Environmental Scanning Reporton
Bharti Airtel
• Incorporated on July 7, 1995 • Largest Private Integrated Telecom Company in
India• 4th Largest Wireless Operator in the World• Largest Telecom Company listed on Indian Stock
Exchange
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Milestones1995-1996• Launches Airtel in Delhi & HP• BT acquires stakes in Airtel1999-2000• Becomes largest private telecom
player• JV with Singtel2001-2002• Launches Indiaone• Launches India’s first private
submarine cable• Initial IPO• Introduces AR Rehman Signature
Tone• Airtel_Jingle_-_FluteOnly_-
_Original.mp3
2003-2004• SA with IBM & Ericsson• Launches Blackberry• First private player to launch mobile
service in J&K2006-2007• SA with Google,• SA with Microsoft• Forays into Srilanka and USA
The Company is first :
• To launch full roaming service on pre-paid in the country.
• To launch 32K SIM cards.• In Asia to deploy the multi band feature in a wireless
network for efficient usage of spectrum.• To deploy Voice Quality Enhancers to improve voice
quality and acoustics.• Telecom company in the world to receive the ISO
9001:2000 certification from British Standards Institute.
Awards• CNBC-TV18 India Business Leader Award for the Outstanding Company of the year,
2007 • Top honours at the NDTV Profit Business Leadership Awards 2007• Among the top 10 best performing companies in the world according to
BusinessWeek IT 100 list • "Indian Mobile Operator of the Year 2005” • 'The Best Asian Telecom CEO' award. • Asia's 'Best GSM Carrier’
Integrated Telecom Company
Mobile Services– Mobile and fixed
wireless service– GSM technology– Value added services like
Hello Tunes, GPRS, Voice Mail, call conference, call wait, call divert, SMS
Enterprise Services– Internet – VPN – IPLC– VSAT– Audio & Video conferencing. Telemedia Services– Fixed Line– Broadband– DTH
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Business Segments
Indian Telecom Sector• Fastest Growing Sector – CAGR 22% (2002-07)• Second Largest Telecom Market• Lowest Tariffs• Low Teledensity
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225.21206
140.398.4
7653
19.9
5.17.0
9.112.8
18.3
0
50
100
150
200
250
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (asof June2007)
Sub
scrib
ers
(in m
illion
)
0
4
8
12
16
20
24
Tel
eden
sity
(in
per
cent
)
Telecom Subscriber Base Teledensity
99
0.230.22
0.19
0.170.16
0.11 0.11 0.11
0.09
0.05 0.050.04
0.030.02
0
0.05
0.1
0.15
0.2
0.25
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ly
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nce
Bra
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ilip
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es
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Arg
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a
Ma
laya
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Ho
ng
Ko
ng
Th
aila
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Pa
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Ch
ina
Ind
ia
US
DINDIAN CONSUMERS GET THE WORLD’S LOWEST MOBILE TARIFFS
Source: Merrill Lynch Global Matrix - Q1 2007
Health Indicators
• Average Revenue Per User (ARPU) • Churn • Minutes of Usage • Total Customers
>>
ARPU TRENDS
<<<<<<
84
159179
315 320 323 326
461
Russia Malaysia Australia Korea Singapore China Thailand India
Source: Merrill Lynch Global Matrix – Q1 2007
HIGHEST MINUTES OF USAGE
SUBSCRIBER BASE
• Average %age Growth =80%
• <<<
Customer Base- Airtel
0.0010.00
20.0030.00
40.0050.00
60.0070.00
Year
Tota
l Sub
scri
bers
(in
Mn)
Customer Base
Health Indicators
Parameters Unit Dec. 2008 Sept. 2008 Jun-08 Mar-08 Dec. 2007 Sept. 2007 Jun-07
Customers 000s 88,270 79,988 71,777 64,268 57,341 50,950 44,676
Average Revenue Per User (ARPU) INR 324 331 350 357 358 366 390
Minutes of Use (MOU) Minutes 505 526 534 507 474 469 478
Post-paid Voluntary Churn % 1.10% 1.10% 1.00% 1.00% 0.90% 1.10% 1.10%
Post-paid Company Initiated Churn % 1.20% 1.40% 1.40% 1.50% 1.80% 2.10% 2.50%
Pre- paid Churn % 2.90% 3.20% 3.80% 4.30% 3.90% 3.80% 4.00%
STEEP ANALYSIS
Telecom Environment
Demand for VAS & Broadband services Among Youth
28 % Urban Population
Rapid Urbanization
Rising Income level
Out of town employment
Outstation trips
Social Factors
Source: Mckinsey Report
CDMA – Already there are big players in this segment Reliance , Tata
3G – Value added services potential still to be tapped fully
2G/3G – GSM Currently commands 70% of mobile subscribers in India
Threat from VOIP
Next Generation Network
Infrastructure sharing
Technology
GDP growth rate - Averaged around 7.9 % from 2002-2008
Growing per capita income/disposable Income Rs 18,885 in 2002 to Rs 38,084 in 2008
Falling Handset Prices (ASP= INR 3150)
Falling Tariffs
Economic Factors
Regulatory Framework
TRAI, DoT, TDSAT 74% FDI Investment High taxes etc in the telecom industry : 17-26% Lack of Transparency in Spectrum & License Allocation 3G Policy & MNP still Pending
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COMPETITOR ANALYSIS
Major Players
Customer Base Comparison
Financial Comparison
Competitors InformationNet Sales (INR
billion
OperatingProfit (INR billion)
Net Profit (INR billion)
Total Assets (INR billion)
Earnings per Share (INR)
Bharti Airtel 257. 61 106.62 62.44 268.12 32. 9
Reliance Communications 147. 92 61.73 25.86 451.26 12. 53
Idea Cellular 67. 2 24.91 10.44 100.61 3. .96
Tata Communications 32. 83 6.45 3.04 73.25 10. 68
Porter’s 5 Forces
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1. Threat from CompetitionWireless Market – Top 4 garnering 75% market share
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HIGH
2. Customer Bargaining Power Lack of differentiation among
Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have –ve
Impact
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HIGH
3. Suppliers Bargaining Power
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LOW
4. Threat of Substitutes
Landline
CDMA
Video Conferencing
VoIP – Skype , Gtalk, Yahoo Messenger e-Mail & Social Networking Websites
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BROADBAND SERVICES
DIMINISHING MARKETHIGH
5. Threat of New Entrants
Huge License Fees to be paid upfront
High gestation period
Highly regulated
Spectrum Availability & Regulatory Issues
Infrastructure Setup Cost - High
Rapidly changing technology
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LOW
SWOT ANALYSIS
Strengths• Pan India Presence• Largest Telecom Player in India • Strategic Alliance with Sony-
Ericsson, Nokia - and Sing Tel• Strong Financials• Very focused on telecom.• Leadership in fast growing cellular
segment.• The only Indian operator, other
than VSNL, that has an international submarine cable.
Weakness• Outsourcing of Core Systems• Price Competition from BSNL and
MTNL• Untapped Rural Market • Absence of own towers.
Source: CMIE Report NOV 08
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SWOT ANALYSIS
Opportunities• Rural Markets• International Markets • 3G/ Wimax• Current Tele-Density is still
low among developing countries
• Low Broadband Penetration
Threats• Introduction of MNP• Intense Competition &
Shortage of Bandwidth• Substantial payment for 3G
licensing • Saturation point in Basic
telephony service
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BCG Matrix for Bharti Airtel
LOWHIGH
HIG
HLO
W
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IPLCCELLULAR SERVICE
ISPBROADBAND
BASIC TELEPHONE(Fixed Line)
ANSOFF MATRIX
MARKET PENETRATION
ENTERED IN BROADBAND AND FIXED LINE MARKET
PRODUCT DEVELOPMENT
IPLC PRODUCTS
MARKETDEVELOPMENT
LOOKING FOR OVERSEAS MARKET AND RURAL MARKET
DIVERSIFICATION
OUTSOURCING New Market
Existing Market
New Product
Existing Product
FINANCIAL REPORTS
REVENUE TRENDS• Average %age Growth =55%Financial Metrics -Airtel
0
50,000
100,000
150,000
200,000
250,000
300,000
2003 2004 2005 2006 2007 2008
Year
Reve
nue
(in M
n)
Series1
EBITA TRENDS
• Average %age Growth =76%Financial Metrics-Airtel
0
20,000
40,000
60,000
80,000
100,000
120,000
2003 2004 2005 2006 2007 2008
Year
EBIT
DA (i
n Rs
Mn)
Series1
FINANCIAL GROWTH
Financials Snapshot-Performance Indicators
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Particulars 2008
Revenue (in Rs Mn) 2,70,122
EBITDA (Rs. Mn) 114,018
PAT (Rs. Mn) 63,954
EPS (Basic) Rs. 34.23
Financial Snapshot - Ratios
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Key Ratios AirtelTelecom Industry
Debt-Equity Ratio 0.38 0.35
Long Term Debt-Equity Ratio 0.35 0.3
ROCE (%) 34. 88 9.72
RONW (%) 39. 53 10.11
Growth Factors
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Road Map – Growth Path
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VPN & VoIP
WiMAX
3G
2G/2.5G
THANK YOU !!
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