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Company Analysis of Bharti Airtel
Company Analysis of Bharti Airtel
Abstract
Company analysis is done to evaluate capability, stability, Market Share, Growth rate,
Sustainability and profitability of a company. It is done through collection of secondary data from
various resources available in the Internet. Company Analysis helps the people to know more about
the company. The main objective of this study is to analyze the company position of Bharti Airtel
from the public point of view. It is done through various information collected from Internet. There
are various tools and techniques of financial analysis out of these techniques Investigator has used
ratio analysis for the analysis of financial statements of Bharti Airtel based on the secondary data
including balance sheet and profit and loss account . Investigator has calculated various types of
liquidity ratio, activity ratio and profitability ratio which helped to analyze and interpret real profit
and liquidity position of the company. Investigator has collected information regarding market
growth and market share of Bharti Airtel in the market and the company has largest market share
from subscriber and revenue based in the telecom sector and it is 4th Largest Telecom Company in
the world
Keywords: financial Analysis, Evaluate Capability, Stability, Market Share, Growth rate,
Sustainability and profitability
Mr. Boggarapu Nikhil – Student, Master of Business Administration, KCT BS,
Coimbatore.
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Company Analysis of Bharti Airtel
Introduction
Bharti Airtel Limited, commonly known as Airtel, is an Indian telecommunications Services
Company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa
and the Channel Islands. Airtel has GSM network in all countries,
providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the
world's fourth largest mobile telecommunications company with over 261 million subscribers
across 20 countries as of August 2012. It is the largest cellular service provider in India, with
186.41 million subscribers as of October 2012. Airtel is the third largest in-country mobile
operator by subscriber base, behind China Mobile and China Unicom.
Airtel is the largest provider of mobile telephony and second largest provider of fixed
telephony in India, and is also a provider of broadband and subscription services. It offers its
telecom services under the airtel brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the
first Indian telecom service provider to achieve Cisco Gold Certification. It also acts as a carrier
for national and international long distance communication services. The company has a
submarine cable landing station at Chennai, which connects the submarine cable
connecting Chennai and Singapore.
Sunil Bharti Mittal founded the Bharti Group. In 1983, Mittal was in an agreement with
Germany's Siemens to manufacture push-button telephone models for the Indian market. In 1986,
Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in India to
offer push-button telephones, establishing the basis of Bharti Enterprises. By the early 1990s, Sunil
Mittal had also launched the country's first fax machines and its first cordless telephones. In 1992,
Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal incorporated the
cellular operations as Bharti Tele-Ventures and launched service in Delhi. In 1996, cellular service
was extended to Himachal Pradesh. In 1999, Bharti Enterprises acquired control of JT Holdings,
and extended cellular operations to Karnataka and Andhra Pradesh. In 2000, Bharti acquired
control of Sky cell Communications, in Chennai. In 2001, the company acquired control of Spice
Cell in Calcutta. Bharti Enterprises went public in 2002, and the company was listed on Bombay
Stock Exchange and National Stock Exchange of India. In 2003, the cellular phone operations
were rebranded under the single Airtel brand. In 2004, Bharti acquired control of Hexa com and
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Company Analysis of Bharti Airtel
entered Rajasthan. In 2005, Bharti extended its network to Andaman and Nicobar. This expansion
allowed it to offer voice services all across India. In 2009, Airtel launched its first international
mobile network in Sri Lanka. In 2010, Airtel acquired the African operations of the Kuwait
based Zain Telecom. In March 2012, Airtel launched a mobile operation in Rwanda. Today, Airtel
is the largest cellular service provider in India and the third largest in the world.
Airtel operates in all telecom circles of India. Its network is present in 5,121 census towns
and 457,053 non-census towns and villages, covering approximately 86.6% of the country’s
population as of September 2012. Airtel is the 6th most valued brand according to an annual survey
conducted by Brand Finance and The Economic Times in 2010.
Organizational Structure
Airtel's initial organizational structure concentrated on the hierarchy of the operations
inside the company as a whole. The structure depicted the corresponding operation/region of
different in-charges and it didn't hold anyone responsible for each of its services. So, the company
found it better to restructure its organizational chart. The transformed organizational structure has
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Company Analysis of Bharti Airtel
two distinct Customer Business Units (CBU) with clear focus on B2C (Business to Customer)
and B2B (Business to Business) segments. Bharti Airtel's B2C business unit will comprehensively
service the retail consumers, homes and small offices, by combining the erstwhile business units -
Mobile, Tele media, Digital TV, and other emerging businesses (like M-commerce, M-health, M
advertising etc.). The B2C organization will consist of Consumer Business and Market Operations.
Review of Literature
Rachana Bajaj (2013)1 Financial analysis is done to evaluate capability, stability and profitability
of a company. It is done through various financial ratios calculated from the financial statements
of a company. Financial analysis helps investors to appraise whether they should invest in a
particular company or not. The main objective of this study is to analyze the financial position of
Bharti Airtel from the investors' point of view. It is done through various ratios calculated through
financial statements of company for the period from 2005 to 2012. There are various tools and
techniques of financial analysis out of these techniques Investigator has used ratio analysis for the
analysis of financial statements of Bharti Airtel based on the secondary data including balance
sheet and profit and loss account Investigator has calculated various types of liquidity ratio, activity
ratio and profitability ratio which helped to analyze and interpret real profit and liquidity position
of the company. Bharti Airtel has the largest market share from subscriber and revenue based in
the telecom sector. In nutshell, it is found that investors can be benefitted in the long run by
investing in the telecom industry because telecom industry is otherwise growing industry. Indian
government is also providing various facilities in the development of telecom industry. Telecom
commission has approved 100% FDI in telecom sector. And among the industry Bharti Airtel has
the largest market share from subscriber and revenue based. Roma Mitra Debnath (2008)2
Technological modernization is increasingly viewed as a premeditated necessity in today's era of
growth and prosperity for any country. Telecommunications has entered a new age of development
with advanced technology and increased competition with established players.
Financial Analysis of Bharti Airtel
Benchmarking telecommunication service in India: An application of data envelopment analysis
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Company Analysis of Bharti Airtel
The prime focus of the service providers is to create a loyal customer base by benchmarking their
performances and retaining existing customers in order to benefit from their loyalty. The paper
aims to address these issues. The results are insightful to the telecom policy planner as benchmark
them in terms of their efficiency. It also identifies the inefficient service providers who can
improve their efficiency by making the efficient providers as their role model. The paper also
identifies some generic insights. Sharma, Alka Singh, Mandeep (2012)3 In Indian context,
telecommunication has emerged as one of the fastest growing services, as it has witnessed
phenomenal growth from 22.8 million subscribers in 1999 to 746.77 million by the end of
November 2010 (Ministry of Finance, Govt. of India, 2011). However, despite this unparalleled
growth, few critical issues have emerged which affect the growth in a negative manner. These are
decreasing ARPU, undifferentiated services, increased competition, rapid evolution of technology
and highly dynamic customers. The present study has been undertaken to analyse the customers'
perception about the following aspects of key telecom providers the value added services (VAS),
service quality, customer satisfaction and loyalty. The results suggest that value added services are
perceived to be a strategic tool to differentiate service of one provider from the other. Further a
comparative analysis of the leading service providers has been undertaken from customer’s
perspective to understand the variations in satisfaction and loyalty levels of their customers.
Subhasish Majumdar, Partha Pratim Bhattacharya (2014)4 in this paper, we have
discussed Porter Five Forces model and presented mobile communication market scenario in India.
Then we have analyzed the intensity of competitions among different mobile phone service
providers. Different forces which may throw a challenge to the existing leader are thus found out.
So far very little analysis is done on telecom sector using Porter five forces model. Analysis
indicates that although to meet competition the top service provider is struggling hard but the
presence of strong rivals has put a challenge. From above discussion, we may conclude that the
presence of rivals is the main area that needs company’s management serious attention. Company
may follow the strategy of horizontal integration by taking the decision of merger or acquisition
with any of its one or two rivals. The leader should offer special packages
Benchmarking telecommunication service in India: An application of data envelopment analysis
Porter Five Forces Analysis of the Leading Mobile Cellular Telephony Service Provider in India
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Company Analysis of Bharti Airtel
Problem Identification
For several years running, Sunil Bharti Mittal-promoted Bharti Airtel has been the
undisputed leader in the Indian telecom market. As of March 31, 2013, it had 188.19 million
wireless subscribers and 21.69 per cent market share. The operator’s rapid rise – from the time it
began as a small company offering mobile services in Delhi only, in 1995 – is symbolic of the
strong growth witnessed in the Indian telecom industry. Today, the company offers mobile voice
and data, fixed line, 3G, national and international long distance, IPTV and direct-to-home (DTH)
services. It also manages 82,083 tower sites through Bharti Infratel and Indus Towers. In 2012,
Bharti Airtel raced ahead of its rivals to offer 4G services in the country. These services were
launched on long term evolution-time division duplexing networks, making India one of the first
countries to commercially offer 4G services through this platform. As per industry estimates,
Bharti Airtel currently has over 3,200 4G users. Going forward, analysts expect significant activity
in the 4G space, especially with the entry of Reliance Jio Infocomm in this market. Bharti is
currently the only operator to provide high-bandwidth 4G services in four circles – Bengaluru,
Chandigarh, Kolkata and Pune. Globally, the company operates in 20 countries: 17 African
countries besides India, Sri Lanka and Bangladesh. It is the world’s fifth largest telecom operator
in terms of subscribers. Business Week has ranked Bharti Airtel among the six best performing
technology companies in the world. Bharti has made large infrastructure investments over the past
decade and a half, and currently owns a 171,610 route km optic fiber network across India. Its
global infrastructure includes over 225,000 route km of networks, covering 50 countries and five
continents.
Industry analysts attribute Bharti Airtel’s swift success to Mittal’s business astuteness and
strong support from his core team. According to the former managing director of a telecom firm,
“In the formative years of the telecom sector, Mittal’s perspective was sharper than that of others.
He was able to grab opportunities that he saw while others dithered.” Also, Mittal’s outsourcing
and “minute’s factory” business model, which has driven low-cost mobile telephony in the
country, is well known. However, the past four years have been rough for the operator with its
financial performance witnessing a major slide. During 2012-13, it registered a net profit of Rs
22.75 billion, the lowest in seven years. This marked a decrease of about 50 per cent from Rs 42.59
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Company Analysis of Bharti Airtel
billion in 2011-12. Its earnings before interest, taxes, depreciation and amortization margin, though
still high, declined from 33.2 per cent in 2011-12 to 31 per cent in 2012-13. The company’s market
capitalization declined from Rs. 1,279 billion to Rs 1,108 billion during this period. The biggest
challenge for the company is servicing its debt, which stood at Rs 638.39 billion as of March 31,
2013. This debt was raised largely to fund the $9 billion acquisition of Zain’s African operations
in 2010. The financial pressure is expected to increase in the coming years as the operator needs
funds to pay the one-time spectrum fee and to renew its licenses for the Delhi and Kolkata circles
in November 2014. While the company has obtained a stay order from the Delhi High Court on
the Rs 52 billion one-time payment for spectrum held beyond 4.4 MHz, it will need to participate
in an auction for license extension in the two circles as the government has rejected its application
for automatic renewal. Borrowing additional funds is not prudent for the operator. Besides, its
funding options have become limited as it already has a huge debt on its books. In this scenario,
reviewing its existing business strategy and tapping new revenue streams are the only way forward
for the company.
Key concerns
The major challenges faced by Bharti Airtel in the past two years include hyper competition, a
difficult regulatory environment, falling margins and a decline in almost all operational metrics.
The entry of new players in the market in 2008 led to a price war and incumbents like Bharti were
forced to offer services at rock-bottom prices. While low-cost mobile services resulted in
subscriber growth, the operating margins slid significantly. “The cut-throat competition in the last
two to three years has impacted incumbent players,” says a senior research analyst at Kotak
Securities. As a corrective measure, all operators hiked 2G tariffs in 2012. This has helped
companies like Bharti improve their margins to some extent.
In addition, acquiring 3G and broadband wireless access (BWA) spectrum in 2010
turned out to be a costly affair for the operator – it spent Rs 122.95 billion on acquiring 3G
spectrum in 13 circles and another Rs 33.14 billion for BWA airwaves in four circles. These
investments have not paid off as 3G service uptake has been below expectations, while the 4G
ecosystem is yet to mature.
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Company Analysis of Bharti Airtel
Strength1.Largest cellular service provider in India, with over 164.61 million subscribers at the end of April 20112.Largest Telecom operator in the world with 207.8 million subscribers across 19 countries at the end of 20103.Only Indian operator, with VSNL, that has an international submarine cable4.High brand visibility5.Strong advertising with celebrity brand ambassadors
Weakness1.Price competition from BSNL and MTNL2.Untapped Rural Market
Oppurtunity1.Fast expanding cellular market2.Latest and low cost technology3.Untapped rural market
Threats1.New entrant's low price offering2.Saturation point in Basic telephony service3.Mobile Number Portability
SWOT
Methodology
Sources of Data
The study is primarily based on secondary data. The required data have been collected from carious
websites and relevant data available in the Internet.
Sampling Framework
Annual Reports of the company has taken into consideration and has analyzed the companies over
a period of years
Interpretation
SWOT Analysis
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Company Analysis of Bharti Airtel
Source: TRAI
Challenging Model
Revenue Market Share
BSNL+MTNL7%
Aircel5%
Bharti Airtel30%
Vodafone23%
Idea15%
Tata Docomo9%
Reliance8%
Others3%
Revenue Market Share
BSNL+MTNL
Aircel
Bharti Airtel
Vodafone
Idea
Tata Docomo
Reliance
Others
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Company Analysis of Bharti Airtel
Source: TRAI
The above chart explains the revenue market share of Telecom Companies in India for
the year 2014. BSNL+MTNL has a market share of 7%, Aircel has a market share of 5%, Bharti
Airtel has a market share of 30%,Vodafone has a market share of 23%,Idea has a market share of
15%, Tata DoCoMo has a market share of 9%. Reliance has a market share of 8% and others has
a market share of 3%.
Subscribers Market Share
The above chart explains the subscriber’s market share of Telecom Companies in the year
2041.Bharti Airtel has a market share of 23%, Vodafone has a market share of 18%, Idea has a
Market share of 15%, Reliance has a market share of 13%, BSNL has a market share of 11%, Tata
DoCoMo has a market share of 7%, Aircel has a Market Share of 8% and others has a market share
of 6%.
23.00%
18.00%
15.00%
13.00%
11.00%
7.00%8.00%
6.00%
Bharti Airtel Vodafone Idea Reliance BSNL &MTNL
Tata Docomo Aircel Others
Subscribers Market Share
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Company Analysis of Bharti Airtel
Source: TRAI, Department of Telecom, Company Filings
Spectrum Position
Acquired 115 MHz of 20 year liberalized spectrum positions – Enhanced long term
deployment flexibility
Prime Spectrum to Lead Data Growth Story in Feb 2014 auctions
Secured pan India 4G footprint- widest broadband footprint in India, which
provides ability to build robust network and enhance leadership position in the
fast growing data segment
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Company Analysis of Bharti Airtel
Company plans to roll-out high speed 4G networks in various circles using FD-
LTE technology in the 1800 MHz band besides its existing TD-LTE rollout in
the 2300 MHz band, giving it a pan-India 4G footprint.
Bharti Already holds 3G and 4G spectrum in 21 telecom circles. Bharti has rolled out 3G
and 4G services – with over 8 million 3G customers
Investment Highlights
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Company Analysis of Bharti Airtel
Conclusion
In nutshell, it is found that investors can be benefitted in the long run by investing in the telecom
industry because telecom industry is otherwise growing industry. Indian government is also
providing various facilities in the development of telecom industry. Telecom commission has
approved 100% FDI in telecom sector. And among the industry BHARTI AIRTEL has the largest
market share from subscriber and revenue based.
References Misra, A., & Anil, K. (2007). ECONOMIC VALUE ADDED (EVA) AS THE MOST SIGNIFICANT MEASURE
OF FINANCIAL PERFORMANCE: A STUDY OF SELECT INDIAN FIRMS. Journal of International
Business & Economics, 7(1).
Nigam, V., Thakur, T., Sethi, V. K., & Singh, R. P. (2012). Benchmarking of Indian mobile telecom operators
using DEA with sensitivity analysis. Benchmarking: An International Journal, 19(2), 219-238.
Majumdar, S., & Bhattacharya, P. P. (2014). Porter Five Forces Analysis of the Leading Mobile Cellular
Telephony Service Provider in India.
Singh, K., & Sukhija, S. (2010). A Study of Profitability Performance of Telecommunication Companies in
India. Available at SSRN 1613084.
Ramadoss, G. (2013). Customer satisfaction of Telecom services in Tamil Nadu, India. International Journal
on Global Business Management and Research, 77.
Upadhyaya, R. C., & Sharma, V. (2001). Customer Satisfaction with Network Performance of BSNL and
AIRTEL Operating In Gwalior Division (MP).
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Company Analysis of Bharti Airtel
Annexure
Balance Sheet of Bharti Airtel ------------------- in Rs. Cr. -------------------
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 Mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 1,998.70 1,898.80 1,898.80 1,898.80 1,898.77
Equity Share Capital 1,998.70 1,898.80 1,898.80 1,898.80 1,898.77
Share Application Money 0.00 0.00 0.00 0.00 186.09
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 64,729.30 52,247.40 47,530.80 42,212.80 34,650.19
Revaluation Reserves 0.00 0.00 0.00 0.00 2.13
Networth 66,728.00 54,146.20 49,429.60 44,111.60 36,737.18
Secured Loans 1.40 -1,236.50 2.90 17.10 39.43
Unsecured Loans 8,521.30 14,216.30 14,126.50 10,216.00 4,999.49
Total Debt 8,522.70 12,979.80 14,129.40 10,233.10 5,038.92
Total Liabilities 75,250.70 67,126.00 63,559.00 54,344.70 41,776.10
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 73,949.20 71,911.80 63,885.40 59,457.90 44,212.53
Less: Accum. Depreciation 34,071.00 28,729.20 23,444.60 18,757.20 16,187.56
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Company Analysis of Bharti Airtel
Net Block 39,878.20 43,182.60 40,440.80 40,700.70 28,024.97
Capital Work in Progress 1,244.20 1,030.80 4,466.50 6,479.20 1,594.74
Investments 34,523.90 28,199.10 12,337.80 11,813.00 15,773.32
Inventories 1.10 2.10 32.10 34.40 27.24
Sundry Debtors 2,165.50 2,246.80 2,134.50 1,461.90 2,104.98
Cash and Bank Balance 446.00 362.70 481.20 133.20 54.89
Total Current Assets 2,612.60 2,611.60 2,647.80 1,629.50 2,187.11
Loans and Advances 19,945.20 12,859.10 20,430.80 10,960.20 7,072.42
Fixed Deposits 0.00 0.00 0.00 0.00 761.86
Total CA, Loans & Advances 22,557.80 15,470.70 23,078.60 12,589.70 10,021.39
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 21,798.60 20,061.70 16,067.20 16,610.30 12,979.55
Provisions 1,154.80 695.50 697.50 627.60 658.75
Total CL & Provisions 22,953.40 20,757.20 16,764.70 17,237.90 13,638.30
Net Current Assets -395.60 -5,286.50 6,313.90 -4,648.20 -3,616.91
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 75,250.70 67,126.00 63,559.00 54,344.70 41,776.12
Contingent Liabilities 87,232.10 123,273.00 8,261.10 6,852.10 3,921.50
Book Value (Rs) 166.93 142.58 130.16 116.16 96.24
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
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Company Analysis of Bharti Airtel
Sources Of Funds
Total Share Capital 1,964.50 1,898.80 1,898.80 1,898.80 1,898.77
Equity Share Capital 1,964.50 1,898.80 1,898.80 1,898.80 1,898.77
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00
Preference Share Application Money 0.00 0.00 0.00 0.00 0.00
Employee Stock Opiton 0.00 0.00 0.00 0.00 261.96
Reserves 57,791.50 48,422.90 48,712.50 46,868.00 37,716.06
Revaluation Reserves 0.00 0.00 0.00 0.00 2.13
Networth 59,756.00 50,321.70 50,611.30 48,766.80 39,878.92
Secured Loans 11,586.90 13,286.70 12,089.30 7,670.50 4,958.43
Unsecured Loans 64,308.90 59,674.10 56,933.90 48,979.60 5,329.71
Total Debt 75,895.80 72,960.80 69,023.20 56,650.10 10,288.14
Minority Interest 4,210.20 4,088.60 2,769.50 2,856.30 2,855.53
Policy Holders Funds 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Total Liabilities 139,862.00 127,371.10 122,404.00 108,273.20 53,022.59
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 198,569.30 186,681.80 133,582.10 128,874.30 72,116.34
Less: Accum. Depreciation 57,954.80 49,758.00 0.00 0.00 21,267.28
Net Block 140,614.50 136,923.80 133,582.10 128,874.30 50,849.06
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Company Analysis of Bharti Airtel
Capital Work in Progress 0.00 0.00 0.00 0.00 2,435.94
Investments 15,530.80 6,769.30 1,815.60 622.40 5,162.07
Inventories 142.20 110.90 130.80 213.90 48.39
Sundry Debtors 6,244.10 6,643.00 6,373.50 5,492.90 3,182.48
Cash and Bank Balance 4,980.80 1,729.50 2,030.00 883.90 1,010.74
Total Current Assets 11,367.10 8,483.40 8,534.30 6,590.70 4,241.61
Loans and Advances 15,664.80 15,146.70 13,129.60 10,345.40 5,653.23
Fixed Deposits 0.00 0.00 0.00 73.60 1,567.90
Total CA, Loans & Advances 27,031.90 23,630.10 21,663.90 17,009.70 11,462.74
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 42,138.30 38,713.80 33,804.60 38,115.20 15,573.92
Provisions 1,176.90 1,238.30 853.00 118.00 1,313.29
Total CL & Provisions 43,315.20 39,952.10 34,657.60 38,233.20 16,887.21
Net Current Assets -16,283.30 -16,322.00 -12,993.70 -21,223.50 -5,424.47
Minority Interest 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 139,862.00 127,371.10 122,404.00 108,273.20 53,022.60
Contingent Liabilities 38,098.20 21,932.10 21,526.60 16,509.40 4,863.86
Book Value (Rs) 149.40 132.51 133.27 128.42 104.32