Analyst Presentation Fy2018

ANALYST PRESENTATION FY2018

MAY 2018 SAFE HARBOUR SOME OF THE STATEMENTS HEREIN CONSTITUTE “FORWARD-LOOKING STATEMENTS” THAT DO NOT DIRECTLY OR EXCLUSIVELY RELATE TO HISTORICAL FACTS. THESE FORWARD-LOOKING STATEMENTS REFLECT OUR INTENTIONS, PLANS, EXPECTATIONS, ASSUMPTIONS AND BELIEFS ABOUT FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS, MANY OF WHICH ARE OUTSIDE OUR CONTROL. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTATIONS EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS INCLUDE KNOWN AND UNKNOWN RISKS. BECAUSE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM OUR INTENTIONS, PLANS, EXPECTATIONS, ASSUMPTIONS AND BELIEFS ABOUT THE FUTURE, YOU ARE URGED TO VIEW ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN WITH CAUTION. TATA COMMUNICATIONS DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE FORWARD LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

2 DIGITAL INFRASTRUCTURE PROVIDER

Connectivity and Collaboration remain @ The Core

Cloud, Security, Mobility Our services now & IoT round out the enable B2B2C and portfolio B2B2B

2 SERVICES ROADMAP

Make the Internet Fit for Business

Build API layer around all Design for Public-Private Weave “Application- services for improved Service Hybrid Solutions – Network, Awareness” Experience and Platform Cloud, UCC, Security into all Services Plug-ins

Full transparency and empowerment through Customer Experience

3 CUSTOMER FOCUS

“Deeper with Fewer” • Focus direct sales efforts on increasing PPR • especially with large customers ($10-25bn revenues)

Force Multipliers Strategic relationships with Digital Outreach • Platform players, • To mid-sized customers • Device/Chip manufacturers, • To new logos • Developer communities

4 INTERNAL AGILITY AND PRODUCTIVITY

Digital Transformation to Simplified org help keep manpower structure costs relatively flat

Business Process Moving to NPS as measure of Re-engineering aimed at Customer Satisfaction simplicity and speed

Common Balanced Scorecard for the entire company

6 PROACTIVELY HARNESSING MARKET WINDS FOR A BETTER FUTURE

MOVE − No. of customers – 64 − SIMs ordered – 51,127 − Key wins – Chungwha, Surbana, DT Tech, Omate Security IoT India NetFoundry − PoCs completed – 37 − Devices ordered – 16,623 INNOVATION − Key wins – JUSCO, Tata Power, Mahanagar Gas

MOVE Security − Devices managed – 3,999 − Key wins – Carlsberg Corp., HDFC, Titan, ICICI, Axis Bank IoT India NetFoundry − PoCs completed – 27 − No. of customers - 12

7 POSITIONED IN THE LEADERS’ QUADRANT “LEADER” IN GARTNER MAGIC QUADRANT FOR NETWORK SERVICES, GLOBAL FOR 5TH CONSECUTIVE YEAR

• Our products have been getting analyst recognition and are consistently featured in Gartner Magic Quadrant • This year we debuted as a niche player in MQ for managed hybrid cloud hosting in Asia Pacific

Source: Gartner, Inc. “Magic Quadrant for Network Services, Global” by Danellie Young, Katja Ruud, Bjarne Munch, Takeshi Ikeda, Neil Rickard, Lisa Pierce, February 27, 2018 This graphic was published by Gartner, Inc. as part of a larger research document and should be ev aluated in the context of t he entire document. The Gartner document is av ailable upon request f rom Tata Communications. Gartner does not endorse any v endor, product or serv ice depicted in its research publications, and does not adv ise technology users to select only those v endors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of f act. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or f itness f or a particular purpose. 8 THIRD PARTY ENDORSEMENTS, AWARDS AND RECOGNITION CONTINUOUS IMPROVEMENT India's largest corporations: Tata Communications at #68 Frost & Sullivan India ICT Awards: Transparency International, a global civil society organization, conducted • Enterprise Data Service Provider of the Year (9th Year in a row) research into the public reporting practices of 100 emerging market companies based in 16 countries in 2016 • Hosted Contact Center Service Provider of the Year (6th Year in a row)

• Enterprise Telecom Service Provider of the Year - Large Enterprises (3rd Tata Communications ranks #2 in the Year in a row) ‘Transparency in Corporate Report’ • Third Party Datacentre Service Provider of the Year (2nd Year in a row) 8 page feature story on the Leadership Profile of Tata Communications in the December edition of Fortune • IoT New Product/Service Innovation Award (First time winner - New India Award Category) http://fortuneindia.com/2016/december/the-importance- of-being-global-1.10468 Recognised for building a high trust, high performance culture and A Great Place to Work-Certified™

Named an Aon Best Employer India, 2nd year in row. Recognised for high employee engagement, compelling employer brand, effective leadership and a culture that enables high #19 best company in India at attracting and performance retaining top talent

8 OUR CUSTOMERS

6,010 493 5.38 85%

Active customers New customers added Product penetration Share of revenue from during the year ratio for top 300 existing customers customers

10 THE YEAR GONE BY - WINS

YOY growth rate of Data revenue grew by ‘Growth services’ doubled to 35.6% in FY18 Capex for full year at 4.4% on the back of USD 235 Mn lower than ramp up in growth from 18.4% growth in guidance services FY17 • IZO services grew by 304% YoY

• Security services Delivered strong grew by 64% EBITDA margins of 30% Net debt contained in traditional data at USD 1.15 Bn portfolio Traditional data grew 4% YoY on full year basis despite industry headwinds Cash flow maintained despite investments • ILL and Ethernet TCTSL revenue grew in growth and grew by 14% YoY by 10% due to new Innovation services business wins • VPN grew by 10%

10 THE YEAR GONE BY - CHALLENGES

Traditional business was Consolidated revenues & Growth services 1 affected by operator 2 EBITDA declined primarily 3 margins impacted: consolidation in India and because of lower Voice upfront investment in increased customer churn. volume, price new wins revenue for compression and which is expected to investment into growth come in FY19 onwards and Innovation and due to customer insolvency.

TCPSL growth impacted due to RoCE decline due to higher 4 sub-optimal cash supply 5 depreciation FY18 PERFORMANCE

Consolidated Data Voice

Revenue Revenue Revenue 16,651 5.5% YoY 11,339 4.4% YoY 5,311 21.4% YoY

# Price and volume erosion in # Revenue up on back of # Global decline in voice Voice strong performance in business # Significant Forex Imapct (Rs Traditional & Growth services 415 Cr -ve) EBITDA EBITDA EBITDA 19.0% YoY 2,291 2.9% YoY 1,956 0.5% YoY 336

# Decrease due to fall in Voice # Muted growth due to # In line with revenue decline EBITDA investment in Growth & # Forex Impact (Rs 39 Crore - Innovation Service ve) * INR Cr. 12 FY18 - PORTFOLIO

Traditional Growth Revenue* Revenue* 1,201 3.9% YoY 346 35.6% YoY

# Growth despite industry headwinds # Growth led by SIP-T, Security # Decline due to operator consolidation & Hosting and IZO and churn

EBITDA* EBITDA* 355 8.5% YoY (42.8) # Decline due to customer # EBITDA Margins back in insolvency and upfront 30% range investment in new win #Cost Optimisation *USD MN Initiatives 13 Q4 PERFORMANCE

Consolidated Data Voice

Revenue Revenue Revenue 4,009 6.6% YoY 2,895 4.0% YoY 1,113 26.3% YoY 2.6% QoQ 0.4% QoQ 9.5% QoQ

# Price and volume erosion in # Revenue up on back of # Global decline in voice Voice strong performance in Growth business services EBITDA EBITDA EBITDA 37.1% YoY 12.0% YoY 26.5% YoY 71.3 555.5 484 3.4% QoQ 9.4% QoQ 10.2% QoQ

# QoQ decrease due to fall in # QoQ decline due to upfront # In line with revenue decline data EBITDA investment in new wins; benefit to flow in FY19 onwards * INR Cr. 12 Q4 - PORTFOLIO

Traditional Growth Revenue* Revenue* 297 1.1% YoY 97 37.3% YoY 1.8% QoQ 8.3% QoQ # Growth despite industry headwinds # Growth led by IZO (up 242%) # QoQ decline due to operator and Security (up 91%) YoY consolidation and churn

EBITDA* EBITDA* 90.2 26.7% YoY (13.7) 5.4% QoQ # Decline due to customer # Q3 had one-time benefit insolvency and upfront investment in new win

*USD MN 13 Q4 - PORTFOLIO

TCTSL TCPSL

Revenue* Revenue* 296 7.2% YoY 100 1.7% YoY 0.6% QoQ 9.9% QoQ # Increase in number of transactions to 98 per month

EBITDA* EBITDA* 11.4% YoY 48.6 YoY 20.4% QoQ 0.3 QoQ # Cost efficiency # Cost efficiencies leading to # Improvement in quality of revenue break even

*INR cr 14 "It is not the strongest or the most intelligent who will survive but those who can best manage change.“ - Charles Darwin WE HAVE THE DNA FOR TRANSFORMATION

Key movements FY14 FY18 Delta

• Trading business, low margin (~12%), high FCF Wholesale voice declining NR 267 109 158 • Holding market leader position

• High NR margins Data increasing NR 881 1138 257 • Invested for propelling future growth

• These are big ticket deals (lower GTM cost) Carrier data revenues flat GR 577 598 21 • Industry forces driving price down (consolidation, threat of next gen players)

Enterprise revenues growing GR 522 949 427 • Invested in global GTM reach to develop this segment

• Steep price drop, compensated by volume growth Traditional products growing GR 988 1201 213 • Maintenance & expansion Capex of ~$150Mn / year • Industry recognised leader (Gartner MQ )

• Built new capabilities for sustainable growth Growth products growing GR 110 346 236 • Investments of ~$150Mn since FY12

Net debt declining Net Debt 1840 1151 689 • Reduced debt over time

All figures in US$ Mn 16 ROADMAP TO DESTINATION 21 FY21 FY18 R Subs, 10% E Subs, 8% Voice, Growth, 32% 32% V Voice, Growth, 20% E 13% N Traditional, Traditional, 38% U 46% E

FY18 FY21

E 7% Subs Subs 9% B I Growth -22% Growth 25% T Traditional 60% D Traditional 100%

A Voice 6% Voice 15% 17 FY 2018 DATA MATH 17.2% Data EBITDA Margin

Revenue Productivity Revenue Cost Productivity

Traditional Growth Innovation Manpower Network G & A

150 Mn USD Revenue by 8% Current CAGR 9% Current CAGR 10% productivity over 5% Revenue CAGR 35% Revenue CAGR FY21 5% Revised CAGR 6% Revised CAGR Flat base (3 years)

1% expansion in Data 1.1% expansion in 4.5% expansion in 0.5% expansion in 0.2% expansion in 0.6% expansion in Margin Data Margin Data Margin Data Margin Data Margin Data Margin

FY 2021

23 – 25% 18 ROADMAP TO DESTINATION 21

1-2% 23-25% Cost productivity (Manpower & 5-6% Opex)

Revenue 17.2% productivity Data EBITDA margin FY21

Data EBITDA margin FY18 DESTINATION 21

Total addressable IOT, mobility Digital transformation market to grow from Consolidation in markets to explode, driving demand for SD $26.6 bn to telecom industry cloud security to be WAN and network $50.9 bn globally and in India dominant theme virtualisation services

IOT, MNaaS to be Growth services’ contribution to VPN and Ethernet to drive data revenue will double from 20% growth in traditional products $100 Mn products each by FY21 in FY18 to 40% in FY21

Data business will SIP-T to be the biggest contribute to over Focus on growth Cloud and security, and revenue contributor 23 and innovation UCC to grow in double followed by hosting in 94% of overall EBITDA growth products services digits by FY21 TO SUMMARIZE…

• Acceleration in growth and innovation services • Momentum maintained in traditional services • Effective bundling in data services leading to higher product penetration ratio Growth Focus Asset • Improve CAPEX to revenue ratio: Efficiency • Sweat underlying cable assets • Focus on asset-lite business models • Improve procurement efficiency

Cost Reduction • Sharp focus on costs • Improve manpower efficiency • Operating leverage in growth services through THANK YOU

tatacommunications.com

www.tatacommunications.com @tata_comm http://tatacommunications-newworld.com www.youtube.com/tatacomms © 2018 Tata Communications. All rights reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries. ACCELERATING GROWTH THROUGH DIGITAL MAY 2018

JAMES PARKER AGENDA

1. Market Opportunity for Tata Communications 2. Go To Market Strategy Transformation

28 BUSINESSES ARE GOING GLOBAL AND NEED TO MAKE BORDERLESS GROWTH PAINLESS- OUR SWEET SPOT

Drivers for Businesses going Global of companies expect overseas expansion to be the focus 84% of their M&A strategy over the next year New Markets & Diversification of Fortune 500 companies have gone bankrupt, been 52% acquired or ceased to exist, due to the disruption by Competitive digital models Advantage

73% tech CEOs report that they actively search for talent Foreign Investment in different countries Opportunities

of Shared Service Centres (SSCs) provide services for 78% Access to New one or more countries Talent

25 WE CONTINUE TO STRENGTHEN OUR LEADERSHIP IN THE GROWING INDIA MARKET We are growing our market share We cater to 5,000 + leading We are investing in our future in India enterprises through new services

Market share growth in India for Customer distribution across India 1. Focussing on upcoming Network, Cloud and Collaboration and international regions segments like IoT:

CAGR: 8.2% CAGR 2,792 Enterprises, IoT India TAM (US$ Mn) TAM (US$) 2,204 10.7% 83% 915 31.7% CAGR: 79% 29.6% Service TCL Share (%) International India 7.1% 23% 77% Provider, 159 68.3% 17% 70.4% Untapped (%) FY18 FY21 FY18 FY21 2. Changing customer conversation from being a connectivity provider to digital infrastructure provider

26 OUR GROWTH SERVICES INVESTMENTS ARE HELPING US CAPITALISE ON THE LARGER GLOBAL OPPORTUNITY International market is a high growth Many of our new products have an increased revenue opportunity contribution from International markets

India vs International TAM (Networking, Collaboration and Cloud)2 International vs India Revenue Contribution (FY 18 OL) • Targeting 315 1 international 260 Total Revenue Split $27.5 bn market gives us 49% access to a 10x $2.8 bn 184 178 India, bigger market International, 58% 42% 140 80% 34% 128

The average value for international customer is much higher 81% 54 97% 42 41 40 38 37 22 compared to Indian customer 60% 19 15 14 66% 73% 55%

38% 91%

ILL

IPL

IZO

NPL

VPN IP-T

MMX GHCC

Higher Cloud Security

average value per Ethernet

UCC SIP T SIP UCC Colo - INTL - Colo

International Core Mobile

customer as International Media Products Media compared to an Market India Market Indian customer USD 1.41 MM USD 1.23 MM

> Conferencing Unified (Top 1000 per customer per customer customers FY18) 27 CHANGE IN DEMAND LANDSCAPE IS EVIDENT WHEN WE ANALYSE THE RFP / FUNNEL Demand Landscape by 2020 – Findings of Global Data Study Today Tomorrow

Very hybrid with strong bias to SaaS and AaaS (API as a Funnel Analysis FY17 vs FY18: Apps on-prem service) • Increase in requirement for Hybrid & SDWAN Still many physical servers, but Automated selection and solution – 506% increase in funnel count with Containers significant levels of provisioning of containers 556% increase in funnel value virtualisation • Managed security funnel value increased by Many switching technologies 63% globally deployed, wide spectrum of LAN LAN and WAN become a single “smartness” ▪ 300% increase in bids asking for Managed managed entity – With providers leveraging SDN Security solutions in India Complex management and orchestration • 142% increase in UCC funnel value coupled WAN admin, using mix of technology with increase in customers requiring these services BUT! – This is a long journey for many organisations – they will need providers that can travel towards SDE with them

Source: Project Mirror - Study commissioned with Global Data – Feb 2018 28 OUR GO TO MARKET STRATEGY TRANSFORMATION

Delivering Customer Success DEEPER WITH FEWER CAN UNLOCK SIGNIFICANT VALUE – SELLING ONE MORE IN TOP 300 ACCOUNTS CAN ADD 150-200 MN IN REVENUE Product Penetration Ratio

Maximum PPR among top 300 customers - 13

9.15 8.75

7.01 6.76

5.38 5.09 • Multi-product engagement  Higher revenue growth and stickiness 1.93 1.75

Top 20 customers Top 100 customers Top 300 customers Overall Average PPR FY18 FY17 30 WE ARE EVOLVING TO A TWO PRONGED ENGAGEMENT MODEL – TARGETING REVENUE MAXIMISATION AND ACQUISITION

HIGH TOUCH DIGITALLY LEVERAGED

- Digital marketing (engage, nurture) & - Deeper Engagement Digital sales (qualify and close) - Differentiated customer experience - Packaged customer themes and aligned APPROACH - Evolved GTM approach APPROACH value propositions - Investment in specialists - Partner ecosystem to add scale

- Enhance Revenue & PPR OUTCOME - Capture larger digital infrastructure OUTCOME - Enhance customer base and revenue share

PARTNER ECOSYSTEM

31 WE ARE ALIGNING OUR CONVERSATIONS TO THE CUSTOMERS’ BUSINESS THEMES

✓ Targeted approach

✓ Alignment with customer maturity

✓ Investment in specialists

32 WE HAVE INTEGRATED THE ORGANISATION TO DELIVER CUSTOMER SUCCESS

▪ Increase

• Targeting • Deeper engagement with ▪ NPS • Differentiation focus accounts • Digital demand • Specialist sales ▪ PPR

▪ Retention Service Operations (Serve)

• Sales & Service alignment for top accounts • Differentiated service

33 SUMMING IT ALL UP…

✓ Market potential exists in both India and Growth Services Funnel International markets Total Funnel YoY ($mn) YoY ($mn) ✓ The need for Borderless growth is driving demand and relevancy for our services 14% 63% ✓ Significant opportunity is present in existing accounts to sell more and better

✓ We have evolved our GTM approach and structure

✓ Our growing funnel as well as the YTD FY17 YTD FY18 YTD FY17 YTD FY18 traction in Growth services is a positive indicator

34 THANK YOU

tatacommunications.com