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Reliance Communications Limited FY15 Annual General Meeting September 30, 2015 Private and Confidential Forward looking statements – Important Note This presentation and the discussion that follows may contain “forward looking statements” by Reliance Communications Ltd (“RCOM”) that are not historical in nature. These forward looking statements, which may include statements relating to future results of operation, financial condition, business prospects, plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and projections of the directors and management of RCOM about the business, industry and markets in which RCOM operates. These statements are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond RCOM’s control and difficult to predict, that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of RCOM. In particular, such statements should not be regarded as a projection of future performance of RCOM. It should be noted that the actual performance or achievements of RCOM may vary significantly from such statements. 2 A great mind’s dream. ‘A phone in every Indian’s hand.’ A vision to empower SHRI DHIRUBHAI H. AMBANI Our Legendary Founder December 28, 1932 - Forever 3 Table of Contents 1 Company overview 2 Data is the future 3 RCOM ready to capture Data boom 4 Conclusion 4 Company overview Reliance Communications : An Overview Integrated telecom operator with Revenues of Rs. 22,098 Crore Global data business with sub-sea cable network of ~69,000 km Nationwide network with ~43,000 towers and 190,000 Km optical fibre cable Only pan-India GSM & CDMA operator and 3G services across 18 circles* 110m wireless subs including 35m data subs of which ~18m are 3G Leading Player in the Indian Telecom Sector Note: * including ICR arrangements 6 Financial Performance - FY 2015 REVENUES 22,098 Cr EBITDA 7,518 Cr EBITDA MARGIN 34% ASSETS 91,284 Cr NET WORTH 37,936 Cr All figures are in Rs. Strong Financial Performance with robust margins 7 Key Performance Indicators RPM (`) Minutes of usage/ sub 0.44 0.44 330 0.43 0.40 Mar' 12 Mar' 13 290 296 Mar' 13 Mar' 14 227 Mar '14 Mar '15 Mar' 12 Mar '15 Quarterly EBITDA/ min (`) Quarterly ARPU (`) 147 128 0.154 117 99 0.155 0.117 0.105 Mar' 12 Mar' 13 Mar' 14 Mar' 15 Mar 12 Mar' 13 Mar' 14 Mar' 15 Wireless Operations: Mar-12; India Operations: Mar-13, Mar-14 & Mar-15 EBITDA / min – Indian telecom operations RPM and Indian Operations margin Operating Metrics have Seen a Sharp Turnaround 8 Strengthening of Balance Sheet Improving the Balance Sheet by addition of Equity Capital and by elongating liability profile Equity Infusion Rs. 6,100 Crore Largest QIP by an Indian Corporate Credit Rating Moody BA3 Stable Fitch BB- Stable First time rating by International agencies USD Bond issue by RCOM USD 300 Million Maiden Issue USD Bond issue by GCX USD 350 Million Successful fund Raising Solid investor confidence in RCOM’s long-term business strategy 9 Future proofing of Spectrum Portfolio RCOM has Pan India Sub 1 GHz spectrum capability for LTE Acquisition of substantial spectrum in 800/850 band in the recent auction to future-proof LTE plans Only operator with 5 MHz spectrum in 800/850 band on a pan-India basis 10 Data is the future Internet connectivity in India 1 billion people still not connected to Internet in India 20% …..but growing faster than China Only of population is Online (source : www.internetlivestats.com) + Huge untapped potential ! 12 Internet connectivity in India Contd… What do Indians do Online …? 83% EMAIL 77% SOCIAL NETWORKING 65% INSTANT MESSAGING 40% SEARCH APP STORE 25% Source : LIQUID ASIA. All rights reserved with owners 13 Internet connectivity in India Contd… Customers are adopting Smartphones at a furious pace…. 44% increase in Smartphone shipments From ~60 lakh per month a year ago , to ~90 lakh a month now Reducing prices of smartphones fuelling growth ! 14 Internet connectivity in India Contd… Online Video consumption in India is Exploding ! 9 cr YouTube videos being watched in a day ! 95 min avg time spend by a YouTube user in a month Creating demand for Smartphones, and for Speed ! 15 Internet connectivity in India Contd… Indians are connecting to online Social Networks in a big way ! Facebook LinkedIn 125 Million Users 24 Million Users 2nd largest market 2nd largest market WhatsApp Twitter 70 Million Users India = Fastest Growing Largest market User Market Social Networking (peer connectivity) accelerating internet adoption ! 16 Mobile E-Commerce – India leapfrogging 50% of India’s E-Commerce sales on Mobile India China Brazil France UK Australia USA Germany Russia Japan 0% 10% 20% 30% 40% 50% 60% Mobile is preferred mode for E-Commerce in India 17 Data is the Next Frontier for Growth Data Traffic to grow 8x over FY 14-18 GB mn 5,496 3,755 future data revenue growth Smartphone, Feature Phone and 2,496 USB Modem constitute 97% of 1,555 726 FY14 Small & large screen to drive data usage FY15 FY16 FY17 FY18 Indian mobile data poised to become a USD 15 bn market 18 RCOM ready to capture Data boom Consumer Business Data Capability …Future proof (3G/4G Capable) Spectrum Portfolio Circles (#) Spectrum (MHz) 2G (900/1800 MHz) 19 90 3G 2100 MHz 13 65 CDMA / 4G 800/850 MHz 22 (Pan India) 114 Pan India broad-band spectrum for 4G services 21 Data Capability … 850 MHz Band - A Powerful LTE Spectrum Our Spectrum Holding in this band – Strategic Advantage in Data Leadership 850MHz band best for indoor coverage due to better penetration and throughput of the signal 4G 3G 2G 1x / EVDO / Rev A / B Supports RCOM’s Unique Incumbency Position in Data 22 Data Capability … High Quality Tower & Fiber Assets Tower Assets Young portfolio of 43,379 towers, located in all 22 circles, capable of housing 4 tenants OFC Assets One of the largest network of backhaul optical fiber ~190,000 Kms Only integrated tower company having a pan-India tower portfolio & robust backhaul network 23 Data Capability … Dominant Footprint GSM – 3G CDMA – Rev B and Rev A LTE Ready Spectrum Capability Delhi Delhi Kolkata Kolkata Pune Mumbai Mumbai Hyderabad Bengaluru Own Chennai ICR Rev A/B Rev A 3G coverage in 18 circles 7 metros on Rev B (14.7 Mbps) 436 towns with Rev B coverage 334 cities (13 own circles) Pan-India 5 MHz or more LTE ready 800/850 MHz spectrum 5 ICR circles Dominate hand held devices Dominate large screen RCOM’s unique data spectrum holding provides advantages over incumbents 24 Data Capability … Extensive Distribution and Service Network Mass Distribution 3,500 Distributors and 7 Lakh Retailers Exclusive 956 exclusive full service franchisee retail outlet Retail Channel DSA for Retail and Corporate Help us reach out to the Post-Paid customers, SMEs and Corporates Customers Digital Channel Growing digital channel selling handsets & recharges Multiple forms of distribution network 25 Data Capability … Exclusive Retail Outlets Launched 956 new full service franchised outlets Sales outlets for wide array of handsets and data devices Key Differentiation Enhanced customer experience Trained and Certified staff Controlled channel sales- Key driver for growth 26 Innovation led Growth…. Unique Social Networking plans Our Data Plans come with Unlimited Free Social Networking pre-bundled ! 30% of our customers use Data …..and 50% of them use 3G ….leading the Industry ! 27 Innovation led Growth….Internet for All Free Basic Services under internet.org / www.freebasics.com are across a wide range of basic internet services Actual Services Screenshot Many First time Internet users added in 6 months 28 Innovation led Growth…. Flexi Recharge Talk Time – Local Talk Time – STD 2G Data Pack 3G Data Pack Social Networking Pack SMS Pack One Voucher ….…. Multiple options 29 Innovation led Growth…. Su Vaat Che! Simple , but compelling propositions Rs. 97 : Unlimited calling on Reliance Network across India Rs. 197 : Unlimited calling + Unlimited Data Ek Recharge Ma Mahina Bhar No Jalso New acquisition market share moves up significantly 30 Thanks… 31 Innovation led Growth…. WiFi Devices Laptop + Dongle WiFi Enabled Devices Multifold Growth in Portable Internet Devices 32 Innovation led Growth…. Focus on Home Wallet Share 33 Innovation led Growth…. Carry your Network Anywhere WiPod – The WiFi Product To Capture Data From Over 180 Mn Internet Devices 34 Innovation led Growth…. Focus on Competition Churn 35 Innovation led Growth…. Empowering the Customers Customer App – InstaCare Simplest way to manage account instantly Make payment & recharge online View latest offers & buy packs Track usage Instant Chat support Leveraging Digital Channels – Promoting Self-help 36 Innovation led Growth…. Leveraging Social & Digital Space Apps & Web based utilities ChannelCare – 1st Telco in country to have retailer App on Android Smart InstaCare – 1st Telco in Asia to have a full feature Customer Service Suite on Twitter MyServices - Fully integrated self Service portal Staying Relevant and Improving Youth Connect 37 Strong Brand Recognition RCOM only Telco in Top 10 Most Reputed Indian Companies RCOM ranked 14th among Urban India’s Most Exciting Brands 38 Enterprise Business RCOM Enterprise Business supporting everyday activities... 1 out of 3 time when you go to withdraw cash from an ATM, you are riding on a RCOM Network 1 in every 4 times you go to a website, you travel over one of the RCOM Cables 40 RCOM Enterprise Business supporting everyday activities Contd.. Over 75% of the time you go to Twitter or Facebook you are on our network 1 in every 3 calls people receive from overseas ride on a RCOM network 41 Our one-stop shop offering is unmatched in the industry Enterprises are outsourcing entire telecom-network services to proven service providers like RCOM Performance Management Latency, throughput, spe ed Scalability Support for Higher Bandwidths Service Support & Customer Interface Differentiated Helpdesk Reliability Higher Uptimes, Traffic Protections Service Bundle Internet, Email, DNS, Web Space, Virus Protection etc Managed Solutions SP Managed CPEs/ Solutions 42 RCOM has One of the Largest Global Fiber Network The Emerging Market corridor connects over 2.0bn Internet subscribers currently and is expected to account for over 70% of the world’s smart phone growth Note: Data above based on countries including the US and those in the Middle East, Europe and Asia ex-China Source: WCIS and EIU data 43 RCOM to play a major role in e-Commerce and e-Governance Focus on increasing IP connection density Cloud Service Providers E-commerce players Content Providers IP Density is increasing at our Data Centers 44 RCOM Well-Positioned to Benefit From Convergence Information, Co mmunication, Te chnology Sweet Spot Voice Network Data Network & Products 45 Conclusion RCOM’s Value Proposition Future ready spectrum portfolio Future expansion at least cost RCOM’s Value Proposition Arrangement / co-operation and reciprocity with Jio to assist revenue & margin growth Lower regulatory cash outflow Focused plans for Deleveraging and Asset monetization Immense Sectoral Growth in India – Consolidation & Data Opportunities 47 Vision of Our Chairman “RCOM led India’s first telecom revolution by making a phone call more affordable than a postcard. It will now lead the second wave by making India a 'wirefree' country where every Indian has access to highspeed data at the click of a mouse, the press of a key.” 48 Thank you