idea cellular limited · 6 service area (900 mhz) idea idea ----subs mkt subs mkt share* rank...

Idea Cellular Limited

Investor Presentation

2

DisclaimerDisclaimerDisclaimerDisclaimer

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 of 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.

“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.”

1 2 4 7 13 3452

96

162

261

390487

050

100150200250300350400450500

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

DriversDriversDriversDrivers

Cost of Entry

Cost of Handset

Network Coverage

Disposable Income

3

Indian Wireless Indian Wireless Indian Wireless Indian Wireless –––– Fastest GrowingFastest GrowingFastest GrowingFastest Growing

501

500

480

477

475

400 420 440 460 480 500

ML

Macq

CSFB

Citi

UBS

Esti

ma

tes

Yr

‘10

Su

bscri

bers

(m

n)

*

* estimates by research houses (as of 17th March‘ 09)

Estimates

Su

bscri

bers

(m

n)

Su

bscri

bers

(m

n)

0.8% 0.9%1.5%

2.2%

3.0%

3.9%

9.6%

0%0%0%0%

2%2%2%2%

4%4%4%4%

6%6%6%6%

8%8%8%8%

10%10%10%10%

12%12%12%12%

North North North North

EastEastEastEast

J & K J & K J & K J & K Assam Assam Assam Assam Orissa Orissa Orissa Orissa Kolkata Kolkata Kolkata Kolkata West West West West

Bengal Bengal Bengal Bengal

TNTNTNTN

4

Idea Idea Idea Idea –––– An OverviewAn OverviewAn OverviewAn Overview

Operates in 15 service areas (incl. Spice Comm.)

Operating service areas cover ~ 78% of national subscriber base

With planned launch of Orissa and Tamil Nadu in next 4 months, and remaining before Dec ‘09, Idea will soon have pan-India operations

Share of non-Idea service areas in national subs base

Current Operations

2.9%2.9%2.9%2.9%

4.6%4.6%4.6%4.6%5.2%5.2%5.2%5.2%

5.9%5.9%5.9%5.9% 6.3%6.3%6.3%6.3%

7.3%7.3%7.3%7.3% 7.5%7.5%7.5%7.5%

9.5%9.5%9.5%9.5% 9.5%9.5%9.5%9.5%

0%0%0%0%

2%2%2%2%

4%4%4%4%

6%6%6%6%

8%8%8%8%

10%10%10%10%

Har . Har . Har . Har . Pun. Pun. Pun. Pun. Ker . Ker . Ker . Ker . UPW UPW UPW UPW M.P . M.P . M.P . M.P . Kar . Kar . Kar . Kar . Guj . Guj . Guj . Guj . Maha. Maha. Maha. Maha. A .P . A .P . A .P . A .P .

5

Competitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = Spectrum

900 MHz spectrum band provides major capex/opex advantage, compared to 1800 MHz

Idea holds 900 MHz spectrum in 9 service areas

~ 58% of national subs base (excl. 4 metros)

~ 50% of national subs base (total)

Idea’s spectrum profile is very attractive across all private operators

Service areas share of national subs base (excl. metros)

900 MHz Spectrum (incl. Spice Comm.)

1800 MHz Spectrum

6

Service Area Service Area Service Area Service Area

(900 MHz)(900 MHz)(900 MHz)(900 MHz)

Idea Idea Idea Idea ---- Subs Mkt Subs Mkt Subs Mkt Subs Mkt

share*share*share*share*RankRankRankRank

Kerala 26.2% 1

Maharashtra 24.7% 1

M.P. 23.9% 1

UP (W) 21.4% 2

Haryana 17.0% 2

A.P 16.7% 3

Gujarat 16.6% 3

Punjab# 17.5% 3

Karnataka# 6.9% 5

*Source: TRAI (as on 31 Dec ‘08 )#Spice Comm. service areas – new in Idea fold

In 9 service areas, comprising ~ 50% of national market, IdeaIn 9 service areas, comprising ~ 50% of national market, IdeaIn 9 service areas, comprising ~ 50% of national market, IdeaIn 9 service areas, comprising ~ 50% of national market, Idea’’’’s competitiveness is intrinsically strong s competitiveness is intrinsically strong s competitiveness is intrinsically strong s competitiveness is intrinsically strong

based on quality of spectrum and scale of operationsbased on quality of spectrum and scale of operationsbased on quality of spectrum and scale of operationsbased on quality of spectrum and scale of operations

Competitiveness Lever 2 = Scale Within a Service AreaCompetitiveness Lever 2 = Scale Within a Service AreaCompetitiveness Lever 2 = Scale Within a Service AreaCompetitiveness Lever 2 = Scale Within a Service Area

1800 MHz Spectrum

900 MHz Spectrum (incl. Spice Comm.)

7

1800 MHz New Launches 1800 MHz New Launches 1800 MHz New Launches 1800 MHz New Launches –––– Focus On Focus On Focus On Focus On OptimisationOptimisationOptimisationOptimisation, Not , Not , Not , Not MaximisationMaximisationMaximisationMaximisation

Service AreaService AreaService AreaService AreaIdeaIdeaIdeaIdea’’’’s Subs s Subs s Subs s Subs

Mkt share*Mkt share*Mkt share*Mkt share*

Share in Net Share in Net Share in Net Share in Net

Adds for Q3 Adds for Q3 Adds for Q3 Adds for Q3

FY09FY09FY09FY09

Mumbai 1.9% 17.6%

Bihar 1.5% 11.5%

*Source: TRAI (as on 31 Dec ‘08 )

Mumbai launched Aug ‘08, Bihar Oct ‘08, Orissa and Tamil Nadu launch by Jun ‘09, West Bengal, Kolkata, Assam, Northeast and J&K by Dec ‘09

To leverage synergies i.e. roaming, termination, NLD, ad spend etc.

Focus on financial returns, not on market position

8

The Indus AdvantageThe Indus AdvantageThe Indus AdvantageThe Indus Advantage

Idea currently operates

To be launched

Indus Share Holding

Provides passive infrastructure services in 15 service areas

Largest independent tower company in the world - ~ 100,000 towers

Indus benefits from assured tenancy from promoters, and from other operators

Idea benefits by reduced capex, speed to market, and embedded value of shareholding

Bharti

Infratel Ltd

42%Vodafone

Essar Ltd

42%

Idea Cellular

Ltd 16%

Indus Share Holding

*through ABTL

9

Strong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic Intent

Gearing

Cash Generation

Net Debt to Equity ratio of 0.14 with cash of ~ INR 80 bn, as of Dec ‘08

Net Worth

~ INR 20 bn as on Dec ‘08

~ INR 136 bn as on Dec ‘08

~ INR 16bn cash profits during Apr - Dec 2008

2

3

4

Net Debt1

10

Idea Idea Idea Idea –––– A Power BrandA Power BrandA Power BrandA Power Brand

No. 4 Buzziest Brand in India Across All Categories*

* Buzziest Brands of the Year Poll 2009

The Top 25*

11

Idea Has Built Large Capacities last 2 FiscalsIdea Has Built Large Capacities last 2 FiscalsIdea Has Built Large Capacities last 2 FiscalsIdea Has Built Large Capacities last 2 Fiscals

44200*

24793

10114

18433049 4763

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

FY04 FY05 FY06 FY 07 FY08 FY09

Added ~14700 sites in FY 2007- 08, more than doubling the sites built since inception

Again added ~ 19500 sites in FY 2008- 09, almost doubling capacity during the year

* estimate

Cum. Sites

# figures only for Idea, excluding Spice comm.

12

Idea Has Absorbed Major Investments To Drive Future Benefit Idea Has Absorbed Major Investments To Drive Future Benefit Idea Has Absorbed Major Investments To Drive Future Benefit Idea Has Absorbed Major Investments To Drive Future Benefit

4.0% 4.6% 4.2% 4.4%

5.6% 4.6% 4.6% 5.6%

10.2% 9.9% 11.2% 11.2%

12.8% 13.2% 11.3%14.2%

17.1% 17.4% 18.2%

18.6%

17.0% 16.4% 17.2%

19.5%

33.3% 33.9% 33.2%26.4%

4.3%4.1%

5.3%5.6%

10.9%9.9%

12.9%16.1%

18.8%16.3%

21.8%15.2%

26.0%

32.8%

0%

20%

40%

60%

80%

100%

Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09

Network Cost

License & WPC charges

EBITDA Margin

Roaming & Access Charges

Subs Acq & Busi Prom

Personnel Cost

Other Expenses

Note: Idea standalone including subsidiaries on a standalone basis.

Decline in EBITDA margin is ~ increase in network costDecline in EBITDA margin is ~ increase in network costDecline in EBITDA margin is ~ increase in network costDecline in EBITDA margin is ~ increase in network cost

Idea has absorbed ARR decline and also EBITDA losses in Idea has absorbed ARR decline and also EBITDA losses in Idea has absorbed ARR decline and also EBITDA losses in Idea has absorbed ARR decline and also EBITDA losses in Mumbai+BiharMumbai+BiharMumbai+BiharMumbai+Bihar ( 3.4% of revenue in Q3 FY09)( 3.4% of revenue in Q3 FY09)( 3.4% of revenue in Q3 FY09)( 3.4% of revenue in Q3 FY09)

Capacity built up in last 2 fiscals will drive future benefitCapacity built up in last 2 fiscals will drive future benefitCapacity built up in last 2 fiscals will drive future benefitCapacity built up in last 2 fiscals will drive future benefit

13

Idea Idea Idea Idea –––– Fastest GrowingFastest GrowingFastest GrowingFastest Growing

14.01

16.118.7

21.124.0

27.2

30.4

34.2

0

5

10

15

20

25

30

35

Q4 FY07 Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09

Subscribers#

* CQGR base Q4FY07# figures only for Idea, excluding joint ventures

13.214.8 15.6

17.1

19.9

21.8 23.0

26.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Q4 FY07 Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09

Revenue#

INR bn

Highest revenue growth rate in last 4

quarters across all major players

CQGR* 10.3%

YoY (Apr – Dec ‘08) 49.5%

Highest subscriber growth rate in last 2

years across all major players

CQGR* 13.6%

YoY (EoP Dec ‘08) 62.5%

mn

14

ShareholdingShareholdingShareholdingShareholding

Indian

Others

10.8%

AV Birla

Group

49.1%Foreign

Holding

40.1%

Indian

Others

10.3%

AV Birla

Group

46.2%Foreign

Holding

43.5%

TMI MAURITITUS 20.0%

P5 ASIA INVESMENT 10.0%

MONET LIMITED 2.7%

HSBC GLOBAL INVESTMENT 2.6%

WAGNER LIMITED 1.9%

Post Spice merger*

As on 31st Dec ‘08

* assuming no change in other shareholding

TOP 5 shareholders

(excluding Promoters)

TOP 5 shareholders

(excluding Promoters)

TMI MAURITITUS 15.0%

P5 ASIA INVESMENT 10.6%

MONET LIMITED 2.9%

HSBC GLOBAL INVESTMENT 2.7%

WAGNER LIMITED 2.0%

15

Idea Idea Idea Idea ---- Awards & RecognitionsAwards & RecognitionsAwards & RecognitionsAwards & Recognitions

15

16

Appendix

17

KeyKeyKeyKey Trends (Idea)Trends (Idea)Trends (Idea)Trends (Idea)

360

377

411

428

417410

320

340

360

380

400

420

440


288

278

261

266

287

279

250

255

260

265

270

275

280

285

290


Average revenue per user per month

INR

Realized rate per minute

0.80

0.74

0.70

0.65

0.62

0.64

0.00 0.20 0.40 0.60 0.80 1.00

Q2 FY08

Q3 FY08

Q4 FY08

Q1 FY09

Q2 FY09

Q3 FY09

INR

Minutes of use per user per month

Minutes

Pre paid subscribers as % of total sub

94.3%94.0%

91.8%

92.6%

93.0%

93.7%

91%

91%

92%

92%

93%

93%

94%

94%

95%


%

18

13.1

22.7

29.9

43.9

67.471.0

0

10

20

30

40

50

60

70

80

FY04 FY05 FY06 FY07 FY08 YTD FY09*

1.0

5.2

7.6

11.7

19.8

16.4

0

2

4

6

8

10

12

14

16

18

20

22


Financial Matrix (Idea)Financial Matrix (Idea)Financial Matrix (Idea)Financial Matrix (Idea)

(2.4)

0.82.1

5.0

10.4

6.7

-4

-2

0

2

4

6

8

10

12


Robust Growth in Top Line

INR bn

3.9

8.4

10.9

14.9

22.7

20.1

0

5

10

15

20

25


Robust Growth in EBITDA

INR bn

Robust Growth in Net Profits

INR bn

Robust Growth in Cash Profits

INR bn

*FY09 figures are for 9 months only

19

13.1

22.729.9

43.9

67.472.1

0

10

20

30

40

50

60

70

80


1.0

5.2

7.6

11.7

19.8

16.3

0

2

4

6

8

10

12

14

16

18

20

22


Financial Matrix (Consolidated)Financial Matrix (Consolidated)Financial Matrix (Consolidated)Financial Matrix (Consolidated)

(2.4)

0.82.1

5.0

10.4

6.3

-4

-2

0

2

4

6

8

10

12


Robust Growth in Top Line

3.9

8.4

10.9

14.9

22.7

20.2

0

5

10

15

20

25


Robust Growth in EBITDA

INR bn

Robust Growth in Net Profits Robust Growth in Cash Profits

INR bn

*FY09 figures are for 9 months only, Including proportionate share of Spice Comm. & Indus

INR bn

INR bn

Thank You

idea cellular limited · 6 service area (900 mhz) idea idea ----subs mkt subs mkt share* rank...

Documents