Tata Communications Limited has informed the Exchange about Investor Presentation
HQ/CS/CL.24B/17059 January 28, 2021
National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Mumbai – 400 051 SYMBOL: TATACOMM
BSE Limited P.J. Towers, Dalal Street, Mumbai – 400 001 Scrip Code: 500483
Dear Sir / Madam,
Sub: Quarterly Investor Presentation.
Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing herewith the quarterly presentation for investors updated for the quarter ended December 31, 2020. This is also available on the Company’s website at www.tatacommunications.com.
Kindly take the same on your records.
Thanking you,
Yours faithfully, For Tata Communications Limited
Sudipto Das Deputy General Manager
Tata Communications Limited Regd. Office : VSB Mahatma Gandhi Road Fort Mumbai – 400 001 India Tel 91 22 6659 1968 website www.tatacommunications.com CIN : L64200MH1986PLC039266 email : sudipto.das@tatacommunications.com
Investor Presentation
January 2021
Index
Business overview
Strategic overview
Our key stakeholders
Performance overview
03
15
21
24
Business overview
Introduction We are Tata Communications
A digital ecosystem enabler, part of India’s multibillion-dollar conglomerate, the prestigious Tata Group.
We enable the digital transformation of enterprises, globally – unlocking opportunities for businesses by enabling borderless growth, boosting product innovation and customer experience, improving productivity and efficiency, embedding agility and managing risk. Both today and in the future.
With a customer solution orientated approach, proven managed service capabilities and cutting-edge infrastructure, we drive the next level of intelligence powered by cloud, mobility, IoT, collaboration, security and network services.
12,000+ employees worldwide
200+ countries of operation
50+ entities across the globe
37+ diverse nationalities
~7,000+ customers (including 300 of the Fortune 500)
Top percentile of NPS®
Introduction Providing connectivity to the world
30% Global internet routes carried by us
#1 Enterprise data and colocation services in India
60% Cloud giants are connected to their businesses through us
4 of 5 Global mobile subscribers connected through our network
Leader In Gartner’s Magic Quadrant for Network Services (Global) 2020 – 7 years in a row
#1 Wholesale voice provider submarine cable owner on-net mobile signaling (globally)
Key Performance Indicators Numbers that matter
Our voice business continues to be strong, and our data business remains instrumental to our overall revenue.
As we grow scale, we are confident of an upward momentum in our profit trajectory in the coming quarters.
674
Revenue (Rs. in crore)
4,223
EBITDA (Rs. in crore)
20
1,046
Rs. 309 crores
PAT
Rs. 339 crores
CAPEX
3,549
Data
V oic e
TCL Consolidated figures for Q3’ FY 21
1,026
1.9 times
Net debt/EBITDA
Our evolution Transformation is in our DNA
2005-06 • Acquired Tyco and Teleglobe, establishing a global presence
• Launched next-
generation dedicated global Ethernet service connecting North America, Europe and Asia
2008 • Established as
Tata Communications • Diversified into
enterprise segment
Diversification
2002 Tata group acquires 25% stake in VSNL (India)
Inception
2010 Launched managed services portfolio for enterprises
2014 Launched the most comprehensive cloud enablement platform, IZO(TM)
2017 Launched NetFoundry, a revolutionary SaaS start-up platform and MOVE(TM), a mobility and IOT platform
2018-20 Getting ready for the next wave of growth as a global digital ecosystem enabler
Innovation
What, why and how Tata Communications at a glance
Why we exist
Deliver a new world of communications to the industry and our customers
CUSTOMER DRIVERS
Enabling borderless growth
Boosting product innovation and customer experience
Enhancing productivity and efficiency
Building agility
Managing risk
PLATFORMS AND EXPERIENCE
y c a m
i t n i
r e m o t s u C
Mobility and IOT
Collaboration
NetFoundry
Next generation connectivity
Cloud, edge and security
Voice
S e r v i c e s
W r a p
COMMITMENTS
Sustainability
Innovation
Artificial Intelligence
How we do it
Our DRIVE culture Daring | Responsive | Inclusivity | Venturing | Ethical
What we do Providing solutions for every stage of digital maturity
Helping customers unlock opportunities through digital transformation - enabling borderless growth, boosting product innovation and customer experience, improving productivity and efficiency, building agility and managing risk.
ONLINE
Internet trading through websites and mobile apps
OMNI-CHANNEL
Mobile apps, social media, online trading portals, client portals, tablet app
PHYSICAL
Primarily out of a trading office
DIGITAL
Collaboration between physical and digital; cloud infrastructure
CONTEXTUAL
Highly customer-centric; real-time trading; AI/ML, Big Data and advanced analytics, etc.
Our customers We cater to multiple industries
AUTOMOTIVE
MEDIA & ENTERTAINMENT
SPORTS
MANUFACTURING
PHARMACEUTICAL
INSURANCE
HEALTHCARE
TELECOM
BANKING
CONSTRUCTION
SERVICES
FINANCE
ENERGY
RETAIL
IT/ITES
CONSULTING
REAL ESTATE
E-LEARNING
E-COMMERCE
GOVERNMENT
Our customers Representing some of the biggest brands
How we do it Our globally local digital infrastructure
• Our end-to-end capabilities in servicing
and delivery make us a preferred partner for businesses everywhere.
• All of our products and services are
underpinned by our global network, the largest world’s largest wholly-owned subsea fibre backbone and a Tier-1 IP network.
How we do it Our DRIVE culture
We view our success as a result of the unstinting commitment of our people and their efforts.
Our greatest asset? Our people.
Can-do attitude
Collaboration
Continuous learning
Innovation
Mindset for growth and agility
Ownership and accountability
Problem solving
Skills transformation
90%
5,300+
Learning via digital mode in Tata Communications Learning Academy
Certifications completed by employees with minimum 16 hours of effort
Our people reflect our ethos 1,64,000
Lives impacted by our employees, through 59,184 volunteering hours as part of our CSR initiatives
Certified as a Great Place to Work by Great Place to Work Institute (India, Hong Kong, Canada and USA)
• • • •
‘Best Workplaces in Asia’ for the year 2019 (Hong Kong)
2019 Best Employer in India by Aon
Best Companies for Women in India – Working Mother and Avtar
Best Workplaces for Women by Great Place to Work Institute (India and Canada)
How we do it Our commitments
Sustainability We strive to make a positive, tangible impact on the environment and wider society through our actions, and through our products & services for our customers.
Innovation We continue to innovate to stay relevant for our customers as a long-term partner in their digital transformation journeys.
Artificial Intelligence We are bringing enhanced focus on leveraging the power of AI and ML technologies and embedding a framework to make AI an integral part of our capability and offerings.
Strategic overview
Operating context Trends shaping the industry
We facilitate businesses to pursue digital transformation through navigating new and emerging technologies, to transition seamlessly into a more intelligent future.
Platform economy 7 of 10 Most valuable companies based on platforms
Managed services 11.5% Growth of global managed services between 2018 and 2023
Enterprise mobility 6 billion Mobile subscriptions by 2025
Internet of Things (IoT) 79.4 ZB Data will be generated globally, by 41.6 billion IoT devices by 2025
(Source: Bloomberg and Google)
(Source: Mordor Intelligence)
(Source: GSMA Intelligence)
(Source: IDC)
Cloud computing 28% Of the IT spending will shift to the cloud by 2022, affecting US$1.3 trillion
Hybrid SDN 60% Of enterprises will have implemented SD-WAN by 2023
Cybersecurity awareness 41.2% Growth in spending on cloud security over the next 5 years
Artificial Intelligence (AI) 37% of organizations adopted AI in some form in 2019
(Source: Gartner)
(Source: Gartner)
(Source: Gartner)
(Source: Gartner)
Market we address Our opportunity landscape
While all areas of our portfolio are expected to grow, 6 key pillars have been identified to significantly contribute to our growth in revenue.
Available Market 2023
MOBILITY & IoT
COLLABORATION
NEXT GENERATION CONNECTIVITY
CLOUD, EDGE & SECURITY
VOICE
NETFOUNDRY
Mobility & IoT CAGR 2022 2019
Voice CAGR 2022 2019
+3.9% $243Bn $217Bn
(6.6)% $8Bn $7Bn
Collaboration CAGR 2022 2019
NetFoundry CAGR 2022 2019
+12.2% $35Bn $25Bn
+25.5% $109Bn $55Bn
Next Generation Connectivity CAGR 2022 2019
+0.2% $145Bn $145Bn
Cloud, Edge & Security CAGR 2022 2019
+12.0% $224Bn $159Bn
Key strategic enablers What helps us turn opportunities into a reality
Our own agility in adopting digitally transformative technologies in order to provide the same to our customers is the key to our consistent business growth.
Prudent foresight
Our ability to anticipate change and transform to meet and exceed the expectations of the business and the industry has paved the way for sustained growth.
Skilled, engaged teams
We believe it is critical for employees to continuously learn and re-educate themselves; and we provide the right platforms for employees to be able to do so.
Customer centricity
We help our customers make the most of the latest digital innovations and be agile, flexible and responsive.
Continuous innovation
Technology is constantly evolving; thus, we need to constantly challenge ourselves and innovate to invest in our future.
Analyst views Recognised for excellence
Tata Communications Positioned as a Leader in the 2020 Gartner Magic Quadrant for Network Services, Global - 7 years in a row
CHALLENGERS
LEADERS
1. Orange Business
11. Masergy
Services
2. NTT
3. AT&T
4. Verizon
5. BT
6. Vodafone
7. Tata
12. Colt Technology
Services
13. GTT
14. Telia
15. Telstra
16. Global Cloud Xchange
Communications
17. Singtel
8. T-Systems
18. Sprint
9. Telefonica
19. PCCW Global
10.CenturyLink
20. China Telecom
Global
E T U C E X E
O T
Y T
I L I
B A
1 23 5
4
6
12
7
11
8
9
10
13
14
15
16 17
18
19
20
NICHE PLA YERS
VISIONARIES
C O M P LET ENES S O F V IS IO N
As of January 2020
Source: Gartner (February 2020)
Ability to Execute Our emphasis is on a vendor’s service quality, pricing and track record.
These elements are particularly important for global networks because the issues of infrastructure, language and culture are more challenging than if applicable to only one country.
Completeness of Vision Visionary providers should have a clearly articulated strategy in evolving areas of enterprise networking, including networking for cloud services, SD-WAN, SDN, NFV and vCPE.
The portfolio should be broad enough to satisfy the evolving requirements of most enterprises, and not just a specific vertical, industry or customer size.
Industry accolades Recognised for excellence
APAC Top 10 IoT Solution
Companies 2019
• Most Innovative IoT Project
Magic Quadrant for Network Services,
• Most Innovative Telecom Project
Global
Enterprise Telecom service provider
Company of the Year – Large
Enterprise Segment
Enterprise Data Service Provider
Managed Multi Cloud Service
SDWAN Service Provider Company of
Company of the Year
Provider Company of the Year
the Year
Unified Communications Service
Managed Security Service Provider
Cloud Interconnect Service
Video Managed Service Provider
Provider Company of the Year
Telecom Company of the Year
Provider Company of the Year
Company of the Year
Our key stakeholders
Our shareholders Maximising long-term intrinsic value
The sustained trust and confidence of our shareholders enable us to remain focused on achieving our strategic objectives and maximising long-term returns.
Drive capital efficiency
Improve margin profile
• Recalibrate investments
• Co-create with partners
• Inculcate strong discipline and governance around capital allocation and expenditure
• Improve operating efficiency and drive
operating leverage
• Accelerate growth in high margin data segment
and new services
Invest for long-term growth
Create strategic flexibility
• Reshape portfolio
• Invest in new services/ innovation to differentiate and accelerate growth
• Generate free cash flow and deleverage
balance sheet
• Pursue opportunities to unlock intrinsic value
• Rationalise businesses with sub-par return
profiles
Shareholding pattern as of 31 December 2020
1.4%
5.7%
17.9%
26.1%
48.9%
TATA Sons
GOI
Foreign Institutions
Domestic Institutions
Non-institutional
Our community Sustainability and CSR
ENABLING SUSTAINABILITY AS KEY DRIVER FOR BUSINESS INNOVATION & GROWTH
• We are uniquely positioned to deliver the digital future now while doing good for People, the Planet and Communities Our goal is to make a positive, tangible impact on the environment and society through our actions and through our • products and services for our customers
Zero FATAL/MAJOR INCIDENTS
Since last 3 years
MULTIPLE BEST EMPLOYER RECOGNITIONS
9 lakh UNITS OF ENERGY CONSERVATION GLOBALLY
Focused solutions (IoT, Mobility, MOVE, Cloud and UCC) for customers leading to cost saving, business optimisation, avoidance of travel, automation etc.
32.7% DIVERSITY
mix for new hires increased from 19% (FY14)
~15 Million UNITS'
Renewable energy sourced
2,19,166
LIVES IMPACTED
16
LONG-TERM PROJECTS
62% women and girls 62% - affirmative action communities
Presence across 9 states in India International presence - Singapore
5,300+ CERTIFICATIONS COMPLETED BY EMPLOYEES
with minimum 16 hours of effort
49% increase In water recycling as compared to
FY20
59,194
VOLUNTEERING HOURS
Contributed by 11,030 volunteers to reach 50,000 lives
Performance overview
Key financials (Quarterly) Revenue | EBITDA | FCF
REVEN UE*
3,549
3,642
3,420
674
759
809
4,223
4,401
4,229
EBI TDA*
1,026
1,108
714
47
20
1,046
50
761
1,158
F CF *
741
828
300
46
271
18
707
45
840
Q3 FY 21
Q2 FY 21
Q3 FY 20
Q3 FY 21
Q2 FY 21
Q3 FY 20
Q3 FY 21
Q2 FY 21
Q3 FY 20
• Consolidated revenues were flat YoY and dropped sequentially, due to effect of seasonality and impact of COVID on deal conversion.
• EBITDA grew by 37.5% YoY with a margin of
24.8% which expanded by 680BPs YoY on the back of strong profitable growth in Data business and focus on cost efficiencies.
• Profit for the quarter was INR 309 crore as compared to a profit of INR 59 crore in the last year. This profit is on the back of strong EBITDA performance and translates into a 5- fold jump in our EPS over the last year
*A ll figures in Rs. crore
Data
V oic e
Consol
Revenue Growth %
QoQ
YoY
Data
Voice
Consol
(2.6%)
3.8%
(11.2%)
(16.6%)
(4.1%)
(0.1%)
EBITDA Growth %
QoQ
YoY
Data
Voice
Consol
(7.3%)
43.8%
(60.6%)
(58.4%)
(9.6%)
37.5%
FCF Growth %
QoQ
YoY
Data
Voice
Consol
(10.5%)
147.2%
(58.6%)
(60.0%)
(15.8%)
160.7%
Key financials (Annual) Revenue | EBITDA | FCF
REVENUE*
13,692
3,376
17,068
12,655
3,870
11,460
5,311
16,525
16,772
EBI TDA*
3,026
263
3,289
2,409
336
2,745
2,066
347
2,412
F CF *
1,742
252
1,693
820
331
881
882
338
898
FY 20
FY 19
FY 18
FY 20
FY 19
FY 18
FY 20
FY 19
FY 18
• Consistent strong growth in Data Business
despite industry challenges
• Data business growth is compensating for
the decline in Voice business
• Voice business is declining in-line with
industry and technology trends
• Shift towards more profitable data business
leading to EBITDA growth and margin expansion
• Voice business continues to generate
healthy cash flow despite decline in revenue
*A ll figures in Rs. crore
Data
V oic e
Consol
Revenue Growth %
FY 18
FY 19
FY 20
Data
Voice
Consol
5.5%
10.4%
8.2%
(21.4%) (27.1%) (12.8%)
(4.8%) (1.5%)
3.3%
EBITDA Growth %
FY 18
FY 19
FY 20
Data
Voice
Consol
6.2%
16.6%
25.6%
(16.3%) (3.1%)
(21.6%)
2.2%
13.8%
19.8%
FCF Growth %
FY 18
FY 19
FY 20
Data
Voice
Consol
42.2% (7%)
112.4%
(14.9%) (2.1%)
(23.8%)
16.2% (1.9%)
92.3%
Key financials (Annual) Performance Highlights | Net DEBT
Net Deb t
USD Mn
N et Deb t to EBI TDA
USD Mn
1,438
1,327
1,150
1,151
1,232
1,216
1,193
1,170
1,091
1,600
1,200
800
400
0
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Jun-20
Sep-20
Dec-20
• Net debt was at USD 1,091 Mn, a decrease of USD 79 Mn over last quarter, aided by strong
operating cashflows.
• Average cost of borrowing for Q3 was 2.88%, an increase of 8 BPS over Q2 FY21 primarily
due to increase in Average LIBOR rate.
6
4
2
0
6.00%
4.50%
3.00%
1.50%
0.00%
3 .3
3 .4
3 .2
3 .2
3 .1
2 .8
2 .6
2 .3
1 .9
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Jun-20
Sep-20
Dec-20
Cos t of Deb t %
3 .80% 3 .41% 3 .12%
3 .87% 3 .86% 3 .73%
3 .03% 2 .80% 2 .88%
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Jun-20
Sep-20
Dec-20
Note: USD-Rs.: FY15 – 61.13; FY16 – 65.44; FY17 – 67.07; FY18 – 64.47, FY19 – 69.9; Q1FY18 – 64.48; Q2FY18 – 64.30; Q3FY18 – 64.77; Q4FY18 – 64.35; Q1FY19 – 66.94; Q2 FY19 – 70.10; Q3 FY19 – 72.13, Q4 FY19 – 70.47; Q1 FY20 – 69.6; Q2 FY20 – 70.4; Q3 FY20- 71.24; Q4 FY20- 72.32; Q1 FY21- 72.32; Q2 FY21- 73.77; Q3 FY21- 73.07. FY15, FY16 are reported numbers, and include Data centre business
Key financials (Annual) Geographical spread
Gross Revenue Share by Geography -
APAC
America
11.2%
8.7%
Europe
FY 15
FY 20
25.4%
22.5%
MENA
15.0%
12.0%
9.0%
6.0%
3.0%
0.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
24.6%
13.1%
India
FY 15
FY 20
8.6%
6.6%
Global
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
41.1%
30.6%
FY 15
FY 20
5.0%
2.6%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
6.0%
4.0%
2.0%
0.0%
FY 15
FY 20
FY 15
FY 20
FY 15
FY 20
Concluding remarks Key reflections
Riding on global data growth
Digital Transformation and Cloud adoption to drive the business growth
Transformation driving demand for hosting, SD WAN and network virtualisation services
Positioned as “Leader” in Gartner magic quadrant for network services, global for 7th consecutive year
Digital push through partnerships with Microsoft, Cisco, Amazon
FY20 Dividend of Rs. 4/- share which is 40% of face value of each share
Significant land bank with the company (~740 acres) post transfer of surplus land to HPIL
The Scheme for Demerger of Surplus Land has been approved by the NCLT, Mumbai on July 12, 2018. The Scheme filed by HPIL, has been approved by the Ministry of Corporate Affairs, New Delhi on 5 August 2019. The Record Date for the Scheme was September 18, 2019. HPIL has allocated the shares to all its eligible shareholders. The company shares were listed publicly, on 22nd October 2020
The revamped GTM strategy has started to show positive results with an improvement both in funnel adds as well as in closed sales.
Product penetration ratio* (which is the number of products sold to each customer) of Top 300 customer has improved from 5.51 in Q3 FY20 to 5.70 in Q3 FY21
Thank you
www.tatacommunications.com
Contact for investor queries: investor.relations@tatacommunications.com
©2021 T at a C ommuni c at i ons. A ll r i ght s r eser ved . T A T A CO MMUNICA TIO NS and T A TA ar e tr ad emar ks of T at a S ons P r iv ate Li mit ed.