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Idea Cellular Limited Investor Presentation September, 2011
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Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

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Page 1: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

Idea Cellular Limited

Investor PresentationSeptember, 2011

Page 2: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

Disclaimer

The information contained in this presentation is only current as of its date. All actions and statements made herein orotherwise shall be subject to the applicable laws and regulations as amended from time to time. There is norepresentation that all information relating to the context has been taken care of in the presentation and neither weundertake any obligation as to the regular updating of the information as a result of new information, future events orotherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of anyinformation contained in this presentation or for any omission of the information. The information shall not be distributedor used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to theapplicable laws or regulations. It is advised that prior to acting upon this presentation, independent consultation / advisemay be obtained and necessary due diligence, investigation etc may be done. You may also contact us directly for anyquestions or clarifications.

This presentation contain certain statements of future expectations and other forward-looking statements, including thoserelating to our general business plans and strategy, our future financial condition and growth prospects, and futuredevelopments in our sector and our competitive and regulatory environment. In addition tostatements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends,anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward lookingstatements.

Actual results, performances or events may differ materially from these forward-looking statements including the plans,objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors,including without limitation, future changes or developments in our business, our competitive environment,telecommunications technology and application, and political, economic, legal and social conditions in India. It iscautioned that the foregoing list is not exhaustive.

This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not beused as a basis for any investment decision.“The information contained herein does not constitute an offer of securities for sale in the United States. Securities maynot be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of1933, as amended. Any public offering of securities to be made in the United States will be made by means of aprospectus and will contain detailed information about the Company and its management, as well as financialstatements. No money, securities or other consideration is being solicited, and, if sent in response to the informationcontained herein, will not be accepted.”

Page 3: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

263.9 263.8265.6

277.8

287.2290.2

304.4

316.7

331.9

240

250

260

270

280

290

300

310

320

330

340

Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12

Indian Wireless Sector – Revenue Trend

Source: Data released by the TRAI & Company estimates; revenue for UAS and Mobile licenses only

Idea 13.9%

Others 86.1%

Idea 10.6%

Others 89.4%

Q1 FY09

Q1 FY12

Sector Gross Revenue (INR bn) Idea - Increase in Revenue Market Share

3

Page 4: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

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Idea – An Overview

A pan India 2G service provider

Won 3G spectrum in 11 service areas

Third largest operator in India, in terms ofMobility Revenues#

Minutes on network > 1.2bn per day, placing itamong the top 10 operators in the world

Currently owns 9,000 towers, besides 11,094towers transferred to Indus under IRU.

Have over 57,000 km optical fibre cable (OFC)transmission network

Idea’s NLD and ILD capacities, currently carry~90% of captive outgoing minutes

Leads the industry, in terms of activesubscribers, as more than 92% of reportedsubscribers are on VLR

Highest number of Net subscribers additionsunder Mobile Number Portability

# Data released by the TRAI & Company estimates; revenue for UAS and Mobile licenses only

Page 5: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

900 MHz Spectrum900 MHz Spectrum

1800 MHz Spectrum1800 MHz Spectrum

900 MHz Spectrum

1800 MHz Spectrum

5

2.5%

4.7% 5.1% 5.3% 5.6%

7.0%

8.6%9.5% 9.8%

0%

2%

4%

6%

8%

10%

12%

Har. Pun. Ker. UPW M.P. Guj. Kar. Maha. A.P.

900 MHz spectrum band provides capex/opexadvantage, compared to 1800 MHz

900 MHz spectrum also accompanied by earlymover advantage

Idea holds 900 MHz spectrum in 9 serviceareas, covering~ 48% of national revenue and ~75% of Idea’s revenue

~ 58% of national revenue base (excl. metros*)

Idea’s spectrum profile is very attractiveacross all private operators

Service areas share of gross revenue (excl. metros)58%

Competitiveness Lever 1 - Spectrum

Source: Data released by the TRAI for Q1FY12 quarter & Company estimates, revenue for UAS and Mobile licenses only * Metros as Mumbai, Delhi and Kolkata

Page 6: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

6

Competitiveness Lever 2 - Scale within Service Area

Service Area (900 MHz)

Revenue Mkt Share 1

(RMS)Rank 2

Kerala 31.3% 1

M.P. 31.2% 1

Maharashtra 28.9% 1

UP (W) 27.3% 1

Haryana 21.0% 2

Punjab 19.3% 2

A.P 16.9% 2

Gujarat 17.1% 3

Karnataka 8.5% 4

Total 21.6% 2

In 9 service areas, comprising ~ 48% of national revenue market & ~75% of Idea’s revenue, Idea’s competitiveness is intrinsically strong based on a) 900 MHz spectrum and b) scale of operations

1Based on gross revenue for Q1FY12, as released by TRAI & Company estimates2Based on revenue market share

# 1 Player# 2 Player# 3 Player

# 1 Player# 2 Player# 3 Player

Page 7: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

7

1800 MHz Operations (6 Service Areas)Emerging Stronger

Service AreaRevenue Mkt Share 1

(RMS)Rank 2

UPE 11.9% 3

Rajasthan 9.7% 3

Delhi 10.1% 4

Bihar 9.4% 4

H.P. 7.2% 5

Mumbai 7.0% 6

Total 9.6% 4

These service areas cover ~32% of all Indiarevenue and ~22% of Idea’s revenue

Idea has increased its combined RMS from6.1% in Q1FY10 to 9.6% in Q1FY12, improvingits position from 6th to 4th ranked operator, inthese service areas

With continuous improvement in RMS, Idea isemerging stronger

1Based on gross revenue for Q1FY12, as released by TRAI & Company estimates2Based on revenue market share

Page 8: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

8

1800 MHz Operations (7 New Service Areas)Focus On Optimisation, Not Maximisation

Providing pan India footprint

Leverage synergies of pan Indiaoperations i.e. roaming, NLD, adspend, common network elements, etc.

Infra sharing to reduce capex, and quickertime to market

Focus on operational and financialgoals, not league tables

Page 9: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

3G Footprint

Idea’s 3G Service Areas

Roaming arrangements with other operators

9

Idea launched 3G services in 9 serviceareas, out of 11 service areas where it won3G spectrum

Currently around 7,000 3G sites in theseservice areas

Launched 3G services under roamingarrangements for the service areas ofMumbai, Bihar, Karnataka, Rajasthan WestBengal , Delhi, Kolkata, Tamil Nadu (incl.Chennai), Assam and North East

With these arrangements Idea currentlyoffers 3G services in 19 service areas.

Committed to offer 3G services in 3,000towns by end of this financial year.

Page 10: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

10

Idea – Long Term Shareholder Value

Cover ~48% of national revenue market

Strong position in these service areas

900 MHz spectrum accompanied by early mover advantage

900 MHz spectrum provides capex and opex advantage

900 MHz( 9 Service Areas )

Leverage spectrum and scale to enhance

leadership

Pan India Footprint

Leverage synergies of scale and footprint

Emerging Stronger in 6 service areas of

UP(E), Rajasthan, Delhi, Bihar, H.P. and Mumbai

Focus on operational & financial goals, not league tables in 7 New

service areas

Calibrated Capex with infra sharing

1800 MHz( 13 Service Areas )

Sustainable and profitable growth

3G Value Drivers

Market power to drive new business: Ranked #1 or #2, in 7 out of 11 service areas, where it won 3G

spectrum

Roaming arrangements: Ability to provide 3G service in almost all

parts of India

Other value: Besides enhanced data performance, High 2G spectrum

utilisation makes the 3G spectrum also valuable for voice

Best placed to exploit 3G

Page 11: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

11

The Indus Advantage

Indus Service Areas

Indus Share Holding

Provides passive infrastructure services in15 service areas

Largest independent tower company in theworld with over 108,000 towers

Indus benefits from assured tenancy frompromoters (combined revenue marketshare of ~66%*), apart from other operators

Idea benefits by reduced capex, speed tomarket, and embedded value ofshareholding

Bharti Infratel Ltd 42%

Vodafone Essar Ltd

42%

Idea Cellular Ltd* 16%

Indus Share Holding

*through Aditya Birla Telecom Ltd.* Data released by the TRAI & Company estimates; revenue for UAS and Mobile licenses only

Page 12: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

12

Idea – A Power Brand

Page 13: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

13

World Class Operations and Cost Management

In an over-crowded sector, Idea is among the very few companies which have the capability to maintain andgrow quality operations at a realised rate of 41.0p (less than 1cent/minute), and still turn in reasonable profits

Last 3 quarters show expansion of margin between ARR and Cost/Minute.*ARR is based on service revenue (exclusive of infrastructure revenues)

Paisa

36.9 36.9 39.942.7 45.6

82.3 84.8

93.5

102.0108.6

43.842.3 41.8

40.6 41.0

35.234.5 33.9

32.6 32.1

25

30

35

40

45

50

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12

Revenue (INR bn) Minutes (bn) ARR* Cost/Min

Page 14: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

14

Strong Balance Sheet to Support Strategic Intent

1Figures for Idea including its 100% subsidiaries and excluding Joint Venture Spice (till February 28,2010) and Indus.

Financial Ratios1

Balance Sheet1

INR INR CroresCrores

Gross debt

Cash & Cash equivalent

Net Debt

Net Worth

Cash Profit1

Net Debt to Net Worth

Net Debt to Annualised EBITDA

Q1 FY10

6088

2656

3432

13650

731

0.25

1.11

Q1 FY11

9775

118

9657

11612

721

0.83

3.04

ROCE 9.3% 6.4%

Q1 FY09

9743

916

8827

3811

574

2.32

3.06

14.7%

Q1 FY12

10432

53

10379

12433

861

0.83

2.43

6.7%

Page 15: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

15

Promoter Group, 46.0%Foreign

Holding 42.9%

Indian Others, 11.1%

As on 30th Jun’11Shareholding

PROMOTERS’ HOLDING

ADITYA BIRLA NUVO LIMITED 25.3%

BIRLA TMT HOLDINGS PVT LTD 8.6%

HINDALCO INDUSTRIES LIMITED 6.9%

GRASIM INDUSTRIES LTD 5.2%

TOP 5 SHAREHOLDERS

TMI MAURITIUS 14.1%

P5 ASIA INVESTMENTS (MAURITIUS) 10.0%

TMI INDIA LTD. 5.0%

MONET LIMITED 2.7%

BAJAJ ALLIANZ LIFE INSURANCE 1.5%

Page 16: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

16

Appendix

Page 17: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

17

Key Trends (Quarterly)

82.3 84.8

93.5

102.0108.6

60

70

80

90

100

110

Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12

VAS as a % of Revenue

Realized rate per minute

43.8 42.3 41.8 40.6 41.0

0.00

10.00

20.00

30.00

40.00

50.00

Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12

paisa

Minutes of use on Network (QoQ)

bn - Minutes

2G - Cell Sites

66,725 67,98070,208

73,66876,291

55000

60000

65000

70000

75000

80000

Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12

12.6%

12.9% 13.0%

12.1% 12.1%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12

Page 18: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

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Financial Matrix (Standalone*- Annual)

43.9 67.4

99.7

121.4

156.4

0

25

50

75

100

125

150

175

FY07 FY08 FY09 FY10 FY11

11.7

19.8

23.5

29.0 30.9

0

4

8

12

16

20

24

28

32

FY07 FY08 FY09 FY10 FY11

5.0

10.4 9.6

10.3

8.4

0

2

4

6

8

10

12

FY07 FY08 FY09 FY10 FY11

Robust Growth in Top Line

INR bn

14.9

22.7

27.530.5

33.3

0

5

10

15

20

25

30

35

FY07 FY08 FY09 FY10 FY11

Robust Growth in EBITDA

INR bn

Robust Growth in Net Profits

INR bn

Robust Growth in Cash Profits

INR bn

18

*Represents Idea and its 100% subsidiaries

Page 19: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

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Financial Matrix (Consolidated*- Annual)

43.9 67.4

101.5

124.5

155.0

0

25

50

75

100

125

150

175

FY07 FY08 FY09 FY10 FY11

11.7

19.8

23.5

30.6 34.1

0

5

10

15

20

25

30

35

FY07 FY08 FY09 FY10 FY11

5.0

10.4 8.8

9.5 9.0

0

2

4

6

8

10

12

FY07 FY08 FY09 FY10 FY11

Robust Growth in Top Line

INR bn

14.9

22.7

28.4

34.137.9

0

5

10

15

20

25

30

35

40

FY07 FY08 FY09 FY10 FY11

Robust Growth in EBITDA

INR bn

Robust Growth in Net Profits

INR bn

Robust Growth in Cash Profits

INR bn

18

*Represents Idea and its 100% subsidiaries

Page 20: Idea Cellular Limited - Vodafone Idea...BAJAJ ALLIANZ LIFE INSURANCE 1.5% 16 Appendix 17 Key Trends (Quarterly) 82.3 84.8 93.5 102.0 108.6 60 70 80 90 100 110 Q1 FY11 Q2 FY11 Q3 FY11

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Thank You