A financial perspective of Tata Communications Ltd.

1. Internship 2014

2. Company Overview

3. Company Overview
♦ Tata Communication Ltd. (“TCL”) was founded in 1986, as Videsh Sanchar Nigam Limited and
currently headquartered in Mumbai, India
♦ TCL provides telecommunications services to telecom service providers and enterprise customers
worldwide
♦ Majority owned by the Tata Group, which is one of India’s largest and most reputed multinational
conglomerates
Source: Company Data
(1) :As on 8/22/2014
3
♦ The company operates mainly in 2 segments: Global Voice Solutions and Global Data Services
♦ The company’s customer base includes approximately 1,600 global carriers and service providers,
785mobile operators, 10,000 enterprises, 275,000 broadband and Internet subscribers, and 500 Wi-Fi
public hotspots
♦ It is considered as a leader in enterprise data services & wholesale long distance voice services in
India; and international voice services & wholesale connectivity globally
♦ Total 8,119 employees as of Jun’14. 929 employees in the South African operations and 7,190 in core
business (Voice+Data) and corporate offices
♦ The company is listed on India’s NSE & BSE with a market cap of Rs 101.7bn (1)

4. Shareholding & Key Personnel
Shareholding Pattern Key Personnel
48.9%
19.6%
5.5%
26.1%
Tata Group Govt. of India Institutions Non-Institutions
4
Name Position
Vinod Kumar MD & Group CEO
Sanjay Baweja CFO
Michel Guyot President - Voice Solutions
Allan Chan President - Global Carrier
Sumeet Walia Enterprise Solutions
Sunil Joshi MD & CEO of Neotel
Rangu Salgame CEO - Growth Ventures
Aadesh Goyal Global Head - HR
Tri Pham Chief Strategy Officer
Sunil Rawal Head Business Excellence
Julie Woods-Moss Chief Marketing Officer
♦ Tata group includes Panatone Finvest Ltd
(31.10%), Tata Sons (13.06%), and Tata Power
Ltd. (4.71%)
♦ Institutions include Mutual funds (2.59%),
Financial institutions (6.58%), Insurance
companies (2.51%) and Foreign Institutional
Investors (7.87%)
♦ Non-institutions include individuals (4.01%),
Bodies corporate (1.32%) and others (0.13%)
Source: Company Data (upto June 30, 2014)

5. Business Model
Products Summary
Voice
Solutions
(49%)
Stage: Mature & Stable Scale Business
Position: Market Leader
Offerings: Wholesale international voice carriage and termination, India national
long distance voice, outsourcing/while label
Market: Global carriers and service providers
Ranking: #1 in international voice by minutes
Data
Services
(40%)
Stage: Mature
Position: India Leader & Global Challenger
Offerings: Connectivity (focusing on leased circuit networking and IP transit
services), data centers, managed services, outsourcing
Market: Global carriers and enterprises, and mid-market segment in India
Ranking: #1 in India in enterprise data services by revenue
Start-ups
(primarily
Neotel)
11%
Stage: Startup
Position: South Africa Investment (Neotel) – Concluded commercial discussions to
sell to Vodacom
Offerings: All telecom services except mobile, first CDMA network in South Africa
Market: South African Carriers, entreprises, SMB and consumers
Ranking: #2 in enterprise and wholesale data in South Africa
Source: Company Data (upto June 30, 2014) 5

6. Financial Overview

7. Summary Financials
Operating Revenue (INR mn) Cash Profit1 (INR mn)
EBITDA (INR mn) Dividend % Per Share
7
110,256
119,320
141,961
172,130
196,196
FY10 FY11 FY12 FY13 FY14
Revenues
10,124
Source: Company Data
12,253
17,915
20,597
30,416
9.3%
10.6%
12.6%
12.0%
15.5%
FY10 FY11 FY12 FY13 FY14
EBITDA Margin%
9,131
7,714
10,254
14,037
23,428
FY10 FY11 FY12 FY13 FY14
1Cash Profit computed as (Net Profit/Loss + Depreciation and
Amortisation & Impairment)
0%
20% 20%
30%
45%
FY10 FY11 FY12 FY13 FY14

8. Debt Profile
Core Business – Net Debt Key Highlights
Core Business - Average Cost of Loans
8
1,550
1,479
1,380
FY12 FY13 FY14
Source: Company Data
♦ Core business is operating at peak debt levels
♦ Consistent reduction in average cost of
borrowing has driven lower interest expense
♦ Lower interest expense and capex intensity with
improved operating performance have set stage
for core business deleveraging
7.4%
6.0% 5.9% 5.8%
5.3% 5.1% 5.0% 4.9% 5.0%
4.4% 4.1% 4.2% 4.3% 4.2%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14

9. Valuation Summary
5 year Index Share Price Performance Comparison
Valuation Broker Comments
Particulars FY13 FY14 FY15E FY16E
Revenue (Rs cr) 17,213 19,666 22,126 25,224
Growth (%) 21% 14% 13% 14%
Operating profit 2,060 3,088 3,380 4,085
Growth (%) 15% 50% 10% 21%
EBITDA margin (%) 12% 16% 15% 16%
Adjusted PAT (Rs cr) (623) 35 363 520
Reported PAT (Rs cr) (727) 101 363 520
EPS (Rs) (26) 4 13 18
PER (x) - 104 29 20
EV/EBITDA (x) 10 8 7 6
Net debt/EBITDA (x) 5 5 4 3
P/Book value (x) 7 13 9 6
As per a research report from Sharekhan, in view of the strong
cost rationalisation efforts of the company, increasing
contribution of the data business in its portfolio and various new
initiatives like ATM business, which is on the cusp of attaining a
break-even, analysts expect the EBITDA of the company to
grow at a compounded annual growth rate of 14.4% over
FY2014-16. This coupled with its deleveraging exercise
(through measured capex) is likely to improve its net
debt/EBITDA level from 3.7x currently to around 3x by FY2016.
The steadily improving core performance coupled with the
management’s initiative to sharpen its focus and deleverage its
balance sheet via Neotel stake sale and monetisation of the
non-core assets keeps us positive on the stock. Analyst
expects the stock to provide additional 12-15% returns from the
current levels.
Source: Company Data, Moneycontrol.com, Sharekhan 9

10. Business Environment

11. SWOT Analysis
Strength Weakness
♦ An attractive business environment with many
emerging local as well as foreign players
♦ Strong mobile- communication development,
with latest technologies offering attractive
services at faster pace
♦ Due to faster growth of industry always
attractive to foreign investors
♦ Delayed execution of important policies due to
issues among TRAI, Telecom ministry
♦ Limited spectrum availability and
interconnection charges issue between the
private and state operators
♦ Wireless Business and prepaid services are
growing at faster pace while wired services and
post-paid services are lagging behind
Opportunities Threat
♦ Regulator recommended foreign players
participation without any local player
♦ All service providers are keen to provide more
services which is great opportunity for them
♦ Telecom industry is likely to see an excellent
growth of services in rural as well as semi-urban
areas
♦ High 3G service charges may reflect negative
influence on demand for licenses
♦ Average Revenue Per User i.e. APRU is falling
due to price war between different players
♦ Huge capacity requirements can hamper the
fast growth in mobile sector
Source: Company Data, Moneycontrol.com, Sharekhan 11

12. Airtel Vodafone
♦ Delayed execution of important policies due to
issues among TRAI, Telecom ministry
♦ Limited spectrum availability and
interconnection charges issue between the
private and state operators
♦ Wireless Business and prepaid services are
growing at faster pace while wired services and
post-paid services are lagging behind.
Competition Overview
♦ An attractive business environment with many
emerging local as well as foreign players
♦ Strong mobile- communication development,
with latest technologies offering attractive
services at faster pace
♦ Due to faster growth of industry always
attractive to foreign investors
Reliance Communication Idea
♦ Regulator recommended foreign players
participation without any local player
♦ All service providers are keen to provide more
services which is great opportunity for them
♦ Telecom industry is likely to see an excellent
growth of services in rural as well as semi-urban
areas
♦ High 3G service charges may reflect negative
influence on demand for licenses
♦ Average Revenue Per User i.e. APRU is falling
due to price war between different players
♦ Huge capacity requirements can hamper the
fast growth in mobile sector
Source: Company Data, Moneycontrol.com, Sharekhan 12

13. Industry Overview

14. Telecom Industry Overview
Indian Telecom Market
♦ In 2013-14, the Indian telecom market grew to 45,643 crores, at a rate of approximately 8% y-o-y
♦ During FY14-19, the market is expected to grow at a compounded annual growth rate (CAGR) of
approximately 9%, on the back of the mid-teens growth forecast in the mobile services and managed
services space
♦ Growth in the Indian market is mainly driven by higher penetration of mobile services, growth in
consumer broadband services and increased adoption of network services by Indian businesses
♦ In the financial year 2013-14, the Indian International Long Distance (ILD) voice market had eight
major operators, a total inbound market size of 85 billion minutes and outbound market size of 4.5
billion minutes
 TCL's market share was 21% in both inbound and outbound traffic
♦ India’s National Long Distance (NLD) voice market size was 372 billion minutes during the year and
consisted of 10 major operators
 TCL's NLD addressable market size was 15 billion minutes, of which its market share was 39%
♦ In 2013-14, TCL had a 28% market share of the Indian data market and a 25% market share of the
Indian data centre market
Source: Company Data 14

15. Telecom Industry Overview
Global Telecom Market
♦ In 2013, the global telecom market was relatively flat, growing just 0.2% y-o-y to USD 2.2 trillion
♦ Telecom services accounted for 75% of the total market while mobile devices accounted for 16% and
telecom infrastructure for 9%
♦ The near-flat growth rate of the past year is likely to improve, with the total telecom market expected
to grow at a CAGR of 2.5% from 2013 to 2018
Mobile Penetration 2014 Mobile Telecom Revenues 2014
92
96.4
108
124
140
140
158
0 50 100 150 200
Sub-Saharan Africa
Asia & Australasia
North America
Latin America
Middle East & North Africa
Western Europe
Eastern Europe
Subscriptions per 100 people
356,731
Revenue (USD Bn)
189,791
170,356
77,899
38,592
Asia &
Australasia
Western
Europe
North
America
Latin
America
Eastern
Europe
Source: Company Data, The Economic Intelligence Unit 15

16. 10,100
Top Telecoms Merger & Acquisition by deal value
Buyer/Seller Deal Value (USD mn)
3,029
Telecom Industry – M&A Overview
1,116
1,263
308
400
520
T-Mobile USA/US Cellular spectrum
Entel/Nextel del Peru
Accelero Capital/MTS Allstream
Hutchinson/Telefonica
Qatar Foundation/Bharti Airtel (5% stake)
Rostelecom/Svyazinvest
Vodafone/Kabel Deutschland
Top Telecoms Merger & Acquisition in Asia-Pacific
Date Bidder Target Stake (Value) Business nature of target
26-Jun-13 Telstra Ventures (Australia) Kony Solutions (US) 100% (US$18.3 mn) App developer
17-Jun-13 NTT Corp (Japan) Solutionary Inc (US) 100% (US$210 mn) Security service provider
4-Jun-13
NTT Communications Corp
(Japan)
Digital Port Asia Limited
(Thailand)
74% (US$40 mn) Data center service provider
7-May-13
Telstra (Australia);
HealthEngine na (US$11 mn) Online health directory
Seven West Media (Australia)
28-Apr-13 Telecom New Zealand Revera Limited (NZ) 100% (US$82 mn)
Integrity computing infrastructure and
service provider
26-Apr-13 NTT DoCoMo (Japan) Nihon Ultmarc Inc (Japan) 77.5% (US$26 mn)
Provider of medical database and
contract research
Source: www.ey.com 16

17. TCL – Mergers & Acquisitions
Acquired company Country Stake Year
BT Group's (BT) Mosaic
business
UK 100% January-10
Neotel South Africa 30% January-09
China Enterprise
Communications Limited
(CEC)
China 50% equity interest June-08
Transtel Telecoms (TT) South Africa April-07
Tata Power Broadband India September-05
Teleglobe International US July-05
Tyco Global Network US November-04
Dishnet DSL's ISP
division
India March-04
Gemplex US July-03
Source: www.ey.com 17

18. Taxation Overview - Telecom

19. Telecom Industry – Taxation Overview
Direct Tax Highlights
♦ Surcharge
• Proposed to levy a 5% surcharge on individuals with income of INR 10 million and 10% on
domestic companies with income exceeding INR 100 million
• The revised effective tax rate for domestic companies with income above INR 100 million would
be 33.99 % (vis-a-vis 32.445%)
• For foreign companies with operations in India, 5% surcharge for income exceeding INR 100
million, which increased the effective tax rate for foreign companies from 42% to 43.26%
♦ Dividend Distribution Tax ('DDT')
• Surcharge on DDT increased by 10%, which would result in effective DDT of 16.995%
♦ Dividends from foreign subsidiaries
• Currently, a beneficial tax rate of 15% is applicable on dividends received from foreign
subsidiaries (i.e., companies in which Indian company holds more than 26%)
♦ Taxation of income by way of royalty or fees for technical services ('FTS')
• Rate of tax applicable on payments in the nature of royalty and FTS made to nonresidents has
been increased to 25% from 10%
♦ Modified General Anti-Avoidance Rules ('GAAR') effective from April 1, 2016
Source: Ernst & Young Budget Impact – Telecommunication Sector

20. Telecom Industry – Taxation Overview
In-Direct Tax Highlights
♦ Central Excise duty
• Standard rate of Excise duty maintained at 12%
♦ Custom duty
• Standard rate of Customs duty maintained at 10%
♦ Service tax
• Standard rate of Service tax maintained at 12%
♦ Cenvat Credit Rules
• Amendment to clearly provide for recovery, in case of non-reversal of Cenvat credit on:
 ‘As such’ removal of inputs or capital goods;
 Removal after use of capital goods; or
 Full/ partial write off of inputs or capital goods
♦ Goods and Service tax
• With respect to GST, the commitment and intention has been reiterated and the Finance
Minister is hopeful that a draft bill on the constitutional amendment and draft bill on GST will be
put forth in the Parliament soon

21. Internship Overview

22. Internship Overview
Job profile- Intern
Duration of Internship - 2nd June to 31st August, 2014
Department - Finance
Job description
 Calculation of tax for TCL clients like Airtel, Tata Docomo, Viom and Infinet
 Updating Bangladesh Telecom Limited (BTCL) data put up on excel sheet
 Checking invoicing errors
 Preparation of reconciliation statement
 Preparation of data for payment received
Learning from Internship
 Learned Types of taxes applicable on telecom bills
 Assisted professionals in Finance and Data Analysis projects
 Understood the SAP functioning
 Gained working knowledge of Excel data analysis features while working on region wise projects
 Understood the F-FORM process
Learning from Project Work
 Learned about TCL’s business and factors affecting the firm
 Learned about factors affecting the industry
 Learned about Direct & Indirect Taxation affecting the Telecom Industry
 Learned about the business opportunities for Telecom Industry