Investor Presentation January'20 - Sterlite Technologies
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Investor
Presentation
January’20
© 2019-2020 Sterlite Technologies Limited
Safe Harbour
Certain words and statements in this communication concerning Sterlite Technologies Limited (“the Company”) and its prospects, and other statements relating to the
Company’s expected financial position, business strategy, the future development of the Company’s operations and the general economy in India & global markets, are
forward looking statements.
Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company, or
industry results, to differ materially from those expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which
the Company will operate in the future.
The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include, among others,
changes in government policies or regulations of India and, in particular, changes relating to the administration of the Company’s industry, and changes in general
economic, business and credit conditions in India.
The information contained in this presentation is only current as of its date and has not been independently verified. No express or implied representation or
warranty is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation.
None of the Company or any of its affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any information
presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future
results. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation.
Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the
Company.
The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or
changes.
Persons should consult their own financial or tax adviser if in doubt about the treatment of the transaction for themselves
These materials are confidential, are being given solely for your information and for your use, and may not be copied, reproduced or redistributed to any other person
in any manner. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should
inform themselves about and observe any such restrictions
© 2019-2020 Sterlite Technologies Limited 2
Our Discussion
• Data Networks
the next phase beckons
• STL is ready
an ecosystem Innovator
• Two Innovation Engines
delivering performance and growth
• The Future is Exciting
ambitious growth, sustainable financials
© 2019-2020 Sterlite Technologies Limited 3
Data growth continues unabated
Next 50% of the world
gets connected
Everything
becomes data
video, entertainment,
navigation, health,
factories...
Users, Enterprises
use connected apps
for everything, everyday
© 2019-2020 Sterlite Technologies Limited 4
Fuelling the investment cycle for creating Data Networks
Global Annual Capex ($Bn)
Network creators need to invest for CSPs (Telcos) and Hyperscale companies
future 435 450
420
390 400
Telcos
huge 5G investments in mobility, backhaul
Cloud Players
many hyperscale and edge Data centres
Citizen Networks 2018 2019 2020 2021 2022
large scale coverage to achieve 100% reach
Capex drivers and trends
Enterprise • Increased data and compute demand
massive modernization, new applications • Network densification due to 5G and IoT
• Virtualization, compute and storage at the edge
© 2019-2020 Sterlite Technologies Limited Source: Credit Suisse, Industry & Company Estimates 5
The next phase of the Data Network evolution
From To
Software VIRTUALIZED
AGILE Hardware
defined (programmable)
A NEW
The next UPGRADABLE OEM
Vendor- OPEN
neutral (standard)
REARCHITECTED
4 billion people
ECOSYSTEM
need an Disaggregated has emerged for
CLOSER Centralized compute, memory EDGE
Internet that is and storage the next phase
pervasive & of the Data
fixed +
affordable EVERYWHERE
wireless
Converged CONVERGED Network
FASTER Electrons Photons OPTICAL
© 2019-2020 Sterlite Technologies Limited 6
The new data ecosystem needs new generation of
innovators
Legacy players New ecosystem
• Focused on rigid hardware Focused on software defined
• Closed ecosystems Developing open standards
• Specializing in one part of Drive ecosystem of integration
the network layer
© 2019-2020 Sterlite Technologies Limited 7
Our Discussion
• Data Networks
the next phase beckons
• STL is ready
an ecosystem Innovator
• Two Innovation Engines
delivering performance and growth
• The Future is Exciting
ambitious growth, sustainable financials
© 2019-2020 Sterlite Technologies Limited 8
STL at a glance
1 Data Networks Innovator
Core Business
For the network creators
System Based Solutions including
2
Innovation
Network Services & Software
Engines
Connectivity Solutions
4
Customer
Segments
Communication
service providers
Citizen
networks
Large
enterprises
Cloud & content
providers
INR 5,087 Cr. 295 Patents 3 Innovation Centers 3000+ Employees
Revenue* * FY19 Revenue 9
© 2019-2020 Sterlite Technologies Limited
Technology Innovation at the core of STL
3 2 295 3
Software
Innovation Patents Ecosystem
Delivery
Centres Globally Partnership
Centres
Centre of Excellence, Centre for Smarter Speciality Products Open Innovation
Aurangabad Networks, Gurgaon Experience Labs Engagements
Core research on optical fibre for Technology and applied research Experience Lab for Structured Partnership with India and Global
high-speed connectivity on smarter networks of the Cabling Solutions Innovation Community
future
Global Academia Collaboration Industry Forums
With the top 2 US and one of the top 3 Indian Joint collaboration with multiple partners such as ONF
technology universities
© 2019-2020 Sterlite Technologies Limited 10Enabling virtualized, converged networks driven with optical
and wireless solutions
+ENGAGEMENT Customer interfaces AI, dTelco
VIRTUALIZED vRAN 2020
OPEN Data Center Design capability 2019
EDGE Cloud solution Next Gen BSS 2018
Integrated design and
CONVERGED deployment approach LEAD 360
2015
Highest quality Fibre since
OPTICAL lightest cables 1990s
With an agile, nimble and innovative culture
© 2019-2020 Sterlite Technologies Limited 11Growing global presence
A GLOBAL PRESENCE B FY’19 REVENUE BY GEOGRAPHY
China
RoW 4%
7%
Europe
24%
India
65%
Market Presence Sales Offices Manufacturing Facilities
© 2019-2020 Sterlite Technologies Limited 12Delivering value across customer segments
Customer Segment Revenue Split (INR Cr.)
FY16 (INR 2,275 Cr.) FY19 (INR 5,087 Cr.) YTD FY20 (INR 3,994 Cr.)
2%
14%
1% 25% 22%
52%
12% 63%
24%
84%
Telco Citizen Networks Enterprise Cloud
© 2019-2020 Sterlite Technologies Limited 13Creating sustainable value over the years
5,087 1,164
+31% +35%
3,205 789
2,594 542
2,275 475
FY 16 FY17 FY18 FY19 FY 16 FY17 FY18 FY19
Revenue (INR Cr.) EBITDA (INR Cr.)
563 34%
30%
+54%
334 20% 21%
201
154
FY 16 FY 17 FY 18 FY 19 FY 16 FY17 FY18 FY19
PAT (INR Cr.) ROCE
© 2019-2020 Sterlite Technologies Limited 14Strong Corporate Governance
Independent Directors on the Board of STL
Kumud Srinivasan Sandip Das
(Non-Executive & Independent Director) (Non-Executive & Independent Director)
• VP and Director of Non-Volatile Fab Manufacturing and • One of Asia’s most respected telecommunications professionals
Automation Systems at Intel Corporation and an acclaimed Chief Executive
• Has spent 30 years at Intel in US, leading multiple global • Ex-MD of Reliance Jio, Group-CEO, Maxis Communications and
functions, prominent ones being R&D for technology Hutchison Essar Telecom (now Vodafone), India
manufacturing, industrial automation and IoT for manufacturing • One of the founding members of private telephony in India and
facilities was part of the group of individuals that founded Hutchison Max
• She served as the President of Intel India from 2012 to 2016 Telecom in 1994
A. R. Narayanaswamy Arun Todarwal
(Non-Executive & Independent Director) (Non-Executive & Independent Director)
• Chartered Accountant & Management Consultant with over 35
• Partner of Todarwal & Todarwal, a Mumbai based firm of
years of industry experience
Chartered Accountants
• Member of The Institute of Chartered Accountants of India
• Member of The Institute of Chartered Accountants of India
• Provides consulting services in accounting, financial
• Has rich and varied experience spanning over three decades in
management and information technology across several
management consultancy, finance and audit
industry verticals
15
© 2019-2020 Sterlite Technologies LimitedSustainability & Governance|Positively impacting lives & the
Environment
298,000+ 36,000 MT 99% Efficient 70,000+
Lives through Waste diverted Rakholi OFC Plant Lives through Water
Health away from Landfills received India’s 1st Conservation
initiatives ZWL Certification initiatives
457,000+ 8,000+
Lives through Over 830,000 Lives through Women
Education & Rural Lives impacted
development Empowerment
initiatives initiatives
© 2019-2020 Sterlite Technologies Limited 16Our Discussion
• Data Networks
the next phase beckons
• STL is ready
an ecosystem Innovator
• Two Innovation Engines
delivering performance and growth
• The Future is Exciting
ambitious growth, sustainable financials
© 2019-2020 Sterlite Technologies Limited 17Network Services © 2019-2020 Sterlite Technologies Limited 18
Network Services Overview
Hyperscale Converged Networks Intelligent Digital Ecosystem
Long haul - Core Access
Active Transport Mobility Data Center Security Applications
Network Connectivity
MPLS, DWDM , Complete Security - Big data Network
Inter-city, Wireless backhaul, Virtualized/Open Cloud and
Advanced transport convergence of analytics, IoT and AI
Intra-city Front haul RAN/Orchestration on prem Service
technologies physical and cyber platforms
7
Physical security with
4G LTE
1 Hyperscale
FR (powered by
LEAD360o)
2 FTTx Mantra
(powered by 5i) 4 Private/Enterprise
Small cells
Rural 6
Massive
connectivity
solutions –
Sensron +
9 STL Garv
Supercomputer for
8
Cyber security with villages
5GNR Sensron dot
3 DNA (powered by
iCORE) 5 Private/Enterprise
Small cells
Rural
10 NEXT Networks ( E2E Network modernisation)
© 2019-2020 Sterlite Technologies Limited 19Creating networks across all customer use cases and segments
Enterprise Telcos
$500 million multiyear project to design,
execute, operate & maintain the Indian Comprehensive network design &
Naval Digital Network deployment across core & aggregation
for home, enterprise & mobility
$350 million project for creating the world’s
largest intrusion-proof smarter network Comprehensive future ready network
infrastructure in J&K for the Indian Army design & technology led fast deployment
Citizen Networks Cloud Players
Connecting 7.5 million people in the state Hyperscale Inside Data Center design
of Maharashtra using unique STL LEAD & deployment with energy and data
360 approach flow planning
Impacting positively 325K lives with smart Data Center Interconnect with high
IoT driven infrastructure in Kakinada capacity secure optical connectivity
Smart City
20
© 2019-2020 Sterlite Technologies LimitedDriving leadership through technology for the new ecosystem
Organically
Developed
Technology Solutions Integrated Access Network
Algorithmic Design
Ultra Fast Deployment
Setup Automation & Robotics
Acquired/Invested
Capabilities
Inside Data Centre Services Virtualized RAN OSS/BSS
21
© 2019-2020 Sterlite Technologies LimitedStrategic growth Engine
Revenue Split YTD FY20:
Revenue (INR Cr.)
Customer Segment
~7.5X
9% 2%
~2600
~370
~370 48%
42%
~350
~50
~50
FY16 Annualised FY20
Telco Citizen
Network Services Cloud Defence
Network Services is enabling STL to become the strategic partner to our customers by providing end to end
solution.
© 2019-2020 Sterlite Technologies Limited 22Continuing unabated growth
Order Book Growth (INR Cr.) Order Book Split (INR 4,798 Cr.)
~3X
4,798
37%
63%
1,692
Dec’15 Dec’19 Project O&M
© 2019-2020 Sterlite Technologies Limited 23Strategic levers for continued growth
Penetrating into new Customer Segments
Penetrating into new
1. Expanding significantly in Telco Segment
Customer Segments
2. Expanding in Cloud Segment through leveraging
acquired capability
Expanding into new Geographies
1. Becoming a Pan India Player (Currently
operate in 8 States)
2. Exploring Markets outside India
Expanding scope
1. Developing capabilities to further increase the
scope of services
© 2019-2020 Sterlite Technologies Limited 24Connectivity
Solutions
© 2019-2020 Sterlite Technologies Limited 25Connectivity Solutions Overview
OPTICAL FIBRE OPTICAL FIBRE
AND PREFORM CABLES
• Full suite of ITU-T fibre products from low • Customised cabling products for FTTx, utilities,
loss to bend insensitive fibre oil and gas, transport and defence applications
• Centre of Excellence for Fibre research • World-class Installation Lab for rollout testing
STRUCTURED PASSIVE
DATA CABLES CONNECTIVITY
• For a variety of applications in structured • Modular, customizable, Plug-n-Play solutions
cabling – From data centres to enterprise for multitude of FTTx applications
• Experiential Lab to test latest innovations • In-house design & development capabilityGlobal Manufacturing footprint & Supply
chain
Multi-fold increase in capacity
50 33
30
22 15
8
FY’16 FY’18 Jun’19 FY’15 FY’18 Jun’20
Optical Fiber Capacity (Mn fkm) Optical Fiber Cable Capacity (Mn fkm)
Industry 4.0 standards
Fully automated machinery with robotic operations
Efficient supply chain
Reduced delivery times and SCM cost
© 2019-2020 Sterlite Technologies Limited 27Differentiating with full vertical Integration
High Tech: R&D Led Model
PREFORM
Restricted:
Increasing Barriers to Entry
Players < 10
STL is Centralized Platform for Glass/ Preform
present
across the Operational Excellence Model
layer FIBER DRAWING
Limited:
Players < 50
Global Platform for Fiber Draw
Application Oriented Solutions: Locally Presence Model
CABLING
Extensive Competition:
Cable Manufactures < 200
Global Platform for Fiber Cable Systems
• Glass Science • Fluid Mechanics • Wave Optics
• Chemical Engineering • Large scale Automation • High Temp processing ~ 2000 deg. C
© 2019-2020 Sterlite Technologies Limited 28Strategic levers for continued growth
A) New Market Entry Consistently growing presence across the world
25%
32%
62%
Existing Market
New Market
75%
68%
38%
B) New Product Strengthening
FY’16 YTD FY’20
RoW India
© 2019-2020 Sterlite Technologies Limited 29Our Discussion
• Data Networks
the next phase beckons
• STL is ready
an ecosystem Innovator
• Two Innovation Engines
delivering performance and growth
• The Future is Exciting
ambitious growth, sustainable financials
© 2019-2020 Sterlite Technologies Limited 30The Future is Exciting
Network creators are
investing heavily in the new ecosystem
Telcos 5G Commercial launches across the globe
huge 5G investments in mobility, backhaul starting to pick pace
Cloud Players Cloud Capex on the rise with a CAGR of 12%
many hyperscale and edge Data centres
Citizen Networks FastTrack Nationwide digital inclusivity
large scale coverage to achieve 100% reach program
Enterprise Network modernization & internal
massive modernization, new applications communication network
© 2019-2020 Sterlite Technologies Limited 31STL is focussed on
1 Network Services:
Investments by Citizen Networks & Enterprises in India to Continue leading to order book growth.
Strong Revenue growth in Network Services on the back of Customer segments penetration,
geographic expansion & scope expansion & to move towards Leadership in India.
STL shall continue to invest to acquire new technologies & new capabilities, and ride the
disruptive trends shaping the networks of the future
2 Connectivity Solutions:
5G Commercially launched globally; Deployment to pick pace; shall lead to demand growth in
Optical Fiber.
Capacity Utilisation to double on new market entry & Industry expansion
Pricing Structure improvement
32
© 2019-2020 Sterlite Technologies LimitedGrowing Order Book and Addressable market
Order Book Growth (INR Cr.)
Journey towards Expanding 10,516
Addressable Market
$75 Bn 8,535
2023
2,253
FY’16 FY’19 Dec’19
$20 Bn Order Book
2017
© 2019-2020 Sterlite Technologies Limited 33With strong financial priorities and governance
Growth Earnings Capital Allocation
• Profitable Organic • Drive sustainable EPS • Focus on Free Cash Flow
Growth growth Generation
• EPS accretive • Attain earning • Sound Leverage and
strategic acquisitions objectives across Working Capital Ratio
economic cycles
• Commitment to R&D • Stated dividend policy
and Talent • ROCE > 25% with consistent returns
to shareholders
© 2019-2020 Sterlite Technologies Limited 34Data Networks
- Industry Evolution
STL
- An ecosystem Innovator
Business Overview
The Future is Exciting
Appendix
© 2019-2020 Sterlite Technologies Limited 35Financials : Detailed
P&L (INR Cr.) FY’19 9M FY’19 9M FY’20 Q3 FY’20 Balance Sheet (INR Cr.) FY’19 Q2 FY’20
Revenue 5,087 3,296 3,994 1,203
Net Worth 1,815 1,890
EBIDTA 1,164 836 877 247
EBITDA % 23% 25% 22% 21%
Net Debt 1,733 1,725
Depreciation 195 145 213 70
EBIT 969 691 664 177
Total 3,548 3,615
Interest 105 75 162 56
Exceptional Items - - 51 51 Fixed Assets 2,356 2,524
PBT 864 616 451 71
Tax 278 196 96 19 Goodwill 107 166
Net Income 563 398 354 53
(After Minority Interest) Net Working Capital 1,085 925
Net Income
Adjusted for exceptional 563 398 392 91 3,615
Total 3,548
item net of tax
© 2019-2020 Sterlite Technologies Limited 36Corporate Structure & Shareholding Pattern
Corporate structure Shareholding pattern
Volcan Vedanta
investments 100%
Resources Plc.
22.7%
35.3%
Public
shareholders 53.7%
53.7% 54.0%
46.3%
14.2%
6.1%
9.1%
Sterlite Technologies Limited 4.9%
58.0% 75.0%
Promoters & Promoter Group
Brazil JV 100% 100% China JV
FII
Other Institutional Holders
Retail
Impact Data Solutions Metallurgica Bresciana
© 2019-2020 Sterlite Technologies Limited Source: Company information; Karvy Shareholding Services; Data as of Dec 31st, 2019 375G Commercial Services starting to pick pace
Expansion of 5G network in US Global Telco's Capex ($bn)
US (Top 4) + Europe (Top 5) + China
134 132 135 141
China rolls out 5G, plans big investment To increase with
• ~6mn base stations planned upcoming 5G
deployments
Large scale 5G rollout expected
2017 2018 2019 2020E
in Europe Telco capex
Profitability to pave way for Future Investments
5G will require
significantly more
fibre than 4G
© 2019-2020 Sterlite Technologies Limited
Source: JPMC, Company & Industry Estimates 38Cloud companies continue to invest heavily
Legacy Data Center
Core
Cloud capex on the rise ($bn)
122 Aggregation
111
103
Access
87
Hyperscale Data Center
Spine Switch
2019 2020E 2021E 2022E
Cloud capex
Leaf Switch
© 2019-2020 Sterlite Technologies Limited
Source: Company & Industry Estimates 39Citizen Networks: Government push towards digital
infrastructure for all
National Broadband Mission
Vision
• Broadband connectivity to all villages by 2022
• Investment of $100 Bn. in next 4 years from both government
and industry
Features
• Deployment of additional optical fiber cable of 3Mn Km route km
• Fiberization of towers: From 30% to 70%
• Tower density: From 0.42 to 1.0 per thousand population
© 2019-2020 Sterlite Technologies Limited 40Large Indian enterprises continues to invest in digital
infrastructure
Defence Railways Power Grid
Investing in Network Investing in signalling and Investing in Smart Grid &
Modernisation, Secure data telecom systems to improve modern MPLS/SD WAN
Communications & Physical speed & safety Networks
Security
© 2019-2020 Sterlite Technologies Limited 41beyond tomorrow © 2019-2020 Sterlite Technologies Limited 42
You can also read
