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Idea Cellular Limited
Investor Presentation
Disclaimer
The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwiseshall be subject to the applicable laws and regulations as amended from time to time. There is no representation that allinformation relating to the context has been taken care of in the presentation and neither we undertake any obligation as to theregular updating of the information as a result of new information, future events or otherwise. We will accept no liabilitywhatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation orfor any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction orcountries were such distribution or use would be contrary to the applicable laws or regulations. It is advised that prior to actingupon this presentation, independent consultation / advise may be obtained and necessary due diligence, investigation etc maybe done. You may also contact us directly for any questions or clarifications.
This presentation contain certain statements of future expectations and other forward-looking statements, including thoserelating to our general business plans and strategy, our future financial condition and growth prospects, and futuredevelopments in our sector and our competitive and regulatory environment. In addition to statements which are forwardlooking by reason of context, the words‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue’ and similarexpressions identify forward looking statements.
Actual results, performances or events may differ materially from these forward-looking statements including theplans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number offactors, including without limitation, future changes or developments in our business, our competitiveenvironment, telecommunications technology and application, and political, economic, legal and social conditions in India. It iscautioned 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 usedas 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 theUnited States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering ofsecurities to be made in the United States will be made by means of a prospectus and will contain detailed information about the Companyand its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response tothe information contained herein, will not be accepted.”
Indian Wireless Sector – Revenue Trend
263.8 273.7285.9 288.9
302.4 309.2 318.7 319.3 321.440.6
43.146.0 46.9
50.854.4
55.8 53.4 55.8
304.4316.7
331.9 335.8353.2
363.6374.4 372.7 377.2
0
35
70
105
140
175
210
245
280
315
350
385
Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13
Others Idea
*1 USD = INR 50
Source: Data released by the TRAI & Company estimates; revenue for UAS and Mobile licenses only
Idea 14.8%
Others 85.3%
Idea 12.7%
Others 87.3%
Q3FY10
Q3FY13
Sector Gross Revenue (INR bn)
In USD (bn)*6.09 6.33 6.64 6.72 7.06 7.27 7.49 7.45 7.54
Idea - Increase in Revenue Market Share
3
4
Idea – An Overview
A pan India 2G-GSM service provider.
Provide 3G services in 20 service areas.
Third largest operator in India, by Mobility Revenues#
and VLR subscribers.
Minutes on network ~ 1.44 bn per day(Q3FY13), placing it among the top 10 operatorsglobally
Leads the industry, in terms of active subscribers, asmore than 98% of reported subscribers are on VLR
Owns 9,325 towers, besides 11,094 towers transferredto Indus under IRU
Over 71,600 km optical fibre cable (OFC) network
Idea’s NLD carries ~96% of captive outgoingminutes
Idea’s International Long Distance Operations (ILDOs)carry 98% of captive outgoing minutes. Total Minutescarried on ILD ~ 1,294mn in Q3FY13
Idea ISP carries ~76% of it’s own data traffic. Totaldata traffic carried is over 100 TB per day
# Data released by the TRAI & Company estimates; revenue for UAS and Mobile licenses only
900 MHz Spectrum
1800 MHz Spectrum
5
2.7%
4.7%5.2% 5.3% 5.6%
7.0%
8.7%9.3%
9.7%
0%
2%
4%
6%
8%
10%
12%
Har. Pun. UPW Ker. M.P. Guj. Kar. A.P. Maha.
900 MHz spectrum band provides capex/opexadvantage, compared to 1800 MHz
900 MHz spectrum also accompanied by earlymover advantage
Idea holds 900 MHz spectrum in 9 serviceareas, covering~ 48% of national revenue and ~73% of Idea’s revenue
~ 58% of national revenue base (excl. metros*)
Idea’s spectrum profile is very attractiveacross all private operators
Service areas share of gross revenue (excl. metros)58%
Competitiveness Lever 1 - Spectrum
Source: Data released by the TRAI & Company estimates for Q3FY13, revenue for UAS and Mobile licenses only * Metros as Mumbai, Delhi and Kolkata
6
Competitiveness Lever 2 - Scale within Service Area
Service Area (900 MHz)
Revenue Mkt Share 1
(RMS)Rank 2
Kerala 34.2% 1
M.P. 33.3% 1
Maharashtra 27.3% 1
UP (W) 27.0% 1
Haryana 22.3% 2
Punjab 20.8% 2
Gujarat 18.1% 2
A.P. 18.9% 2
Karnataka 9.4% 4
Total 22.6% 2
In 9 service areas, comprising ~ 48% of national revenue market & ~73% of Idea’s revenue, Idea’s competitiveness is intrinsically strong based on a) 900 MHz spectrum and b) scale of operations
1Based on gross revenue for Q3FY13, as released by TRAI & Company estimates2Based on revenue market share
# 1 Player# 2 Player# 1 Player# 2 Player Improved combined revenue market share
from 21.0% in Q3FY11 to 22.6% in Q3FY13
7
1800 MHz Operations (6 Service Areas)Emerging Stronger – Ranked #3
Service AreaRevenue Mkt Share 1
(RMS)Rank 2
UPE 12.2% 3
Rajasthan 11.0% 3
Delhi 10.9% 3
Bihar 9.9% 4
H.P. 9.1% 5
Mumbai 8.4% 5
Total 10.4% 3
Idea has increased its combined RMS from9.0% in Q3FY11 to 10.4% in Q3FY13, improvingits position from 4th to 3rd ranked operator, inthese service areas
These service areas cover ~32% of all Indiarevenue and ~22% of Idea’s revenue
With continuous improvement in RMS, Idea isemerging stronger
1Based on gross revenue for Q3FY13, as released by TRAI & Company estimates2Based on revenue market share
8
1800 MHz Operations (7 New Service Areas)Focus On Optimisation, Not Maximisation
In Nov’12 1800 MHz spectrum auction Ideaacquired 5 MHz (6.25 MHz in West Bengal) ofliberalized spectrum (can be used for 2G,3Gor 4G) in these service areas, for 20 years foran amount of Rs. 19.9 bn.
Leverage synergies of pan India operationsi.e. roaming, NLD, ad spend, commonnetwork elements, etc.
Focus on operational and financial goals, notleague tables
Combined RMS of 3.3% in Q3FY13.Inevitably, as the number of operators in theIndian market shrink, these new market willoffer good growth potential
3G Footprint
Idea’s 3G Service Areas
Roaming arrangements with other operators
9
Idea launched 3G services in 10 serviceareas, out of 11 service areas where it won3G spectrum
Having 15,545 3G sites in these serviceareas (Q3FY13)
Launched 3G services under roamingarrangements for the service areas ofMumbai, Bihar, Karnataka, Rajasthan, WestBengal, Delhi, Kolkata, Tamil Nadu (incl.Chennai), Assam and North East
With these arrangements Idea currentlyoffers 3G services in 20 service areas
Around 4.1 mn 3G subs with data ARPU ofRs. 97
Existing 21mn 2G EDGE data subscribers &growing, offer excellent long term 3Gupgrade opportunity
Note :For Punjab service area, authorisation for commercial use of 3G spectrum is awaited
10
Idea – Long Term Shareholder Value
Cover ~48% of national revenue market
Strong position in these service areas
900 MHz spectrum accompanied by early mover advantage
900 MHz spectrum provides capex and opex advantage
900 MHz( 9 Service Areas )
Leverage spectrum and scale to enhance
leadership
Pan India Footprint
Leverage synergies of scale and footprint
Emerging Stronger in 6 service areas of
UP(E), Rajasthan, Delhi, Bihar, H.P. and Mumbai
Focus on operational & financial goals, not league tables in 7 New
service areas
Calibrated Capex with infra sharing
1800 MHz( 13 Service Areas )
Sustainable and profitable growth
3G Value Drivers
Market power to drive new business: Ranked #1 or #2, in 8 out of 11 service areas, where it won 3G
spectrum
Protecting existing business value:11 service areas cover ~74% of company revenue and ~ 49% of
Industry revenue
Roaming arrangements: Ability to provide 3G service in almost all
parts of India
Other value: Besides enhanced data performance, High 2G spectrum
utilisation makes the 3G spectrum also valuable for voice
Best placed to exploit 3G
11
The Indus Advantage
Indus Service Areas
Indus Share Holding
Provides passive infrastructure services in15 service areas
Largest independent tower company in theworld with more than 111,200 towers
Indus benefits from assured tenancy frompromoters (combined revenue marketshare of ~67%*), apart from other operators
Idea benefits by reduced capex, speed tomarket, and embedded value ofshareholding
Bharti Infratel Ltd 42%
Vodafone Essar Ltd
42%
Idea Cellular Ltd** 16%^
Indus Share Holding
**through Aditya Birla Telecom Ltd.
* Data released by the TRAI & Company estimates ; revenue for UAS and Mobile licenses only
^In addition, Idea also own more than 9,300 towers
12
Idea – A Power Brand
13
World Class Operations and Cost Management
*ARR is based on service revenue (exclusive of infrastructure and device revenues)
** Includes Depreciation & Amortisation, but excludes Interest & Finance Cost
Paisa
50.7 54.0 55.4 53.5 56.1
114.0124.0
130.9125.6
132.243.3
42.241.2 41.3 41.1
33.9 33.8
32.5 32.5 32.5
40.0 39.6
38.3 38.8 38.7
29
32
35
38
41
44
0
34
68
102
136
Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13
Revenue (INR bn) Minutes (bn) ARR* Pre-EBITDA Cost/Min Operational Cost/Min**(Pre- EBIT)
14
Strong Balance Sheet to Support Strategic Intent
Note: Figures for Idea including its 100% subsidiaries and excluding Joint Venture Spice (till February 28,2010) and Indus.
Q4 Q4 Q4 Q3FY10 FY11 FY12 FY13
Gross Debt 65,264 105,575 120,957 134,447
Cash & Equivalent 14,005 13,902 1,406 17,624
Net Debt 51,259 91,673 119,550 116,822
Net Worth 114,101 122,767 129,077 140,204
Cash Profit 7,657 9,031 10,135 11,085
Financial Ratios
Net Debt to Net Worth 0.45 0.75 0.93 0.83
Net Debt to Annualised EBITDA 1.54 2.41 2.48 2.22
ROCE 8.7% 6.1% 6.7% 6.2%
INR Million
15
Promoter Group, 45.9%Foreign
Holding, 45.6%
Indian Others, 8.5%
As on 31st Dec’12Shareholding
PROMOTERS’ HOLDING
ADITYA BIRLA NUVO LIMITED 25.3%
BIRLA TMT HOLDINGS PVT LTD 8.6%
HINDALCO INDUSTRIES LIMITED 6.9%
GRASIM INDUSTRIES LTD 5.2%
TOP 5 SHAREHOLDERS
TMI MAURITIUS 14.0%
P5 ASIA INVESTMENTS (MAURITIUS) 10.0%
AXIATA INVESTMENTS 2 (INDIA) LTD. 5.9%
NWB PLC AS DEP. OF FIRST STATE 2.9%
LIFE INSURANCE CORP. OF INDIA 1.5%
Appendix
17
Key Trends - 1* (Quarterly)
50.754.0
55.453.5
56.1
30
35
40
45
50
55
60
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
Cash Profits
EBITDA
12.0 12.1
12.9 12.6
13.2
8.00
9.00
10.00
11.00
12.00
13.00
14.00
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
Rs bn
Gross RevenueRs bn
Subscribers
106.4112.7
117.2 115.5 113.9
98.9105.3
108.4 109.1 111.9
60
70
80
90
100
110
120
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
Subscriber VLR Subscribers
9.5
10.110.5
12.3
11.1
6.00
7.00
8.00
9.00
10.00
11.00
12.00
13.00
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
Rs bn In mn
*Represents Idea and its 100% subsidiaries
YoY Growth 10.8% YoY Growth
9.9%
YoY Growth 17.3% YoY Growth^
13.2%
^VLR Subs
18
Key Trends – 2* (Quarterly)
114.0
124.3
130.9125.6
132.2
75
85
95
105
115
125
135
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
VAS and Data as a % of Revenue
Realized rate per minute43.3 42.2 41.2 41.3 41.1
20.00
25.00
30.00
35.00
40.00
45.00
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
paisa
Minutes of use on Network (QoQ)
bn - Minutes
Cell Sites
80,637 83,190 83,860 85,779 87,662
10,90212,825 13,363
14,46715,545
45000
65000
85000
105000
Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
2G Sites 3G Sites
*Represents Idea and its 100% subsidiaries
4.5% 5.4% 5.7%
13.7% 14.3%
10.0%10.2%
8.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13
VAS% Data %
14.5%15.6%
14.6%
19
Financial Matrix (Standalone)*
67.4
99.7 121.4
156.4
196.8
165.0
0
25
50
75
100
125
150
175
200
FY08 FY09 FY10 FY11 FY12 9m FY13
19.8
23.5
29.0 30.9
36.1 33.9
5
10
15
20
25
30
35
40
FY08 FY09 FY10 FY11 FY12 9m FY13
10.4 9.6
10.3
8.4
6.0 7.4
0
2
4
6
8
10
12
FY08 FY09 FY10 FY11 FY12 9m FY13
Robust Growth in Top Line
INR bn
22.727.5
30.5 33.3
45.2
38.7
5
10
15
20
25
30
35
40
45
50
FY08 FY09 FY10 FY11 FY12 9m FY13
Robust Growth in EBITDA
INR bn
Net Profits
INR bn
Robust Growth in Cash Profits
INR bn
*Represents Idea and its 100% subsidiaries
20
Financial Matrix (Consolidated)*
67.4
101.5 124.5
155.0
195.4
164.0
0
25
50
75
100
125
150
175
200
FY08 FY09 FY10 FY11 FY12 9m FY13
19.8 23.5
30.6 34.1
40.3 35.5
0
10
20
30
40
50
FY08 FY09 FY10 FY11 FY12 9m FY13
Robust Growth in Top Line
INR bn
22.7
28.4
34.137.9
50.9
43.3
15
20
25
30
35
40
45
50
55
FY08 FY09 FY10 FY11 FY12 9m FY13
Robust Growth in EBITDA
INR bn
Net Profits
INR bn
Robust Growth in Cash Profits
INR bn
*Represents Idea, its 100% subsidiaries and Joint Ventures
10.4 8.8
9.5 9.0
7.2 7.0
0
2
4
6
8
10
12
FY08 FY09 FY10 FY11 FY12 9m FY13
21
Thank You