o-Y Growth: 5.6% 472 471 174,270 469 175,000 470 170,320 170,000 460 455 167,202 165,000 450 446 160,000 440 155,000 430 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Mar
Slide 26: Implementation of Green Initiatives
4 Implementation of Green Initiatives Bharti Infratel has institutionalized ‘GreenTowers P7’ programme, aimed at minimizing dependency on diesel consumption and thereby, reducing the carbon footprint The ‘GreenTowers P7’ programme is based on seven innovative ideas deploying cleaner energy techn
Slide 27: Experienced Management Team
5 Experienced Management Team Joined Bharti Infratel in March 2008 as Director Work experience of 29 years Akhil Gupta Certified Chartered Accountant and fellow member of ICAI. Completed an advanced management program at Chairman Harvard Business School. Has received various awards including
Slide 28: CSR, Awards and Recognition
CSR, Awards and Recognition Awards and Recognition Best Employer Award 2015 • Aon Hewitt released the list and Bharti Infratel is one of the 11 best Employers in India, also received a special category award for "Commitment to Engagement" National Quality Excellence Award 2015 • World Quality Congre
Slide 29: In Summary
(, In Summary
Slide 30: Company Strategy
Company Strategy Promote Tower Sharing Capitalize on the Rollout of New Technologies Organic Growth and Acquisition Opportunities and Data Services Achieving Cost Efficiencies Across Increasing Revenue and Capital Productivity Tower Portfolios 30 of 36
Slide 31: Investment Thesis
Investment Thesis Demonstrated Operational and Financial Performance Insulated from Major Concerns - $-Re, Continuing Voice led Growth Leverage, Import Dependence Operator Agnostic way to benefit Experienced Management Team from Data Growth High Standards of Corporate Regulatory Environment Favorabl
Slide 32: Appendix
Appendix
Slide 33: Bharti Infratel Overview
Bharti Infratel Overview Corporate Structure Public(1) Vodafone Idea #2 Wireless Operator(4) #3 Wireless Operator(4) 28.1% 42% 100% 71.9% Bharti Infratel Indus Towers 42% 16% Aditya Bharti Airtel Birla 85,892 Towers(2) Telecom 115,942 Towers(3) #1 Wireless Operator(4) #1 Tower Company(5) #2 Tower Co
Slide 34: Impact of Data Growth on Tower Industry
Impact of Data Growth on Tower Industry Expansion of 3G / 4G Networks by Operators will necessitate demand for towers Propagation on higher frequency band weaker Data usage to drive co-location growth 3G/4G only sites to drive tower demand Propagation effects in different bands Tower Multipl
Slide 35: Regulatory Environment Favourable
Regulatory Environment Favourable The Cabinet Committee on Infrastructure has included “Telecommunication towers” as a infrastructure sub-sector in the master list Potential Benefits Impact Accelerated depreciation Encourages further investments in expanding the telecom infrastructure to rural areas
Slide 36: Investor Presentation
Investor Presentation May 2015