idea cellular limited...aditya birla nuvo limited 27.02% grasim industries ltd 5.51% tmi maritus...
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Idea Cellular Limited
Investor Presentation
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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.”
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0
40
80
120
160
200
240
280
320
Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
Su
bs
cri
be
rs (
Mn
)Indian Wireless Indian Wireless Indian Wireless Indian Wireless –––– Fastest GrowingFastest GrowingFastest GrowingFastest Growing
481
478
475
475
471
415
0 100 200 300 400 500
CSFB
ML
Citi
Macq
UBS
CLSA
Explosion Phase
Reduced Cost of Entry
Expanded Network Coverage
Increasing Disposable Income
Reduced Cost of Handset Ownership
Mark
et
Es
tim
ate
s Y
rM
ark
et
Es
tim
ate
s Y
r ’’10
10
Su
bscri
bers
(M
n)
Su
bscri
bers
(M
n)
**
* Based on estimates given by research houses
Sep-08
315.31 mn Subs
(Sep’08)
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Idea Idea Idea Idea –––– Strong Operating PerformanceStrong Operating PerformanceStrong Operating PerformanceStrong Operating Performance
* Estimates based on COAI and AUSPI data, BSNL WLL-M subs has not been included and MTNL WLL – M subs are as of June’08
6.3%5.4%Idea
8.8%8.6%TATA
18.9%23.3%BSNL
16.0%16.4%Reliance
Market Share *
Sep 30, 08Sep 30, 07
27.5%22.6%Bharti
22.1%23.3%Vodafone
3 New Service Areas - Launched in Q3 FY 07
17.8%17.5%16.2%Vodafone
11.5%11.3%11.3%TATA
12.6%14.8%15.7%BSNL/MTNL
17.7%17.7%20.7%Reliance
Market Share *
Sep 30, 08Sep 30, 07Sep 30, 06
20.5%20.3%18.5%Bharti
19.8%18.4%17.6%Idea
8 Established Service Areas
8 Established Service Areas
5 New Service Areas
Operator
Operator
� Launched Mumbai Operation in Aug’08 and gained ~ 20%
of net adds in Sep’08, with 0.1 million subscribers
� Launched Bihar operation in Oct’08
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Idea Idea Idea Idea –––– Expanding FootprintExpanding FootprintExpanding FootprintExpanding Footprint
* Estimates based on COAI and AUSPI data, BSNL WLL-M subs has not been included and MTNL WLL – M subs are as of June’08
No. of Operational
Service Areas 13 15 17
National Market
Share * 9.8% 11.0% NA
Subscriber
Coverage 67% 78% 90%
No. of Service
Areas in 900Mhz 7 9 9
% of Subscribers
Pan India,
Covered by 900
Mhz
39%
50%
50%
Current Operations Post Spice Merger Post Launch in Tamilnadu and Orissa
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Strong Balance Sheet and Cash PositionStrong Balance Sheet and Cash PositionStrong Balance Sheet and Cash PositionStrong Balance Sheet and Cash Position
TMI TransactionTMI Transaction
Strong Balance Strong Balance
SheetSheet
Spice MergerSpice Merger
� Net Debt to Equity ratio of 0.28 and cash of ~ Rs 67 bn, as of Sep’08
� Strong balance sheet capable of driving strategy for the future
Providence Providence
� TMI has invested INR 73bn in Idea through issue of 464.73 mn shares at a price of Rs 156.96 per share
� Funds will be used for capital expenditure for expansion in new as well as existing service areas and for 3G auction
� Providence to invest approx INR 27bn through CCPS in ABTL, a 100% subsidiary of Idea Cellular
� ABTL includes Bihar Operations and 16% stake in Indus
1
2
3
4
� A regional player, having presence in Punjab and Karnataka circles with around 3.6 mn subs (Sep’08)
� Holds 7.8 Mhz spectrum in Punjab and 6.2 Mhz in Karnataka, both in 900 Mhz
� Will reduce the time to market in two high income service areas
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Creating Brand PreferenceCreating Brand PreferenceCreating Brand PreferenceCreating Brand Preference
Strong Brand Nationwide campaigns
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BuildingBuildingBuildingBuilding StrengthsStrengthsStrengthsStrengths
3,046
3,945 4,0923,596
2,801
5,783
0
1000
2000
3000
4000
5000
6000
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
17.10 18.83
22.46
27.82
33.0936.32
0
5
10
15
20
25
30
35
40
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
`
2.13
2.552.38
2.953.19 3.19
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
Subscriber Addition (QoQ)
Subs in mn
VAS Revenue (% of ARPU)
Margin %
Cell Site addition (QoQ)
No
Total Minutes on Network (QoQ)
8.2%
8.0%
8.3%8.4%
8.9%
9.8%
7%
8%
9%
10%
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
In bn
Q2 FY09 (EoP)
33377
14.01
Q4 FY07 (EoP)
Q2 FY09 (EoP)
30.38
15.07
Q4 FY07 (EoP)
Q2 FY09 (EoP)
36.32
9.0%
Q4 FY07 (EoP)
Q2 FY09 (EoP)
9.8%
10114
Q4 FY07 (EoP)
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Investing For Long Term Competitive AdvantageInvesting For Long Term Competitive AdvantageInvesting For Long Term Competitive AdvantageInvesting For Long Term Competitive Advantage
4.1% 4.0% 4.6% 4.3%
5.6% 5.6% 4.6% 4.7%
9.9% 10.2% 9.9% 11.2%
16.1%12.8% 13.2% 11.3%
16.3%
17.1% 17.4% 18.2%
15.2%17.0% 16.4% 17.2%
32.8% 33.3% 33.9% 33.1%
5.2% 4.4%
4.8% 5.7%
10.8% 11.2%
15.5% 14.2%
16.2% 18.5%
12.8%
19.5%
34.7%
26.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
Network Cost
License Fees
EBITDA Margin
Pass Through Charges
Subs Acq & Busi Prom
Personnel Cost
Other Expenses
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Expansion PlansExpansion PlansExpansion PlansExpansion Plans
Launch in New Launch in New
Service AreasService Areas
Spice AcquisitionSpice Acquisition
NLD/ILD NLD/ILD
ExpansionExpansion
Indus TowersIndus Towers
1
2
3
4
� Capex plan of ~Rs. 75bn during FY 08-09 for existing service areas and new launches (excluding 3G capex)
� Growth from 11 circles to 15 circles with increase in subscriber coverage from 60% to 80% (90% subscriber coverage, including Spice)
� Launched Mumbai in Aug’08 and Bihar in Oct’08
� Launching operations in Tamilnadu and Orissa during FY 09
� With Punjab and Karnataka circles, Idea will cover 90% of India’s telephony potential
� Opportunity of rapid expansion in 5 New service areas and deepercoverage in existing service areas
� Economies in OPEX and CAPEX
Capital Capital
ExpenditureExpenditure5
� Expansion of NLD network and ILD operations to reduce roaming and access charges
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Appendix About Idea
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Emergence of IdeaEmergence of IdeaEmergence of IdeaEmergence of Idea
Commenced operations
in Maharashtra
& Gujarat
Merged with
Tata Cellular (Andhra Pradesh)
Acquired RPG Cellcom (Madhya
Pradesh)
Commenced Delhi operations
Acquired Escotel
(Haryana, UP(W), Kerala)
Launched HP, Raj, UP(E), Mumbai and Bihar
Added Spice (Punjab and Karnataka)
Planned Launch for TN and Orissa (FY09)
License for remaining 5 service areas
Indus Towers
1997
2 Service Areas
2000
3 Service Areas
2002
5 Service Areas
2004
8 Service Areas
2006 – Mar’09
11 to 17 Service Areas
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ShareholdingShareholdingShareholdingShareholding
ADITYA BIRLA NUVO LIMITED 27.02% GRASIM INDUSTRIES LTD 5.51%
TMI MARITUS 14.99% MONET LIMITED 2.89%
P5 ASIA INVESTMENTS (MAURITIUS) 10.64% HSBC GLOBAL INVESTMENT FUND 2.65%
BIRLA TMT HOLDINGS PVT LTD 9.15% WAGNER LIMITED 1.98%
HINDALCO INDUSTRIES LIMITED 7.37% LIC OF INDIA MONEY PLUS 1.27%
51.74 %Direct + Indirect Foreign Holding
10.66 %Indirect Foreign Holding (30 Sep 08)
41.08 %Direct Foreign Holding (30 Sep 08)
74.00 %Total Foreign Holding Limit
Top 10 Shareholders – Sep 30, 2008
Indian
Others
9.87%
AV Birla
Group
49.05%Foreign
Holding
41.08%
As on 30th Sep’08
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Promoter GroupPromoter GroupPromoter GroupPromoter Group
One of India’s most respected business groups
Earned the distinction of 'The Best Employer in India- 2007' (ranked # 1)*
Scope for exploiting synergies within the Group to create value
Aditya Birla Group
Anchored by over 100,000 employees from over 25 different nationalities
Global player in non-ferrous metals, carbon black, viscose staple fibre, BPO
and chemicals
Leading player in cement, branded apparel and financial services
*And one of the Best in Asia-2007 (ranked # 16) as per The Best Employers Study 2007, conducted by Hewitt Associates in partnership with Economic Times (India) and the Wall Street Journal (Asia)
Strong confidence of all stakeholders, lenders, and vendors
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PartnersPartnersPartnersPartners
GSM Network in Maharashtra,
Gujarat, Madhya Pradesh, Rajasthan, Himachal Pradesh
and Mumbai
GSM Network in Delhi, Andhra
Pradesh, Haryana, Kerala, Uttar Pradesh (E), Uttar Pradesh (W)
and Bihar
Transformational IT outsourcing
IVR managed services
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Partnership in IndusPartnership in IndusPartnership in IndusPartnership in Indus
� To Provide passive infra to all Mobile operators on non-discriminatory basis
� Will cover 15 Service areas out of 22 service areas covering 10 Idea Service areas
Purpose and Purpose and
CoverageCoverage
� Idea holds 16% stake in Indus Towers
� Idea to transfer ~11200 towers as on Sep’08 in line with its 16% shareholdingIdeaIdea’’s Shares Share
� Opportunity of rapid expansion in 5 New service areas
� Provide deeper coverage in short span in existing service areas
� Provide economies in OPEX and CAPEX
BenefitsBenefits
� On Standalone basis, EBITDA impact will be downward but on Consolidated basis, there may not be any significant impact
Effect on Effect on
ProfitabilityProfitability
OperationsOperations� De-merger and Merger, court driven process of typically 6 – 12 months
� Indus Arrangements will be effective in Q3 FY08-09
4
5
Vodafone
42.00%
Bharti
42.00%
Idea
16.00%
Indus Share Holding
1
2
3
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KeyKeyKeyKey TrendsTrendsTrendsTrends
381
360
377
411
428
417
320
340
360
380
400
420
440
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
320
287
278
261
279288
250
260
270
280
290
300
310
320
330
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
Average revenue per user per month
INR
Realized rate per minute
0.84
0.80
0.74
0.70
0.65
0.62
0.00 0.20 0.40 0.60 0.80 1.00
Q1 FY08
Q2 FY08
Q3 FY08
Q4 FY08
Q1 FY09
Q2 FY09
INR
Minutes of use per user per month
Minutes
Pre paid subscribers as % of total sub
94.0%93.7%
90.5%
91.8%
92.6%
93.0%
88%
89%
90%
91%
92%
93%
94%
95%
Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09
%
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OperatingOperatingOperatingOperating MatrixMatrixMatrixMatrix
42
6068
97
149
179
0
20
40
60
80
100
120
140
160
180
200
FY04 FY05 FY06 FY07 FY08 H1 FY09
2.7
5.17.4
14.0
24.0
30.4
0
5
10
15
20
25
30
35
FY04 FY05 FY06 FY07 FY08 H1 FY09
Increase in Daily Minutes of Usages
mn
1736
57
126
236
379
0
50
100
150
200
250
300
350
400
FY04 FY05 FY06 FY07 FY08 H1 FY09
Cell Sites
No
Cumulative Investments
Rs Bln
Subscriber Base
No Mn
1,8433,049
4,763
10,114
24,793
33,377
0
5000
10000
15000
20000
25000
30000
35000
FY04 FY05 FY06 FY07 FY08 H1 FY09
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13.1
22.7
29.9
43.9
67.4
44.8
0
10
20
30
40
50
60
70
FY04 FY05 FY06 FY07 FY08 H1FY09*
1.0
5.2
7.6
11.7
19.8
10.2
0
2
4
6
8
10
12
14
16
18
20
22
FY04 FY05 FY06 FY07 FY08 H1FY09*
Financial MatrixFinancial MatrixFinancial MatrixFinancial Matrix
(2.0)
0.82.1
5.0
10.4
4.1
-4
-2
0
2
4
6
8
10
12
FY04 FY05 FY06 FY07 FY08 H1FY09*
Robust Growth in Top Line
Rs Bln
3.9
8.4
10.9
14.9
22.7
13.3
0
5
10
15
20
25
FY04 FY05 FY06 FY07 FY08 H1FY09*
Robust Growth in EBITDA
Rs Bln
Robust Growth in Net Profits
Rs Bln
Robust Growth in Cash Profits
Rs Bln
*FY09 figures are for 6 months only
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Thank You