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<strong>Reliance</strong> <strong>Communications</strong><br />
Inves<strong>to</strong>r Presentation<br />
May 2009
Forward looking statements – Important Note<br />
This presentation and the discussion that follows may contain “forward looking<br />
statements” by <strong>Reliance</strong> <strong>Communications</strong> Ltd (“RCOM”) that are not his<strong>to</strong>rical in nature.<br />
These forward looking statements, which may include statements relating <strong>to</strong> future<br />
results of operation, financial condition, business prospects, plans and objectives, are<br />
based on the current beliefs, assumptions, expectations, estimates, and projections of<br />
the direc<strong>to</strong>rs and management of RCOM about the business, industry and markets in<br />
which RCOM operates. These statements are not guarantees of future performance, and<br />
are subject <strong>to</strong> known and unknown risks, uncertainties, and other fac<strong>to</strong>rs, some of which<br />
are beyond RCOM’s control and difficult <strong>to</strong> predict, that could cause actual results,<br />
performance or achievements <strong>to</strong> differ materially from those in the forward looking<br />
statements. Such statements are not, and should not be construed, as a representation<br />
as <strong>to</strong> future performance or achievements of RCOM. In particular, such statements<br />
should not be regarded as a projection of future performance of RCOM. It should be<br />
noted that the actual performance or achievements of RCOM may vary significantly<br />
from such statements.<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
India’s leading fully integrated & Converged service provider…<br />
Wireless<br />
• Mobile (CDMA & GSM)<br />
• VAS (Mobile World)<br />
• Wireless Data<br />
• Fixed Wireless<br />
• Public Access Business<br />
Enterprise<br />
• Internet Data Center<br />
• Broadband<br />
• Leased Line<br />
• Office Centrex<br />
• MPLS & VPN<br />
• WiMax<br />
Tower (Infratel)<br />
Home<br />
• DTH (Big TV)<br />
• Multi tenancy <strong>to</strong>wers (4x)<br />
• IPTV (Digital Home)<br />
• Pan- India coverage<br />
• Backhaul<br />
• Support systems Other businesses<br />
Globalcom<br />
• Submarine cable (FLAG)<br />
• Ethernet Data services<br />
• Long Distance (NLD/ILD)<br />
• <strong>Reliance</strong> Global Call<br />
• Vanco<br />
• Yipes<br />
Tech Services<br />
• Leveraging Internal IT<br />
Development Capabilities<br />
BPO<br />
• Expertise in Telecom<br />
BFSI, Utilities & Media<br />
Retail<br />
• <strong>Reliance</strong> World<br />
• <strong>Reliance</strong> Mobile S<strong>to</strong>re<br />
…Integrated play covering the entire value chain<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Complete range of telecom services<br />
Home Enterprise Globalcom Infratel Wireless<br />
Canada<br />
USA<br />
Netherland<br />
Spain<br />
Austria<br />
Russia<br />
UK<br />
London Netherland<br />
France<br />
Germany Belgium Switzerland<br />
Japan<br />
Germany<br />
Belgium<br />
d<br />
Austria<br />
Italy Saudi Arabia<br />
France Switzerland<br />
Italy Bahrain<br />
China<br />
UAE<br />
Japan<br />
Spain<br />
Qatar Pakistan<br />
Pakistan<br />
South Korea<br />
Qatar<br />
Oman<br />
Hong Kong<br />
Bahrain India<br />
Bangladesh<br />
Oman<br />
Taiwan<br />
Saudi Arabia<br />
Malaysia<br />
Sudan<br />
Hong Kong<br />
Nigeria Sudan<br />
UAE<br />
Malaysia<br />
Taiwan<br />
Sri Lanka<br />
New Zealand<br />
Nigeria<br />
South Korea<br />
Australia<br />
South<br />
South<br />
Africa<br />
Africa<br />
New Zealand<br />
6 th largest wireless opera<strong>to</strong>r in the world (cus<strong>to</strong>mer base in a single country)<br />
Only Indian company <strong>to</strong> offer nationwide both CDMA & GSM services<br />
Largest network covering a billion people in India<br />
Services offered includes Mobile, Home phones, PCOs, Datacards, etc<br />
Largest portfolio of multi-tenancy <strong>to</strong>wers with 4x tenancy<br />
Integrated solutions including <strong>to</strong>wers, optic fiber, network management, etc<br />
World’s largest submarine cable network with presence in 60 countries<br />
Wide range of services include Capacity services, MPLS-VPN, Ethernet,<br />
Managed services, etc<br />
One s<strong>to</strong>p shop for all kinds of enterprise connectivity solutions<br />
>50% market share in high growth data products<br />
Services offered include MPLS-VPN, Centrex, Data centers, WiMax, etc<br />
Only Indian DTH opera<strong>to</strong>r <strong>to</strong> provide services in 6,500 <strong>to</strong>wns<br />
Services offered by leveraging the existing infrastructure<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Strategy<br />
Objectives<br />
Action Plans<br />
Cus<strong>to</strong>mer<br />
Growth<br />
Latest congestion free Next Generation network for highest quality<br />
Attractive plans & offers<br />
Revenue<br />
Growth<br />
Integration &<br />
Convergence<br />
More revenue streams from new product launches<br />
Increased revenue from new service streams like GSM (share of VAS & Inroaming<br />
revenue)<br />
Focused participation in the entire value chain of telco business<br />
Would also be participating in the new technological developments <strong>to</strong><br />
provide one-s<strong>to</strong>p shop for all communication needs<br />
Profitable<br />
Growth<br />
Profitable & sustainable growth<br />
Leveraging existing infrastructure for new launches leads <strong>to</strong> stable margins<br />
Focused & profitable growth<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Building leadership position across all screens<br />
4 screen strategy<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Recent performance<br />
Financial Performance<br />
Balance Sheet Strength*<br />
4Q FY09 Q-o-Q Y-o-Y<br />
Revenue (Rs. Mn) 61,237 4.7% 15.3%<br />
(As on Dec 31, 2008)<br />
Assets<br />
(Rs. Mn)<br />
880,000<br />
EBITDA (Rs. Mn) 23,832 1.3% 2.9%<br />
Networth<br />
290,000<br />
Net Profit (Rs. Mn) 14,544 3.1% -3.2%<br />
Gross Debt<br />
267,000<br />
EBITDA Margin 38.9% -1.3ppt -4.7ppt<br />
Net Debt<br />
186,000<br />
Net Profit Margin 23.8% -0.3ppt -4.5ppt<br />
Net Debt <strong>to</strong> Equity (x)<br />
0.64<br />
* Balance Sheet as on 31 st Dec 2008. Fiscal year 09 balance sheet will be published post the final approval of Shareholders and/ or the Hon’ble High Court of Judicature at Mumbai on the<br />
Scheme of Arrangement for demerger of the Optical Fibre Division of the Company <strong>to</strong> <strong>Reliance</strong> Infratel Limited (“RITL”)<br />
Maintaining the strong growth momentum<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Financial Highlights<br />
Key Financial Parameters (Rs. Mn)<br />
Revenue EBITDA Net Profit<br />
+29%<br />
190,678<br />
229,411<br />
+55%<br />
81,989<br />
92,875<br />
+137%<br />
54,005<br />
59,078<br />
107,664<br />
144,683<br />
57,208<br />
31,637<br />
24,762<br />
4,438<br />
FY06 FY07 FY08 FY09<br />
FY06 FY07 FY08 FY09<br />
FY06 FY07 FY08 FY09<br />
Consistent & Substantial increase in profitability<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Cost management (% of revenue) with stable margins…<br />
Margins 42.3% 40.8% 40.2% 38.9%<br />
% of Total Revenue<br />
100%<br />
90%<br />
15.3%<br />
18.2% 19.9%<br />
80%<br />
22.2%<br />
70%<br />
60%<br />
18.6%<br />
18.2%<br />
17.5%<br />
50%<br />
16.5%<br />
40%<br />
6.6%<br />
30%<br />
8.1% 7.5% 6.9%<br />
Network expenses<br />
- Increase in network cost due <strong>to</strong><br />
expansion of coverage & GSM<br />
launch<br />
- Opex of other new businesses like<br />
DTH, Vanco, etc<br />
SG&A expenses<br />
- Focused marketing & various cost<br />
control measures<br />
Staff cost<br />
20%<br />
10%<br />
0%<br />
17.2%<br />
14.7% 14.9% 15.5%<br />
1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Access charges & LF<br />
- Expansion of fiber optic assets &<br />
increase in PoIs<br />
- Removal of ADC<br />
…inspite of launch of multiple new businesses<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Profitability<br />
EBITDA Margin<br />
Net Profit Margin<br />
50%<br />
30%<br />
40%<br />
30%<br />
Bharti<br />
RCOM<br />
Idea<br />
25%<br />
20%<br />
15%<br />
RCOM<br />
Bharti<br />
20%<br />
10%<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
10%<br />
5%<br />
Idea<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Source: Company reports<br />
<br />
<br />
Among the highest margins in the industry in spite of the launch of<br />
several new businesses<br />
Aimed at leveraging common infrastructure <strong>to</strong> protect/enhance margins<br />
Profitable growth<br />
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<strong>Reliance</strong> <strong>Communications</strong><br />
Capex intensity coming down significantly…<br />
30,000<br />
20,000<br />
Rs. Crore<br />
10,000<br />
Bharti<br />
RCOM<br />
0<br />
FY06 FY07 FY08 FY09 FY10<br />
Note: FY2010 capex amount is the company’s guidance in the earnings call<br />
Source: Company reports<br />
…moving <strong>to</strong>wards FCF positive<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
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Wireless Business<br />
Targets the largest untapped population in the world<br />
140%<br />
120%<br />
100%<br />
80%<br />
60%<br />
Low wireless penetration…<br />
48%<br />
80% 86% 89% 92% 126%<br />
…Leading <strong>to</strong> strong revenue growth<br />
40%<br />
30%<br />
26%<br />
20%<br />
18%<br />
14%<br />
40%<br />
20%<br />
0%<br />
30%<br />
10%<br />
0%<br />
0%<br />
3% 2%<br />
6%<br />
India China Brazil Japan US France UK<br />
Japan France UK US China Brazil India<br />
Source: Merrill Lynch Global Wireless Matrix, December 2008<br />
Low penetration + High Revenue growth = Huge opportunity<br />
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Wireless Business<br />
Mobile subscribers in India <strong>to</strong> cross 600 mn in 2 years…<br />
700<br />
600<br />
Mobile Subscribers (mn)<br />
Penetration<br />
50%<br />
60%<br />
50%<br />
400<br />
Subscriber additions (mn)<br />
13.7<br />
15.2<br />
386<br />
500<br />
400<br />
300<br />
200<br />
CAGR 44%<br />
22%<br />
14%<br />
256<br />
33%<br />
386<br />
42%<br />
496<br />
596<br />
40%<br />
30%<br />
20%<br />
350<br />
300<br />
9.1<br />
10.0<br />
10.4<br />
10.3<br />
10.7<br />
15.4<br />
100<br />
9%<br />
161<br />
10%<br />
96<br />
0<br />
2006 2007 2008 2009 2010E 2011E<br />
0%<br />
250<br />
Jul Aug Sept Oct Nov Dec Jan Feb Mar Mar<br />
Year end March 31<br />
Source: Industry estimates, COAI, AUSPI<br />
…even then t<strong>here</strong> will be 600 mn unserved people in India<br />
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Wireless Business<br />
RCOM: One of the fastest growing wireless companies globally<br />
<br />
<br />
Among India’s <strong>to</strong>p 2 opera<strong>to</strong>rs with over 73 mn wireless subscribers<br />
- Prepaid subscriber additions drive growth - 93% of <strong>to</strong>tal subscribers<br />
Key Performance Indica<strong>to</strong>rs<br />
- EBITDA margins among the highest in the industry - 37%...<br />
- … despite among the lowest tariffs in the world…<br />
- … backed by the highest Minutes Of Usage – 830 million minutes per day<br />
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Wireless Business<br />
Net adds market<br />
Net adds (mn) Net adds market share (%)<br />
12.0<br />
35.0%<br />
10.0<br />
RCOM<br />
Net adds (in mn)<br />
8.0<br />
6.0<br />
4.0<br />
Bharti<br />
Vodafone<br />
Idea<br />
25.0%<br />
15.0%<br />
RCOM<br />
Bharti<br />
Vodafone<br />
2.0<br />
Idea<br />
0.0<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
5.0%<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Source: COAI, AUSPI<br />
<br />
<br />
Highest wireless subscriber acquisition in the world – 5 mn in the first<br />
month of our GSM launch<br />
Achieved more than 25% market share in 7-8 telecom opera<strong>to</strong>r market<br />
Significant acceleration in RCOM net adds post GSM launch<br />
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Wireless Business<br />
Mobility<br />
Over 73 million<br />
Happy cus<strong>to</strong>mers<br />
Wireless Data<br />
Fixed Wireless<br />
Market leadership<br />
in all segments<br />
*CDMA<br />
*<br />
PCO<br />
… shall replicate success with nationwide GSM service<br />
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Wireless Business<br />
24,000<br />
Towns<br />
600,000 Villages<br />
1 Billion Indians<br />
CDMA<br />
GSM<br />
Seamless coverage w<strong>here</strong>ver you go<br />
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Wireless Business<br />
India’s billion people can now expect an unbeatable<br />
choice and value proposition across….<br />
1. Coverage 2.<br />
3. Cus<strong>to</strong>mer Choice 4.<br />
Quality<br />
Handset Range<br />
5.<br />
Service Breadth<br />
6.<br />
Int’l Roaming<br />
7.<br />
Value Added Services<br />
<strong>Reliance</strong> GSM – Set <strong>to</strong> redefine mobility landscape in India<br />
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Wireless Business<br />
GSM network exploits huge capex and opex synergies<br />
Capex for new entrant : ~ US$ 10 bn<br />
Radio<br />
Electronics<br />
Retail Network<br />
Sales &<br />
Distribution<br />
BPO + Call Center<br />
IT Systems<br />
Billing + CRM + SAP<br />
Transport Backhaul + PoI<br />
Passive Infrastructure<br />
< 15% investment<br />
Leveraged for<br />
Multiple businesses<br />
incl. CDMA +GSM<br />
85% of capex is<br />
Technology<br />
Agnostic<br />
3G Ready<br />
Infrastructure<br />
Nationwide GSM service at marginal incremental cost<br />
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Wireless Business<br />
Dual network offers additional market share levers<br />
Existing growth<br />
momentum<br />
Industry monthly net adds of 8 - 10 mn GSM subscribers<br />
Impetus from network expansion in semi-urban/ rural areas<br />
Broad Market Segmentation<br />
Cross technology<br />
On-net plans: Unique<br />
Service offering<br />
Corporate Requirement<br />
GSM<br />
Senior executives<br />
- Smart phones<br />
- International travel<br />
Retail/Family<br />
Similar CUG family plans<br />
Field force<br />
- Large on-net talktime<br />
RCOM CDMA<br />
- Remote email access<br />
RCOM will bring both segments on-net, driving cus<strong>to</strong>mer value & stickiness<br />
Cus<strong>to</strong>mer churn<br />
Mobile Number<br />
Portability (MNP) CDMA GSM<br />
Incumbent GSM RCOM GSM<br />
Probability<br />
Unique advantage: Competition can’t replicate<br />
Low<br />
High<br />
Cus<strong>to</strong>mer has invested in Handset<br />
Cus<strong>to</strong>mer neither loses number<br />
nor investment in Handset<br />
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Wireless Business<br />
Drivers for additional revenue market share<br />
International<br />
in-roaming<br />
revenue<br />
<br />
<br />
<br />
Participation in rapidly growing ~US$ 1 bn<br />
international in-roaming market<br />
Currently enjoyed by few GSM incumbents<br />
Extremely profitable segment<br />
VAS revenue<br />
<br />
<br />
GSM non-voice revenue contribution ~10% with<br />
SMS contributing ~5% vs ~1.2% in CDMA<br />
Attract high SMS/VAS usage groups who also<br />
look for trendy & sleek multimedia handsets<br />
Thru GSM<br />
Handsets<br />
Ecosystem<br />
<br />
Mid <strong>to</strong> High-end range handset users contribute<br />
higher ARPU (incl. international roamers)<br />
Significant revenue upside from GSM launch<br />
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Wireless Business<br />
Most comprehensive wireless portfolio<br />
Technology<br />
Advantages CDMA GSM<br />
Spectrum efficiency<br />
Wireless Data capacity<br />
Unlimited usage plans<br />
PCO & FWP<br />
Mobile internet dominance<br />
ATM & PoS<br />
Multimedia/Video capability<br />
Near 3G experience<br />
Handset range at all price points<br />
International Roaming<br />
GSM ecosystem - 75% of<br />
Indian mobile sec<strong>to</strong>r<br />
High ARPU segment<br />
In-roaming revenues<br />
Only company <strong>to</strong> leverage strengths of both technologies<br />
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Wireless Business<br />
Best positioned <strong>to</strong> serve all cus<strong>to</strong>mer segments<br />
Segment Need Technology Supporting fac<strong>to</strong>rs<br />
Light pockets<br />
-Low handset prices<br />
GSM/EDGE<br />
-Presence of 2 nd hand handsets<br />
-Primarily incoming &<br />
low outgoing<br />
-SIM Distribution reach<br />
Business and<br />
Enterprise<br />
-E-mail<br />
-Browsers<br />
GSM/EDGE<br />
-Mid and High end handset range<br />
-International Roaming<br />
-Office <strong>to</strong>ols<br />
-Roaming<br />
Lifestyle aspirants<br />
-Multimedia<br />
GSM/EDGE<br />
-Mid and High end handset range<br />
-Design (look & feel)<br />
Anchored users<br />
-Fixed wireless<br />
CDMA<br />
-High data speeds possible with 1X<br />
-Data speeds<br />
-Low cost <strong>to</strong> operate limited<br />
mobility<br />
Data hungry users -Data speeds CDMA -High data speeds possible with 1X<br />
Value seekers<br />
-Value seeker of<br />
Handset and Minutes<br />
CDMA<br />
-Minutes bundled with handsets<br />
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Wireless Business<br />
Netconnect Broadband Plus<br />
Competitive differentiation<br />
Fastest internet broadband service of up <strong>to</strong> 3.1<br />
Mbps in India’s <strong>to</strong>p 35 cities<br />
Seamless handover & connectivity through CDMA<br />
1X in over 23K <strong>to</strong>wns and 6 lakh villages covering<br />
90% of the Indian population<br />
Wide reach compared <strong>to</strong> limited reach of wireline<br />
networks<br />
- Broadband coverage expansion the wireless way<br />
Easy plug & play USB devices<br />
Easy availability & instant activation within<br />
minutes compared <strong>to</strong> few weeks or even months<br />
in case of wired broadband<br />
Fastest internet connectivity under wireless platform<br />
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Wireless Business<br />
Service Innovations: First <strong>to</strong> reach the market<br />
Unlimited local & STD calls<br />
Mobile TV<br />
Yahoo on <strong>Reliance</strong><br />
Micro-billing<br />
Internet on the move<br />
<strong>MB</strong>log<br />
<strong>MB</strong>anking<br />
MPay<br />
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Wireless Business<br />
Multi-channel cus<strong>to</strong>mer delivery system<br />
<br />
<br />
<br />
<br />
World-class design , fit out & ambience<br />
at 2,000 exclusive retail showrooms on<br />
High streets/Malls<br />
High Quality Reach & National footprint<br />
through 5,000 distribu<strong>to</strong>rs & 1 million<br />
retailers<br />
5,000+ Direct & indirect outbound sales<br />
force <strong>to</strong> cater <strong>to</strong> cus<strong>to</strong>mers at their<br />
premises<br />
Dimensioned <strong>to</strong> handle over 35 mn<br />
sales transactions annually<br />
By far the largest retail distribution network in the industry<br />
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Wireless Business<br />
Financial Performance<br />
Revenue (Rs. Mn)<br />
EBITDA (Rs. Mn)<br />
46,000<br />
44,000<br />
42,000<br />
41,608<br />
41,187<br />
43,356<br />
44,119<br />
45,015<br />
17,000<br />
16,000<br />
16,763<br />
16,623<br />
16,859<br />
16,616 16,629<br />
40,000<br />
38,000<br />
15,000<br />
36,000<br />
34,000<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
14,000<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
EBITDA Margin<br />
80%<br />
60%<br />
40%<br />
40.3%<br />
40.4%<br />
38.9% 37.7%<br />
36.9%<br />
20%<br />
0%<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Maintained growth momentum with stable margins<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
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<strong>Reliance</strong> Infratel<br />
Infrastructure Tenancy Slots – Market<br />
RITL Ground based <strong>to</strong>wer<br />
2G, 3G & BWA<br />
700,000<br />
400,000<br />
200,000<br />
RITL Roof <strong>to</strong>p <strong>to</strong>wer<br />
2008A 2009A 2010E<br />
Source: Industry Estimates<br />
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<strong>Reliance</strong> Infratel<br />
Infrastructure sharing<br />
GSM and 3G roll outs<br />
Access large rural<br />
population<br />
Spectrum scarcity vs.<br />
coverage<br />
Speed of deployment<br />
Opera<strong>to</strong>r imperatives<br />
Growth<br />
Regulation<br />
Growth drivers<br />
Pressure on site<br />
sharing<br />
Active sharing<br />
allowed<br />
USO scheme for<br />
sharing<br />
infrastructure<br />
Rural roll out<br />
Reduced cost of<br />
service<br />
Increase penetration<br />
Government imperatives<br />
Social<br />
responsibility<br />
Key drivers of<br />
infrastructure<br />
sharing<br />
Financial<br />
&<br />
business<br />
impact<br />
Opera<strong>to</strong>r imperatives<br />
Capex burden<br />
Profitability amid<br />
falling ARPUs<br />
Network quality<br />
Focus on core<br />
business<br />
Infrastructure sharing – All drivers are in place<br />
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<strong>Reliance</strong> Infratel<br />
Infrastructure overview<br />
<br />
Operational in all 22 circles<br />
~48,000 multi-tenancy <strong>to</strong>wers as on March 31, 2009.<br />
<br />
<br />
<br />
Anchor cus<strong>to</strong>mer (<strong>Reliance</strong> <strong>Communications</strong>) driven strategy<br />
Current captive tenancy of 1.6x post our GSM launch; will further increase<br />
by 3 rd party (external) tenants<br />
Financial performance (FY2008)<br />
- Revenue: Rs. 14,566 mn<br />
- EBITDA: Rs. 6,746 mn; Margins: 46.3%<br />
- Total Assets: Rs. 117,205 mn<br />
Aim <strong>to</strong> be a preferred infrastructure provider for new opera<strong>to</strong>rs<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
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Globalcom Business<br />
Business structure<br />
<br />
Completed restructuring of our services under four core business segments<br />
of Data, Voice, WiMax and NLD<br />
Data Voice WiMAX NLD<br />
Accelerate growth in<strong>to</strong> $290 Billion communications market by<br />
providing comprehensive voice, video & data network services<br />
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Globalcom Business<br />
Market potential<br />
Business Unit<br />
2008F Global Market Demand ($bn)<br />
Past scope of services<br />
Typical<br />
margins<br />
WiMAX<br />
$185 bn<br />
$2.2 bn<br />
$1.5 bn<br />
35%–55%<br />
15%-25%<br />
NLD<br />
20%–40%<br />
Data<br />
$100 bn<br />
15%–35%<br />
Voice<br />
Sources: Telegeography, Ovum, Gartner Research<br />
Addressable market revenue is ~US$ 290 bn with EBITDA in range of<br />
15% <strong>to</strong> 55% based on service and geography<br />
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Globalcom Business<br />
Voice Business<br />
USA<br />
<br />
<br />
Canada<br />
Global Reach<br />
Retail services in U.S.,<br />
Canada, U.K., Australia,<br />
New Zealand, Hong Kong<br />
and Malaysia.<br />
<strong>Reliance</strong> Global Call offers<br />
Calling services for 200<br />
countries across the globe.<br />
Netherland<br />
Spain<br />
Austria<br />
Russia<br />
UK<br />
London Netherland<br />
France<br />
Germany Belgium Switzerland<br />
Japan<br />
Germany<br />
d<br />
Belgium<br />
Austria<br />
Italy Saudi Arabia<br />
France Switzerland<br />
Italy Bahrain<br />
China<br />
UAE<br />
Japan<br />
Spain<br />
Qatar Pakistan<br />
Qatar Pakistan<br />
South Korea<br />
Oman<br />
Hong Kong<br />
Bahrain India Bangladesh<br />
Oman<br />
Taiwan<br />
Saudi Arabia<br />
Malaysia<br />
Hong Kong<br />
NigeriaSudan<br />
Sudan<br />
UAE<br />
Malaysia<br />
Taiwan<br />
Sri Lanka<br />
New Zealand<br />
Nigeria<br />
South Korea<br />
<br />
<br />
Innovative Product<br />
Suite<br />
<strong>Reliance</strong> Global Call<br />
- International Calling Service<br />
- Web based service delivery,<br />
fulfillment<br />
<strong>Reliance</strong> Passport<br />
- Single SIM for 110<br />
countries with free incoming<br />
calls in 57 countries<br />
<br />
<br />
<br />
Leadership Position<br />
Market share of 30% for<br />
ILD wholesale inbound<br />
traffic<br />
Over 2 million cus<strong>to</strong>mers<br />
for <strong>Reliance</strong> Global Call<br />
service.<br />
Usage of <strong>Reliance</strong> Global<br />
Call accounts for 40% of<br />
<strong>to</strong>tal retail market calls<br />
from the United States <strong>to</strong><br />
India.<br />
South Africa<br />
South Africa<br />
Australia<br />
New Zealand<br />
Market leader in International Long Distance<br />
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Globalcom Business<br />
Business Performance & Product Development<br />
<br />
<br />
<br />
<br />
<br />
RGC continues <strong>to</strong> be #1 Retail Service for India calling<br />
from US – user base of over 2 mn<br />
Special promotional offers were given for Pongal, Holi,<br />
Valentine’s day, etc<br />
Launched South Asia based calling card portal as part of<br />
RGC expansion strategy<br />
Beta launch of MindBridge Audio conference services<br />
<strong>Reliance</strong> Global Call: New cus<strong>to</strong>mer friendly features <strong>to</strong><br />
existing products being added e.g. ‘Express Dial’ for Java<br />
based mobile<br />
Extending RGC services <strong>to</strong> enterprise cus<strong>to</strong>mers in<br />
Singapore and New Zealand<br />
Continues <strong>to</strong> be #1 Retail Service for India calling from US<br />
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Globalcom Business<br />
Voice Business - Plan <strong>to</strong> drive profitable growth<br />
Continued<br />
Product<br />
Innovation<br />
Value adds <strong>to</strong> drive retention and usage<br />
- Loyalty and reward program<br />
- Money transfer services<br />
- Entertainment and content features<br />
Launch new products like:<br />
- Web based Audio and Video Conferencing<br />
Expand<br />
Cus<strong>to</strong>mer<br />
Base<br />
Expand retail reach <strong>to</strong> new terri<strong>to</strong>ries like Bahrain<br />
Aggressively target Enterprise cus<strong>to</strong>mers through cross<br />
sell and up sell through <strong>Reliance</strong> Vanco sales team<br />
Maintain low cost leadership while aggressively growing business<br />
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Globalcom Business<br />
Data Business<br />
Unmatched<br />
Capabilities<br />
Global presence in over 60<br />
countries. World’s largest<br />
IP optical network<br />
Blue Chip Cus<strong>to</strong>mers<br />
Diverse base of over 200<br />
carriers, ISPs and content<br />
providers.<br />
<br />
Leadership Position<br />
Ranked amongst <strong>to</strong>p 5 in<br />
Global Network Service<br />
Providers by Gartner.<br />
<br />
Leadership in Global<br />
Ethernet (Yipes) and MPLS<br />
VPN (Vanco).<br />
<br />
Over 1,200 Blue Chip<br />
enterprise cus<strong>to</strong>mers.<br />
<br />
Among <strong>to</strong>p 3 IDC suppliers<br />
Coverage<br />
Among Top 5 Managed Network Services providers<br />
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Globalcom Business<br />
Data Business - Plan <strong>to</strong> drive profitable growth<br />
Vertical<br />
Expansion<br />
Enhance revenue contribution from higher margin<br />
value added services<br />
“Sell <strong>to</strong>, sell through, sell with” channel partners <strong>to</strong><br />
extend the cus<strong>to</strong>mer franchise<br />
Horizontal<br />
Expansion<br />
Expand Geographical Coverage:<br />
- Reach of cable network<br />
- VPoPs<br />
- Product suite<br />
Low risk investment strategy based on securing prebuild<br />
commitments<br />
Maintain low cost leadership while aggressively growing business<br />
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Globalcom Business<br />
WiMAX Business<br />
Building a Spectrum Bank<br />
Focused on acquiring licenses and spectrum in<br />
emerging markets; market size of WiMAX<br />
estimated <strong>to</strong> be US$ 10 bn by 2010<br />
Way Forward<br />
Operationalise WiMAX<br />
business in select<br />
geographies<br />
Leverage the low cost<br />
and scalable delivery<br />
center in Mumbai<br />
Deliver affordable broadband access across emerging markets<br />
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Globalcom Business<br />
Financial Performance<br />
Revenue (Rs. Mn)<br />
EBITDA (Rs. Mn)<br />
20,000<br />
15,000<br />
15,257 15,260<br />
16,915 16,783<br />
18,803<br />
6,000<br />
5,000<br />
4,000<br />
4,089<br />
3,222<br />
3,608<br />
4,315<br />
5,025<br />
10,000<br />
3,000<br />
5,000<br />
2,000<br />
1,000<br />
0<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
0<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
EBITDA Margin<br />
50%<br />
40%<br />
30%<br />
20%<br />
26.8%<br />
21.1%<br />
21.3%<br />
25.7%<br />
26.7%<br />
10%<br />
0%<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Short term margin impact due <strong>to</strong> VANCO acquisition<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
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Enterprise Business<br />
Underserved market: Provides strong growth opportunity<br />
Broadband market segment revenue (US$ bn)<br />
US$ 13 bn<br />
US$ 5.5 bn<br />
+ US$ 8 bn<br />
FY2008<br />
FY2012<br />
Household S<strong>MB</strong> + SME Enterprise<br />
Source : Industry Report<br />
Indian Market <strong>to</strong> grow <strong>to</strong> US$ 13 bn in the next 3 years<br />
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Enterprise Business<br />
RCOM: Best positioned <strong>to</strong> drive growth<br />
<br />
>50% market share in highest growth data<br />
products like IDC, Centrex solutions, VPN, etc<br />
1 Million buildings connected across <strong>to</strong>p 44<br />
cities <strong>to</strong> our fiber network, <strong>to</strong> cross 1.5 mn by<br />
next year end<br />
Fiber<br />
Ring<br />
Meshed Core<br />
Atlantic<br />
Pacific<br />
<br />
Have built the largest capability in India <strong>to</strong><br />
serve >7.5 mn Voice & Data cus<strong>to</strong>mers<br />
Who do we Serve<br />
<br />
<br />
<br />
Servicing over 900 of <strong>to</strong>p 1000 <strong>to</strong>p Enterprises<br />
250 MNCs and 50,000 S<strong>MB</strong> businesses<br />
Over 1.4 mn access subscribers<br />
India’s leading provider of enterprise services<br />
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Enterprise Business - IDC<br />
IDC: Largest in India with >60% market share<br />
<br />
Six data centres with level 3+ accreditation<br />
– more than 300,000 sq ft of facilities<br />
space<br />
Hosting >20,000 systems and >1400<br />
terabyte of information<br />
<br />
<br />
Geographic redundancy<br />
Wide & complex application hosted<br />
- Core Banking, ATM/ Internet Banking<br />
- Complex ERP/ SAP Applications<br />
- Complex Intranet/ Cus<strong>to</strong>mized Apps.<br />
- Large Messaging Applications<br />
Expanding capacity 4 times <strong>to</strong> cater <strong>to</strong> fast growing demand<br />
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Enterprise Business<br />
Financial Performance<br />
Revenue (Rs. Mn)<br />
EBITDA (Rs. Mn)<br />
8,000<br />
6,000<br />
5,100<br />
5,603<br />
6,023<br />
6,542<br />
7,075<br />
4,000<br />
3,000<br />
2,492<br />
2,714<br />
2,941<br />
2,760<br />
3,160<br />
4,000<br />
2,000<br />
2,000<br />
1,000<br />
0<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
0<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
EBITDA Margin<br />
80%<br />
60%<br />
40%<br />
48.9% 48.4%<br />
48.8%<br />
42.2%<br />
44.7%<br />
20%<br />
0%<br />
4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09<br />
Consistent growth with strong margins<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
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Home<br />
Indian Market (as of March’09)<br />
400<br />
India’s TV Viewership<br />
• 2 nd largest in the world<br />
• 120 Mn TV Homes<br />
• 90 Mn C&S Homes<br />
• 12 Mn Pay TV DTH Homes<br />
TV HH (in mn)<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
China India US Japan<br />
TV Technology Evolution<br />
Analog cable HH<br />
90%<br />
• Analog Cable – Digital Cable – DTH<br />
• DTH <strong>to</strong> grow multi-fold by 2015<br />
Digital HH<br />
1%<br />
DTH HH<br />
9%<br />
One of the largest Pay TV markets globally<br />
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Home Business<br />
Big TV (DTH) - Commercially launched<br />
Key service differentia<strong>to</strong>rs<br />
- More channel choice<br />
- Pure Digital viewing<br />
- 32 Cinema channels<br />
- Easy program guide<br />
- Quick channel select<br />
- Interactive applications (iNews, iGames,<br />
iCricket, etc)<br />
- Superior Mpeg 4 technology<br />
Pioneering HD Experience in India<br />
Pioneering DVR – “Watch when you want”<br />
Digital viewing experience will create revolution in TV entertainment platforms<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
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Home Business<br />
BIG TV Services: Complete suite of services<br />
BroadcastTV and Radio<br />
EPG / Mini EPG Mosaic Portal<br />
Information<br />
News<br />
S<strong>to</strong>ck<br />
Entertainment<br />
Game VoD / MoD / PVR Karaoke / Pho<strong>to</strong> Album<br />
Services<br />
Advertisments<br />
Interactive Promotion<br />
Dedicated Advertiser Location<br />
Messaging<br />
SMS / MMS Mail Polling / Voting<br />
Commerce<br />
Shopping / Banking<br />
Public Service<br />
T - Government / T - Learning<br />
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Contents<br />
<br />
<strong>Reliance</strong> <strong>Communications</strong> – an integrated telco<br />
• Wireless<br />
• Infratel<br />
• Globalcom<br />
• Enterprise<br />
• Home<br />
<br />
Key takeaways<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
53 of 55
Looking ahead<br />
Key Takeaways<br />
<br />
<br />
<br />
<br />
Drivers for growth<br />
RCOM launched nationwide GSM service<br />
with presence in 20,000 <strong>to</strong>wns in March<br />
2009<br />
RCOM GSM expanding coverage <strong>to</strong> 24K<br />
<strong>to</strong>wns <strong>to</strong> cover 1 billion people by mid<br />
CY2009<br />
Huge growth opportunity in Business<br />
segments like Infratel, DTH & expansion<br />
of Enterprise/IDC<br />
Time -<strong>to</strong>- Market advantage for launching<br />
new & unique products & services<br />
Impact<br />
Increases the Revenue<br />
generating ability<br />
High EBITDA margin<br />
Businesses improves the<br />
overall profitability<br />
Robust pipeline of<br />
business <strong>to</strong> support<br />
growth<br />
Integration of Telecom, Media, IT will be levers of tremendous future growth<br />
Wireless | Infratel | Globalcom | Enterprise | Home<br />
54 of 55
Thank you
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