Idea Cellular Cover 2017 (Final)

1 IDEA Cellular LIMITED ANNUAL REPORT 2016-2017 CMYKCMYKT homson PressIdea Cellular LimitedSuman Tower, Plot No. 18, Sector - 11,Gandhinagar - 382 011, Cellular LIMITEDIDEA Cellular LIMITEDIDEA Cellular LIMITEDIDEA Cellular LIMITEDIDEA Cellular LIMITEDMr. Aditya Vikram BirlaWe live by his , Commitment, Passion, Seamlessness and Chairman s Letter to ShareholdersDear Shareholder,Global EconomyThe global economy continued tobe subdued in 2016. The slowdownin the advanced economies of theWest adversely impacted growthlevels, resulting in the slowing ofthe world economic growth to in the earlier year. Thegrowth in emerging markets anddeveloping economies wasencouraging.

2 However, China andIndia experienced a markets reflected a broaduptrend, notwithstanding Brexitand the rate hikes by the US data reveals that the globaleconomy is gaining (Purchasing Managers Indexes), accelerating trade flowsand better business and consumerconfidence are the key IMF has projected globalgrowth to notch up to in 2017from last year. Growth in theadvanced economies is estimatedat 2%, with US growth at , theEuro area at and Japan Growth in the emergingmarkets is pegged at , drivenlargely by China, India and theASEAN region. Latin America isexpected to grow only ,affected by the weak trend EconomyIndia is on a roll.

3 There is a buzzabout India, as it blazes forth as thefastest growing economy in theCMYKF oreign investmentflows, which were atover USD 60 billion inFY-17 are scaling newrecords. Markets arebuoyant. Stock index isat a historic s global rankinghas jumped up incompetitiveness and onthe innovation at The trade deficit in 2016-17 wasUSD 106 billion, lower by 11% over the previous year. Thecurrent account deficit has been significantly pared. India sforeign exchange reserves as at March end 2017 wereUSD 370 billion. Investors are bullish. Foreign investmentflows, which were at over USD 60 billion in FY-17 arescaling new records.

4 Markets are buoyant. Stock index isat a historic peak. India s global ranking has jumped upin competitiveness and on the innovation various initiatives and reforms of the ModiGovernment have built the platform for a quantum leapahead. High impact national projects, coming to grips withstructural issues, which were holding back the country sprogress, innovative approaches in policy making havecollectively contributed in driving India on a high growthtrajectory. Going forward the abiding sense is one ofimmense optimism and confidence in the future with thenation slated to grow at to 8%. India s narrative said, if there is one subject that needs greater attentionon the government s radar for the ensuing years, it is therevival of investment activity and creation of quality jobsin large measure.

5 The Government is seized of these Government has taken many steps, including a sharpfocus on improving ease of doing business, speeding ofgreen clearances and stepping up public sector outlaysfor infrastructure. I believe, it is a matter of time beforethe private sector investments pick up as NPAs areresolved and corporate balance sheets are Company s PerformanceAs you are all aware, the Indian wireless industrywitnessed an unprecedented disruption, given the lure offree offerings both voice and mobile data by a new has been a Period of Telecom Discontinuity ,permanently changing mobility business , the revenue KPIs and financial parametersfor all mobile operators have sharply declined.

6 For the firsttime in its history, the flourishing Indian Mobility industry,is trending towards an annual revenue decline of ~2% inFY17 (vs FY16). With the new entrant starting to chargefor its services, albeit very slowly, the sector is expected toreturn to growth in the next financial wirelessbroadband populationunder coverage nowexpands beyond500 million Indians in21 service areas, whileGSM presence spreadsto nearly 1 a consolidated basis, your Company for the first timesince its IPO, reported a total revenue decline of at` 358,827 million for FY17 (` 361,625 million in FY16).While we remain optimistic on the India growth story andIdea continues to expand its scale of operations, thistumultuous phase subdued Idea s EBITDA during thecurrent financial year by to ` 105,832 million(vs ` 121,807 million in FY16).

7 Further, last two years ofhigh Investment in Spectrum and Network Equipment hasincreased the Depreciation and Amortisation charge to` 78,272 million and Interest and Financing Cost to ` 40,411 million. This has resulted into loss of` 3,997 million in FY17 the first ever annual loss in last11 years since its IPO during Year 2007. The Cash Profitfor the Company stands at around ` 69,981 of short term challenges, Idea remains committedto the process of building world class broadband the slated launch of Mumbai 4G services by end ofMay 2017, the Company will be offering broadbandservices on its own spectrum across all 22 service areas,3G (15 service areas) and 4G (20 service areas).

8 DuringFY 2017, Idea integrated highest ever network telecom sitecount of 50,004 sites (2G+3G+4G), expanding its networksites on GSM (2G), HSPA (3G) and LTE (4G) technologiesto an overall EoP of 241,540 sites, including 70% increasein its wireless broadband sites on 3G and 4G platform from64,703 sites as at end March, 2016 to 110,054 sites as at endMarch, wireless broadband population under coverage nowexpands beyond 500 million Indians in 21 service areas,while GSM presence spreads to nearly 1 billion Company has also expanded its fibre backbonenetwork by 29,100 km from 115,500 km as at end March,2016 to 144,600 km as at end March, 2017.

9 The Company sgross investment in fixed assets has risen nearly to` 1,185 billion, an addition of ` 198 billion in last 12 s overall spectrum holding of MHz acrossspectrum bands of 900, 1800, 2100, 2300 and 2500 MHzequips it with an ability to rollout wireless broadbandwhich can carry 15-20 times of its current mobile datatraffic. The monetization of this front loaded largeinvestment in spectrum and equipment is inevitable asDigital India mission gathers 20th March, 2017,we announced amerger betweenVodafone India andIdea Cellular . The twocompanies willcombine theiroperations in India(excluding Vodafone s42% stake in IndusTowers) to createIndia s largest 20th March, 2017, we announced a merger betweenVodafone India and Idea Cellular .

10 The two companies willcombine their operations in India (excluding Vodafone s42% stake in Indus Towers) to create India s largest telecomoperator. The merger of Idea and Vodafone is founded onthe shared commitment to deliver substantial stakeholdervalue, offer strong consumer choice to billion Indiansand contribute towards realising the Prime Minister svision of Digital India and financial inclusion goals. Thecombined company would become the leadingcommunication provider in India with ~ 400 millioncustomers, 35% Customer Market Share and 41% RevenueMarket Share (based on Q3FY17 TRAI release). The mergertransaction is subject to approval from the relevantregulatory authorities and Idea s shareholders.