An introduction to India
Vodafone Open Office Mumbai, India
30 November 1 December 2011
Disclaimer
Information relating to price at which investments have been bought or sold in the past or the yield on such investments, cannot be relied upon as a guide to the future performance of such investments. The presentation also contains certain non-GAAP financial information. The Groups management believes these measures provide valuable additional information in understanding the performance of the Group or the Groups businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Groups industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for but rather as complementary to, the comparable GAAP measures. Vodafone, the Vodafone logo and the Zoozoo characters are trade marks of the Vodafone Group.
India: a huge economy
The worlds 9th largest economy; 7.5% GDP growth expected in 20121 Wide income divide and a growing middle class The worlds second largest population, 28% under the age of 152
Five Indian states would stand among the 20 most populous nations in the world
Uttar Pradesh, the largest state, would be the 5th largest country in the world Large rural population
2/3 of population based in villages Rural GDP nearly half of national total
Country China Population (m)3 1,341
India
USA Indonesia Uttar Pradesh Brazil
1,210
309 238 200 191
1. 2. 3.
International Monetary Fund, [Link] United Nations Economic and Social Commission for Asia and the Pacific, November 2010 Census of India 2011, [Link]
India: a segmented mobile market
Mobile penetration (%)1 Fixed penetration (%)1 Number of operators
70
Ave. ARPU (US$)1
3
Ave. MOU1
15
Ave. RPM (US$)1
3.5
345
0.01
3 Metro circles2
Large cities; high purchasing power, high population density 160% penetration
Delhi
5 A circles
States with highest earning power 84% penetration
8 B circles
Kolkata
Mumbai
Majority of population in rural, low infrastructure development 63% penetration
6 C circles
Chennai
Relatively lower earning power Limited infrastructure 50% penetration
1. 2.
Bank of America Merrill Lynch Global Wireless Matrix 28 September 2011 Chennai and Tamil Nadu treated as one circle as per TRAI reports
India: an exciting fast growing market
Customer base has continued to grow Revenues have picked up after a decline in 2010 Customers and revenue1
Industry wireless customers (m)
1000
Industry total comms revenue (Rs. bn)
359 325 312 309 311 312 584 636 331 752 341 365 866
380 360
Industry mobile customers (m) Industry total comms revenue (Rs. bn) 327
800
322 309 309 297
320 688
812
852
340 320 300 280 260 240 220
600
400
200
261
287
315
347
392
427
472
525
0 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12
200
1.
TRAI
with many operators and very low prices
Up to 13 operators in some circles New entrants have gained 3ppt of market share in two years
Revenue market share (Sept 2011)1
Aircel 4% TATA Uninor 2% MTS 1% Others 1%
Intense competition has created low prices
Revenue per minute (US$)2
0.11 0.10 0.10 0.05 0.02 Italy UK Brazil Russia Egypt 0.01 China 0.01 India
8%
Reliance
28%
Bharti
Monthly ARPU (INR)3
325 275 225
Bharti Vodafone Idea Reliance
8% 13% 20% 15%
BSNL+MTNL
Idea
175
Vodafone
125
75 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY09 FY10 FY11 FY12
1. 2. 3.
TRAI, based on gross revenues Bank of America Merrill Lynch Global Wireless Matrix 28 September 2011 Published company results
Vodafone India
6th largest Vodafone Opco by revenue, largest by customer base
145 million customers
4bn revenue, #2 revenue market share Ranked 1st or 2nd in 12 circles (68% of industry revenue) 79% nationwide population coverage
Vodafone rank1
#1 in 6 #2 in 6 #3 in 3
Strong rural presence
3G services launched in Q4 10/11
Circles
Metro A B C
% of total market1
Vodafone share (%) 1
Vodafone rank1
19 37 33 11
26 20 20 11
1 2 2 5
1.
TRAI, based on gross revenues
An important part of the Vodafone Group
History Acquired controlling interest in May 2007 for $10.9bn Expanded from 16 circles to nationwide in 2008/09 Over 100m customers in March 2010 3G launched in February 2011 Agreement to purchase Essar stake announced July 2011
Contribution in H1 11/12
Revenue
9%
EBITDA
7%
Operating free cash flow
9%
91%
93%
91%
Base station sites
Total minutes
48%
Number of customers
37% 63%
Vodafone India Rest of the Group
54%
46%
52%
Vodafone India: wide 2G coverage, expanding 3G
2G Footprint
88% population coverage in established 16 circles and 79% nationwide
Over 100k 2G base station sites 900MHz in 12 circles 3G Footprint 3G spectrum in 9 circles, which cover 68% of our service revenue base
Bilateral roaming agreements in most circles
Launched in over 530 cities and towns 9k 3G base station sites
Operations per circle
3 Metro circles 5 A circles 7 B circles 1 B & 6 C circles
9 6.2 6.2 4.4 4.4 6.2 8.2 4.4 4.4 6.2 4.4 6.2 8.0 7.2 9.8 10.0 6.2 4.4 4.4 6.2
Population coverage
c.99% c. 84% c.91% c. 57%
2G sites
11k 39k 37k 19k
9.8
10.0
GSM Spectrum allotment in MHz - 900 MHz (primary band) - 1800 MHz 3G (5MHz in each circle)
6.2
Definition of terms
AUSPI: Association of Unified Service Providers of India, an association of CDMA operators Circles: The Indian telecoms market is divided into 22 circles, with a license needed to operate in each circle. Chennai and Tamil Nadu are treated as one circle for reporting purposes
COAI: Cellular Operators Association of India, an association of GSM operators
Crore: A unit representing ten million Department of Telecommunications: Government department that overseas the telecommunications industry Lakh: A unit representing one hundred thousand TDSAT: Telecom Disputes Settlement Appeal Tribunal Telecoms Minister: Shri Kapil Sibal, Honourable Minister of Communications and Information Technology TRAI: Telecom Regulatory Authority of India, the telecommunications regulator
10