bharti airtel limited - s3-ap-southeast-1. · pdf filebharti airtel limited akhil gupta ......

Bharti Airtel Limited

Akhil GuptaJoint Managing Director2007 Worldwide Wireless and Wireline Conference (organized by Lehman Brothers)

New YorkHotel Crown PlazaMay 30, 2007

Disclaimer

The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact us directly for any questions or clarifications at our end.

This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward looking statements.

Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social conditions in India. It is cautioned that the foregoing list is not exhaustive

This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any investment decision.

Investor Relations :- http://www.bhartiairtel.inFor any queries, write to: [email protected]

“The information contained herein does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.”

3

Mobile Services Broadband & Telephone Services Enterprise Services

India

4


among the top 5 economiesone of the fastest growing economies

4th Highest GDP in PPP terms 2nd Highest GDP Growth 2003-2006

India – placing in the world

Source: World Development Indicators 2006 & Citigroup Estimates

2,3263,3633,774

7,124

11,628

0

3,500

7,000

10,500

14,000

US China Japan India Germany

(In U

SD

Bn)

China

India

Russia

Mexico

Brazil

US

Canada

UK

Japan

France

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

5


Largest democracy in the world.

Separation of executive and judiciary.

Well diversified industrial base.

Dominant private sector.

High standards of accounting and audit practices.

Large & sophisticated financial architecture:

World class central banking system and robust banking industry.

Transparent and mature currency markets.

Robust capital markets.

World class IT & telecom infrastructure.

India – strong fundamentals

6


Second most attractive investment destination – ATKEARNEY Business Confidence Index

Continues to be the best BPO destination - AT KEARNEY

200 of Fortune 500 companies are present in India;

NSE ranks 3rd and BSE ranks 5th in terms of number of trades;

Best technology licensing regime - UNCTAD’s Global Competitiveness Report

Among the top three investment hotspots - UNCTAD and Corporate Location Survey

Major destination for foreign venture capital funds - Far Eastern Economic Review

Amongst the only three Asian countries with super computing competence.

An Emerged India – preferred destination

7


20-59 yrs50.7%

0-19 yrs41.8%

60yrs & above7.5%

India – consumption driven growth

Increasing consumer

spend

Rising income level

Increasing consumerism

Growing availability of retail credit

household consumption to double by 2008 (Report by ML dated 08/08/03)

telecom sector …..one of the many beneficiaries

Largest youth populationGrowing literacy rateLarge pool of professionals and technocrats

8


Indian telecom

9


Indian telecom – growing share in world telecom

indian telecom – well placed in world telecom space

Source: Based on data in Global Wireless Matrix 4Q06- Merrill Lynch .COAI & AUSPI data as on April 30, 2007

- Total Telecom Base ~ 214 Million Amongst top five in the world

- Wireless Sub Base ~ 168 Million 3rd largest in the world

- Wireless Penetration ~ 15 % Lowest in the world

- ARPU < USD 10 One of the lowest

- Mou/Sub/Month ~ 460 minutes 2nd highest in the world

- Realised RPM ~ 2 US cents/ min Lowest in the world(All Inclusive)

- Fixed line Sub Base ~ 46 Million

- Broadband Sub Base ~ 2 Million Large potential market

10


214

23

5

30

55

80

105

130

155

180

205

230

Mar-99Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05Mar-06 Apr-07

Tele

com

sub

scrib

ers

(Mn)

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

Tele-density

Telecom subscribers (LHS) Tele-density (RHS)

168

10

30

60

90

120

150

180

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Apr'07

Wir

eles

s Su

bscr

iber

s (M

n)Indian telecom – growth trajectory

CAGR 85% CAGR 32%

wireless exceeds fixed-line subscriber baseone of the fastest growing wireless market in the world

Source: AUSPI and COAI data

Indian telecom wireless led growth

11


Indian telecom – growing share in world telecom

Indian Telecom“the only large growth story emerging in the world”

“ India” - clearly set to lead world market based on total wireless subs after china

CountryWireless Subs (Mn) as at Mar

31,2007

Rank Net Adds (Mn) in Q1CL07

Rank

China 481 A 1 19.7 1US 239 A 2 7.2 3India 162 A 3 15.4 2Russia 156 E 4 3.7 4Brazil 102 A 5 1.4 5

Note: ‘A’ implies Actual subscriber data and ‘E’ implies estimated subscriber data

12


Indian wireless - competitive landscape

Source: AUSPI and COAI data for April 2007. Hutch subscriber base included BPL operations in Mumbai

highly competitive – top 4 garnering over 75% share

9.0

38.9

16.2

28.8

29

.8

30.3

14.6

23.2%

18.1% 17.8% 17.2%

9.7%

5.4%

8.7%

0.0

7.0

14.0

21.0

28.0

35.0

42.0

Bhar

ti (

GSM

)

BSN

L &

MTN

L(G

SM+

CD

MA

)

Relia

nce

(GSM

+C

DM

A)

Hut

ch (

GSM

)

Tata

(C

DM

A)

Idea

(G

SM)

Oth

ers

(GSM

+C

DM

A)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Customers (Mn) CMS (%)

13


Indian wireless – growth potential…

key growth driversaffordability (falling handset prices, lowest tariffs)availability (network, distribution)

Source: Global Wireless Matrix 4Q06- Merrill Lynch.

market estimatesCountry

Subs in Mn.

Pen / Pop

India in 2010 (if) 400 36%

china 461 35%philippines 42 48%canada 19 58%thailand 40 65%usa 231 77%Japan 100 78%malaysia 19 83%korea 40 83%singapore 5 106%uk 71 117%world average 46%

Current Status (Dec'06)

361

369

378

388

417

425

441

344

150 200 250 300 350 400 450

CLSA (Yr '10)

JPM (Yr '10)

Kotak (Yr '10)

LB (Yr '10)

Citigroup (Yr '10)

CS (Yr '10)

Macquarie (Yr '10)

UBS (Yr '10)

Wireless Subscribers (Mn)

14



15


Airtel - Integrated play

full scope telecommunications company

Mobile servicesBroadband &

Telephone servicesEnterprise services


Corporates Carriers

16


‘DELHI

Growth – combination of organic and inorganic growth.

Airtel – a growth journey

1996 2001 2003 2007

No. of circles1 5 15 23

17


Airtel - a snapshot

poised to….. create wealth

Note: 2007 Financials are as per USGAAP FY07 results , except Market Capitalization.

1996 2007Single Circle Operator + telephone instruments

Company Profile Largest integrated private telecom operator

< 25 k Customers > 39 mn

~ USD 16 mn Market Capitalisation ~ USD 40 bn3rd Largest in India

Net Profit ~ USD 988 mn

~ USD 3.3 mn

~ USD 17 mn

~ USD 1.4 mn

~ USD 2.5 mn EBITDA ~ USD 1.7 bn

Investment ~ USD 7.4 bn

Revenue ~ USD 4.3 bn

18


a snapshot - operational

rapidly expanding operations10th largest wireless operator in the world

Note: Customers are as at end of April 30, 2007 & operational data is as at the end of quarter ended March 31, 2007. Total minutes have been annualized base on Q4FY07 results

Total Customers 40.8 mnMobile 38.9 mnB&T 1.9 mn

Mobile coverageCensus Towns 4,676 (out of 5,161)Non - Census towns & villages 207,327 (out of 586,000)Population coverage 59%

B&T Coverage 94 cities High revenue potential areas

Total minutes on network 239 bn minutes

On Roll Employees No. 20,314 High employee productivity

Distribution outlets > 500 k One of the widest reach

Optic fiber laid (national) 48,037 km

Largest integrated private telecom Operator

Extensive mobile coverage

19


overall financial performance

Source: Results for the quarter and full year ended March 31, 2007 as per US GAAP.

robust growth……on all parameters

Amount in USD Million, except ratios

Mar. 31, 2007

Mar. 31, 2006

Y-o-Y Growth

Mar. 31, 2007

Mar. 31, 2006

Y-o-Y Growth

Total Subscribers (000's) 39,013 20,926 86% 39,013 20,926 86%

Customer Market Share wireless 22.9% 20.4% 22.9% 20.4%

Revenues 1,251 791 58% 4,297 2,696 59%

EBITDA 520 297 75% 1,729 1,006 72%

EBITDA Margin 41.5% 37.5% 40.2% 37.3%

Cash Profit from Operations 509 280 82% 1,695 948 79%

Earning before tax 350 172 103% 1,134 589 93%

Net Profit 314 158 98% 988 524 89%

ParametersQuarter Ended Full Year Ended

20


earnings & debt servicing

low gearing……high Interest cover……….further leverage available …..

gross debt: USD 1,217 Mnnet debt: USD 982 Mnshareholders equity: USD 3,145 Mn19.86

28.48

0.95

0.57

13.0

17.0

21.0

25.0

29.0

33.0Q

40

6

Q4

07

Tim

es

0.5

0.7

0.9

1.1

1.3

1.5

Times

Interest Coverage Ratio (LHS) Net Funded Debt to EBITDA (LTM) (RHS)

21


overall performance trendsCustomer Base

Revenues & Margins

Note: 1) All the financials are as per United States Generally Accepted Accounting Principles (US GAAP).2) Total minutes are gross of inter-segment eliminations.

Total Minutes on Network (Bn)

Profitability Ratios

29.635.6

59.7

50.842.4

11.0

21.0

31.0

41.0

51.0

61.0

Q406 Q107 Q207 Q307 Q407

20.9

28.7

33.7

24.6

39.037.1

32.0

27.123.1

19.6

1.3 1.5 1.6 1.7 1.9

0.0

14.0

28.0

42.0

Q406 Q107 Q207 Q307 Q407

Total (Mn) Mobile (Mn) B&T (Mn)

29% 30%32%

35%38%

29%26%

25%24%22%

12%

17%

22%

27%

32%

37%

42%

Q406 Q107 Q207 Q307 Q407

ROE (LTM) ROCE (LTM)

791 841

1,2511,114

948

36.3%

41.5%

350

550

750

950

1,150

1,350

Q406 Q107 Q207 Q307 Q40731.0%

33.5%

36.0%

38.5%

41.0%

43.5%

Revenues (USD Mn) EBITDA Margin (%)

22


mobile services

customer base (Apr'07) 38.89 mnwireless market share (Apr'07) 23.2%net additions (Apr'07) 1.75 mnoperational (as at end of Mar'07)

mobile minutes carried (Q4FY07) 49.24 Bn Mincensus towns 4,676non census towns & villages 207,327population covered 59%strategy mass market

23


560

659

766

872

984

39.1%

36.2%

500

600

700

800

900

1,000

Q406 Q107 Q207 Q307 Q40714.0%

18.0%

22.0%

26.0%

30.0%

34.0%

38.0%

42.0%

Revenues (USD Mn) EBITDA Margin (%)

3.33.5

4.0

5.24.9

9.9

10.9

2.0

3.0

4.0

5.0

6.0

Q406 Q107 Q207 Q307 Q4075.0

7.0

9.0

11.0

Net Addtions (Mn) ARPU (USD)

19.6

37.132.0

27.123.1

7.0

14.0

21.0

28.0

35.0

42.0

Q406 Q107 Q207 Q307 Q407

mobile performance trends

Customer Net Additions & ARPU

Customer Base Revenues & Margins

MoU/Sub (Min) & Total Minutes of Use

Note: All the financials are as per United States Generally Accepted Accounting Principles (US GAAP).

90% (Y-on- Y)

431

475

441451

46749,240

23,187

350

380

410

440

470

500

Q406 Q107 Q207 Q307 Q40712,000

22,000

32,000

42,000

52,000

MoU/Sub (Min) Total minutes of use (Mn Min)

24


broadband & telephone services

customer base (Apr'07) 1.91 mnDSL customers (% of total cust.) ~32.0 %net additions (Apr'07) 40 kcoverage (as at end of Mar'07) 94 citiesstrategy cherry picking

25


enterprise services – carriers NLD

LegendExisting OFC RouteUnder Execution

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

ErnakulamCoimbatore

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

ErnakulamCoimbatore

Voice Network

captive traffic (group traffic) ~ 70 %NLD minutes carried (Q4FY07) 5 Bn Minoptic fibre laid 48,037 km

26


enterprise services – carriers ILD

Major international carriers connected to the ILD gateways through i2i, SMW4, SMW3 and Flag Submarine cable systems

Legendi-2-iSEA-ME-WE-4Other Int’l ConnectivityInt’l Gateways Connectivity

SEA-ME-WE-4 Connectivity to Westi-2-i Connectivity to EastILD minutes carried (Q4FY07) 1.19 Bn MinILD gateways 4landing stations 2

27


enterprise services - corporates

Voice services

Satellite services Managed data & Internet services

Managed e -business services

Managed customized integrated solutions

Mobile services

competition limitedsegment one stop telecom solution

1000 top large corporates2,000 - 3,000 medium multi

location companiesleveraging integrated play

target

28


Revenues & Margins

non-mobile performance trends

Customer Base – B&T (overall) & Broadband (DSL) B&T ARPUs (in USD)

Note: All the financials are as per United States Generally Accepted Accounting Principles (US GAAP).

1,347

1,871

1,7381,631

1,505

315

383

473

550 592

1,000

1,200

1,400

1,600

1,800

2,000

Q406 Q107 Q207 Q307 Q407100

200

300

400

500

600

B&T Customer ('000) DSL Customers ('000)

308

357

402 424

322

35.4%32.6%

250

300

350

400

450

Q406 Q107 Q207 Q307 Q4070.0%

8.0%

16.0%

24.0%

32.0%

40.0%

Revenues (USD Mn) EBITDA MARGIN (%)

24.127.3

25.327.2

25.8

0.0

7.0

14.0

21.0

28.0

Q406 Q107 Q207 Q307 Q407

29


our partners - alliances with best in class

Asia’s telecom power house

IBM Daksh

Mphasis

Hinduja TMT

Tele Tech

Nortel

Strategic Equity Partner Business Partners

30


Being First

Hello Tunes(Ring Back

Tones)

Portfolio Manager(Stock Tracker)

Blackberry

Airtel Live(Portal)

first mover advantage/ product innovations

Life time validity product

Electronic Recharge / Micro Prepaid

focus on product innovations

Easy Music18,000 songs,Available in

Over 100,000 Outlets

Song Catcher

Call Home Service

31


few recent recognitions

Won the “Forbes Global IT Excellence award” for its Outsourcing arrangement with Nortel.

Conferred with the “Best Emerging Market Carrier Award”at the Telecom Asia Awards

Adjudged as the “Most Customer Responsive Telecom Company”in India by Avaya Economic Times Global Connect Awards

Ranked 13th in Asia across all sectors in “The Asia Business Week 50” list

32


Changing telecom ecosystem

33



Telecom – business redefined……….

EARLIER NOW

1) Growth Geographies Developed Economies Developing Economies

- High GDP/ Per Capita - Low GDP/Per Capita

2)Telecom medium to address masses

Fixed Line Wireless

3) Skill Sets All Inhouse Domain knowledge Based

- Periodic transactionsVendors - On opposite side

- Conflict of interest

- Deep Pockets - Sufficient Resources- BIG - Efficient

4)

5)

Partners

Ideal Operator

34


Telecom – business redefined……….


EARLIER NOW

6) Good CustomerHigh ARPU Postpaid

Customers All Customers

7)Profitability/ Efficiency Indicators

- Usage Low MoU per customer High MoU per customer

- Tariff High realised rate per minute Steady margin per minute

- Competition Limited Commensurate with size

- Capex Efficiency Capex : Revenue Revenue : Capex

35


New Business Models – principles of outsourcing

Earlier

Non Core Activities

Today

• Every activity is core

• Outsource based on:

1. Domain expertise

2. Economies of scale

3. Ability to attract talent

36


New Business Models – partnership approach (outsourcing)

Network management

Information technology

Call centers / customer service

Towers / passive infrastructure

37


Performance dashboard – Bharti’s 3 line graph (B3LG)

growth in revenues + cost efficiencies + capital productivity = profitability

(operating efficiency) (capital productivity)

1,251

1,114

948

841

767

35%

35% 36%33%

32%

71% 72%71%

74% 76%

600

700

800

900

1,000

1,100

1,200

1,300

1,400

Q406 Q107 Q207 Q3FY07 Q4FY07

Gro

ss R

even

ue (

USD

Mn)

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

Gross Revenue (USD Mn) (LHS) Opex to Gross Rev (RHS) Revenue (annualized) to Gross Cummulative Capex (RHS)

38


operating cost & capexEconomies of scale

highest quality network, seamless customer service, a consistentbrand experienceCustomer experience

management depth & creating leadershipStrong management execution

network reach, product availability (distribution)Speed to market

product innovationsBeing first

key focus areas

39


to summarize

Our Vision

By 2010 Airtel will be the most admired brand in India:

loved by more customerstargeted by top talentbenchmarked by more businesses

bharti airtel limited - s3-ap-southeast-1. · pdf filebharti airtel limited akhil gupta ......

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