RCOM Investor ppt August, 2011 - Reliance Group NGN Mediterranean and continue to main tain leadership in the Carriers Carrier market Incr ... Overview Global Enterprise Business Global

Reliance CommunicationsInvestor PresentationInvestor Presentation

August, 2011

Forward looking statements – Important NoteForward looking statements Important NoteThis presentation and the discussion that follows may contain “forward lookingstatements” by Reliance Communications Ltd (“RCOM”) that are not historical in nature.These forward looking statements, which may include statements relating to futureresults of operation, financial condition, business prospects, plans and objectives, arebased on the current beliefs, assumptions, expectations, estimates, and projections ofth di t d t f RCOM b t th b i i d t d k t ithe directors and management of RCOM about the business, industry and markets inwhich RCOM operates. These statements are not guarantees of future performance, andare subject to known and unknown risks, uncertainties, and other factors, some of whichare beyond RCOM’s control and difficult to predict that could cause actual resultsare beyond RCOM’s control and difficult to predict, that could cause actual results,performance or achievements to differ materially from those in the forward lookingstatements. Such statements are not, and should not be construed, as a representationas to future performance or achievements of RCOM In particular such statementsas to future performance or achievements of RCOM. In particular, such statementsshould not be regarded as a projection of future performance of RCOM. It should benoted that the actual performance or achievements of RCOM may vary significantly fromsuch statements

Confidential 2 of 37

such statements.

ContentsContents

Reliance Communications – an integrated telco

Wireless

Global Enterprisep

Home

Ke takea a sKey takeaways


Journey so far

Reliance Communications

FY 2009 to FY 2011

Journey so far….

FY 2007 & FY 2008

FY 2005 & FY 2006

MobileCDMA , GSM, 3G, Netconnect

GlobalcomFLAG Telecom VancoFY 2005 & FY 2006

MobileCDMA Service

Globalcom

FLAG Telecom, Vanco, Yipes, Falcon & NGN

EnterpriseIDC

MobileCDMA Service

Globalcom

GlobalcomFLAG Telecom, Vanco,

Yipes & Falcon

Enterprise

Infratel200K slots; deepest backhaul

Home

IntegrationGrowthFoundation

FLAG Telecom Enterprise Reliance Digital TV, IPTV, DigiCom


Evolution path towards a profitable integrated Telco

Current position of our businesses


#2 in India, #4 globally (single country), dual technology

3G license in 13 circles (highest number of circles by single Wireless

Current position of our businesses

( g y goperator)

Pan India data leadership

Wireless

Global Enterprise

Largest global private submarine cable network, blue-chip global clients

One stop shop for all large corporates and SMBs for communications, networking and IT infrastructure needs

Infratel 200k+ slots, unique ability to provide space and connectivity

Home Rapidly growing national DTH business, rich content access


Strong market presence in every business

Strategy for focused and profitable growth


Address mass mobility market thru’ GSM with special focus on rural distribution

Strategy for focused and profitable growth

ess

Consolidate data market leadership with high ARPU 3G services & high speed datacards

Increased revenue from new service streams (share of VAS & In-roaming revenue)

Sign long term contracts with existing and new operators to provide pan India infrastructure

Wire

le

Sign long term contracts with existing and new operators to provide pan-India infrastructure and bandwidth

Complete NGN Mediterranean and continue to maintain leadership in the Carriers Carrier market

Increasing IDC capacity and launching new high margin product/service lines

USA

Canada

Pakistan

China

Hong Kong

Bangladesh

Germany

Italy

London

UAE

Saudi Arabia

Bahrain

Qatar

Austria

Oman

Japan

Taiwan

Malaysia

RussiaSpain

Belgium

FranceSwitzerlandd

Netherland

Sudan

USA

Canada

Pakistan

China

Hong KongBangladesh

Nigeria

Germany

Italy

UK

South Korea

UAESaudi Arabia

BahrainQatar

Austria

Oman

Japan

Taiwan

Malaysia

Russia

Spain

BelgiumFrance Switzerland

Netherland

Sudan

India

bal E

nter

pris

e

Maximize revenues from existing assets of Towers OFC & Ducts

Expanding Managed Services portfolio for higher share of customer’s wallet and to increase stickiness of our products

Australia

Sri Lanka

Nigeria

South Africa

South KoreaNew Zealand

Australia

Sri Lanka

South Africa New ZealandGlo

bte

l

Maximize revenues from existing assets of Towers, OFC & Ducts

Huge potential of value unlocking for Reliance Communication shareholders

Aggressive acquisitions to build the subscriber base for long-term revenueeIn

frat

Infratel


gg g

Rigorous program management framework for capex and opex cost efficiencies, esp. Set-top box and Content H

ome

Financial Highlights


Key Financial Parameters (Rs. Mn)

Financial Highlights

Revenue EBITDA Net Profit

57,208

81,989

93,050

78,205

90,816

144,683

190,678

229,485 221,323231,076

31 637

54,01160,449

46,550

24,762

107,664

4,438

31,637

13,457

FY06 FY07 FY08 FY09 FY10 FY11FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 FY11


Maintaining Revenue & EBITDA levels in hyper competitive market

ContentsContents


Wireless

Global Enterprise

Home

Key takeawaysKey takeaways


Industry outlook : India’s growing mobile market

Wireless Business

Industry outlook : India s growing mobile marketIndia, the world’s fastest growing & second biggest mobile market, has fifteen telecom service providers.

Industry Subscriber Net Additions

4.4% 629

846Customer Market Share

23 19 20 20 16 13 11

Aircel, 6.9%

Uninor, 3.1%MTS, 1.4% Others, 2.6%

18 17 18 17 19 2323 19 20

Bharti, 20.0%

Vodafone,

Tata, 10.8%

,

16.7%

Reliance, 16.9%

IDEA/Spice, 11 2%

BSNL, 10.5%

846 Mn wireless subscribers at the end of June 2011

RCOM (143 Mn)

Source: TRAI

Jun '10

Jul '10 Aug '10

Sep '10

Oct '10

Nov '10

Dec '10

Jan '11

Feb '11

Mar '11

Apr '11

May '11

Jun '11

11.2%


Source: TRAI

RCOM maintained its Customer Market Share (CMS) and continue to add around 2.5 Mn. customers every month

Strengths of Wireless BusinessWireless Business

Strengths of Wireless BusinessDual technology advantage1

Data leader (3G + HSD / EVDO)2

143 Million customer base3

3G License winner in 13 circles (All 900 Mhz circles covered)

4

Integrated Telco with segmented play5


All this with only 7 years of existence in industry as compared to 15+ years for competition

India’s billion people can now expect an unbeatable

Wireless Business

India s billion people can now expect an unbeatable choice and value proposition across….

Coverage Customer choice1. 2.

Product & Service innovations3 4 Distribution & ReachProduct & Service innovations3. 4. Distribution & Reach


Unmatched customer proposition

Wireless Business

Coverage24,000 Towns

Coverage

600,000 Villages

1 Billion Indians1 Billion Indians

Voice Data VAS

CDMA GSM


Seamless coverage wherever you go

Coverage : 3G license in 13 circles

Wireless Business

Coverage : 3G license in 13 circles

Won 13 circles with a spend of Rs. 8,585cr

Geographical mix of top 3 metros, 4 “B” circles & 6 “C” circles

Marginal capex for 3G upgrade on our EDGE GSM network

2G Ci l2G Circles

2G + 3G Circles

Delhi & Mumbai


Nationwide EVDO/ 3G footprint; Pan-India data leadership

Coverage : Launched 3G within 100 days of receiving theWireless Business

g y gspectrum

3G services kick off in 3 key metros of Mumbai, Delhi & Kolkata and city of Chandigarh on 13th December, 2010Chandigarh on 13th December, 2010

Currently, 3G services are available in 333+ cities & towns


Coverage : High Speed Data (HSD) in 800+ towns

Wireless Business

Coverage : High Speed Data (HSD) in 800+ towns

Competitive differentiationFastest internet broadband (High Speed Data) service in India’s top 800+ cities & towns

Seamless handover & connectivity through CDMA 1X i 20K tin over 20K towns

Wide reach compared to limited reach of wireline networks

Broadband coverage expansion the wireless wayBroadband coverage expansion the wireless way

ARPUs are 3-4 times higher than the voice usage

Increased capacity utilization in CDMA network

Easy availability & instant activation within minutes compared to few weeks or even months in case of wired broadband


Fastest internet connectivity under wireless platform

Wireless Business

Customer ChoiceCustomer ChoiceMobile Handheld Dongles

3G HSPA CDMA HSD

Voice

3G HSPA CDMA HSD

Data

CDMA GSM

Data

Video


Wide options for Voice, Data & Video across CDMA & GSM platforms

Wireless Business

Product & Service innovations: Reliance 3G TabAndroid 2.3

(Gingerbread)Reliance 3G Network

Product & Service innovations: Reliance 3G Tab

SMS, MMS, and FM RadioFully Featured Phone

7 inch Thin Film Transistor (TFT) capacitive multi-touch screencapacitive multi touch screen

Dual camera (front and rear)

Photographs & Video Recording

Wi-Fi & Bluetooth enabledPersonal Wi-Fi Hotspot allowing to

Photographs & Video Recording


p gconnect with up to 5 Wi-Fi enabled devices (Laptop, Mobile, PC etc …)

Product & Service innovations

Wireless Business

Product & Service innovationsGroup Talk Simply MusicTune Maker Nokia Life Tools

Bubbly (voice twitter)

WAP PortalApp Store Location Based Services


Distribution & Reach

Wireless Business

Distribution & ReachWorld-class design , fit out & ambience at 2 000 exclusive retail showrooms on High2,000 exclusive retail showrooms on High streets/Malls

High quality reach & national footprint through 5,000 distributors & 900,000 retailers

5 000+ Direct & indirect outbound sales5,000+ Direct & indirect outbound sales force to cater to customers at their premises

Dimensioned to handle over 35 mn sales transactions annually


One of the largest retail distribution network in the industry

Financial PerformanceWireless Business

12 10141 613 40 644 41 978 43,267

Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn)

12,101 11,792 11,490 11,727

4,000

8,000

12,00041,613 40,644 41,978 ,

20,000

40,000

02QFY11 3QFY11 4QFY11 1QFY12


EBITDA Margin

29.1% 29.0% 27 4% 27.1%40%

60%

80%

27.4%

0%

20%



Two consecutive quarters of consumption led revenue growth

Revenue Per Minute (RPM) trendWireless Business

Revenue Per Minute (RPM) trend2Q‘10 3Q’10 4Q‘10 1Q'11 2Q'11 3Q’11 4Q’11 1Q’12 Change

over last 8 Qtrs.

Player 1 0.56 0.52 0.47 0.45 0.44 0.44 0.43 0.43 -23.2%y

Player 2 0.56 0.51 0.47 0.44 0.42 0.42 0.41 0.41 -26.8%

RCOM 0.47 0.45 0.44 0.44 0.44 0.44 0.44 0.44 -6.4%

0.560.560.55

0.60Revenue Per Minute (Rs.)

0.47

0.450 44 0 44 0 44 0 44 0 44 0 44

0.52

0.47

0.450 44 0 44

0.51

0.47

0 440.45

0.50

0.44 0.44 0.44 0.44 0.44 0.440.44 0.440.43 0.43

0.44

0.42 0.420.41 0.41

0.402QFY10 3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

RCOM Player 1 Player 2


RCOM, the only operator which has held on to the RPM over last 6 quarters

ContentsContents


Wireless

Global Enterprise

Home



OverviewGlobal Enterprise Business

Overview

Global Enterprise Business

Carrier Enterprise Consumer


Leading Enterprise services provider in IndiaAmong the Top 6 Leader-board of global Ethernet service providers

Among Top 15 largest international long distance carriers with over 15 billion minutes of traffic

2.5 million retail customers in 14 countries380 corporate have

t t d thAmong Top 11 Managed Services providers in the U.S. and Europe(Gartner Report March 2010)

Amongst Top 10 Data Centers in

World’s largest private submarine cable system owner and capacity providerLeading NLD Infrastructure provider in India

contracted these services in 3 continents1.25 million broadband customers in India

the world and # 1 in India (in terms of Saleable space)

provider in India

S l bl d i f t t d biliti i l


Scalable and proven infrastructure and capabilities are in place Target is to scale up the business


Carrier business : Global connectivity & assetsCarrier business : Global connectivity & assetsOwn 277,000 RKms of optic fiber cable with landing points in 30 countries & world’s largest private undersea cable system spanning 65,000 Kilometers

M 60 000 i i 163 i h h 700 iManage over 60,000 customer sites in 163 countries through 700 carrier partners

This cable system is seamlessly integrated with 1,90,000 kilometer of fiber optic in India connecting 600,000 villages & 24,000 towns to key business markets in India, USA, Europe,

Global Network Long Distance Network in India

Middle East, and APAC regions

Over 1000 direct interconnects with 450+ top networks


Network connecting over 85% of the world’s population

Enterprise business : Enterprise Managed Network


Enterprise business : Enterprise Managed Network

Global Connectivity Global Network

60,000+ managed sites with reach in 160 countries and territoriesterritories Metro Ethernet connectivity across 26 Metros outside IndiaHigh Capacity Access Network customized to meet Customer Demand


Unparalleled global reach and depth of network

Enterprise business : Biggest Data center player in Global Enterprise Business

p gg p yIndia with more than 450,000 sq ft of space

18 (9 India; 9 Outside India)18 (9 India; 9 Outside India) Data centers across the globe with more than 550,000 sq ft of facilities space

Geographic redundancy

Wide & complex application hosted

Core Banking, ATM/ Internet BankingComplex ERP/ SAP ApplicationsComplex Intranet/ Customized pApps.Large Messaging Applications


Expanding capacity to cater to fast growing demand

Consumer business : Calling services to 160+ countries Global Enterprise Business

gacross the globe

Global Reach Innovative Product SuiteRetail services in 14 countries including U.S, Canada, U.K., Australia, New Zealand, Hong K Si FKong, Singapore, France, Canada, Spain, Belgium, Netherlands, Austria and India

Leadership PositionOver 2.5 million customers for Reliance Global Call

iservice.

Usage of Reliance Global Call accounts for 40% of total retail market calls from


total retail market calls from the United States to India.

Global presence and strong customer baseGlobal Enterprise Business

Global presence and strong customer baseOver 2,100 enterprise and 2.5 million retail customer base outside India

Over 200 carrier customers based on strong

Carrier

Over 200 carrier customers based on strong long term relationships with over 70% repeat orders;Particularly strong in Asia, the Middle East and India

Among Top 5 Managed Network Service providers with over 200 global corporate customersA T 6 Gl b l Eth t S i id

EnterpriseAmong Top 6 Global Ethernet Service providers with over 1,200 customers in US alone;# 1 or # 2 service provider to world’s top exchanges including CME, NYSE, NASDAQ.Serve 850 of top 1000 enterprises in IndiaServe 850 of top 1000 enterprises in India

Over 2.5 million retail customers in 14 countries including U.S, Canada, U.K., Australia, New Zealand, Hong Kong, Singapore, France, Consumer


g g g pCanada, Spain, Belgium, Netherlands, Austria and India1.25 million broadband customers in India

Consumer

Financial PerformanceGlobal Enterprise Business

31,38930,000

35,00051,663

40 000

50,000

Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn)

5,6435,000

10,000

15,000

20,000

25,000

22,916

0

10,000

20,000

30,000

40,000

70%

04QFY11 1QFY12

04QFY11 1QFY12

EBITDA Margin

60.8%

24.6%20%

30%

40%

50%

60%

0%

10%

4QFY11 1QFY12

Note : 4Q FY’11 Revenue and EBITDA includes IRU license income of Rs 25.45 bn. and Rs. 25.3 bn. respectively. From 1Q FY’12 onwards, RCOM is reporting combined Global and Enterprise business units as a single operating business unit.


Synergies to improve operational efficiencies

, p g p g p g

ContentsContents


Wireless

Global Enterprise

Home



Indian Cable & Satellite Market

Home Business

Indian Cable & Satellite Market

200

2220

18

140

160

180

200

105108

11047

4133

26

80

100

120

140

Cable Dark

C & S

21 32 41 5070

8390

98

20

40

60DTH

Source : Industry Estimates

2 5 12 210

2007 2008 2009 2010 2011E 2012E 2013E


DTH penetration at ~20%% of TV homes; gaining momentum

y

Home Business

Reliance Digital TV (DTH)Industry’s 1st offerings of its kind - All 250 channels in High Definition like quality

Reliance Digital TV (DTH)

Pioneering HD experience in IndiaPioneering DVR – “Watch when you want”Key service differentiators

More channel choicePure Digital viewingg g8 Cinema channelsEasy program guideQuick channel selectInteractive applications (iNews, iGames, iCricket, iCooking, etc)Superior MPEG 4 technology


Digital viewing experience will create revolution in TV entertainment platforms

Digital TV Services: Complete suite of servicesHome Business

BroadcastTV and Radio EPG / Mini EPG Mosaic Portal

Digital TV Services: Complete suite of services

Information News Stock

Entertainment

Advertisments

Game VoD / MoD / PVR Karaoke / Photo Album

Interactive Promotion Dedicated Advertiser LocationServices Advertisments

Messaging

Interactive Promotion Dedicated Advertiser Location

SMS / MMS Mail Polling / Voting

Services

Commerce Shopping / Banking


Public Service T - Government / T - Learning

The 4 Pillars of GrowthHome Business

Reach and service

The 4 Pillars of Growth

Content

250+ channels

8 exclusive movie channels in English, Hindi and other regional languages

8,100 towns

2,000+ exclusive Reliance retail stores

regional languages

Interactive features – Games, Shopping, Kids, Stocks, Astrology, Cooking

24x7, 11 language customer service

Experience

High-definition channels

Technology

MPEG 4

Digital Picture

Digital Sound

High-definition DVR box

Next generation easy-to-use guide


Most advanced mini guide

ContentsContents


Wireless

Global Enterprise

Home



Drivers for future growth and shareholder value


Drivers Impact

Drivers for future growth and shareholder value

Reliance Infratel transaction: RCOM received formal indicative offers

from several interested parties. Currently, the transaction is proceeding

on track and is at advance stage

Deleveraged BalanceDeleveraged Balancesheetsheet

II

OO

Peak investment phase is over. RCOM continues to be free cash flow

positive and this trend to continue in succeeding years

Financials at inflection point as GSM and 3G momentum scales up

Increase revenueIncrease revenuegenerating abilitygenerating ability

Operational Operational leverage improves margin &leverage improves margin &

profitabilityprofitability

P t ti l fP t ti l f

p p

RCOM not only reliant on wireless business for future growth but also on

massive opportunity which exists in newer segments including DTH and

expansion of Enterprise/IDC Potential of Potential of unlocking unlocking

shareholders value shareholders value

expansion of Enterprise/IDC

Potential for unlocking shareholder value at subsidiary level (Infratel,

Global Enterprise, DTH)


Deleveraged balance sheet coupled with significant free cash flow generation to place RCOM in a much stronger financial position

Thank youy

Documents

RCOM Investor ppt August, 2011 - Reliance Group NGN Mediterranean and continue to main tain leadership in the Carriers Carrier market Incr ... Overview Global Enterprise Business Global