Company Analysis of Bharti

Airtel

Boggarapu Nikhil

10/14

Executive
Communication

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.

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 entered Rajasthan. In 2005, Bharti extended its network to

Company Analysis of Bharti Airtel

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
countrys 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 two distinct Customer Business Units (CBU) with clear focus on B2C (Business to

Company Analysis of Bharti Airtel

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

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 customers 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
companys 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

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 operators 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 worlds 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 Airtels swift success to Mittals 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, Mittals perspective was sharper than that of
others. He was able to grab opportunities that he saw while others dithered. Also, Mittals
outsourcing and minutes 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

Company Analysis of Bharti Airtel

of Rs 22.75 billion, the lowest in seven years. This marked a decrease of about 50 per cent from
Rs 42.59 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
companys 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
Zains 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.

Company Analysis of Bharti Airtel

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

Weakness
1.Price competition from BSNL and MTNL
2.Untapped Rural Market

1.Largest cellular service provider in India, with over

164.61 million subscribers at the end of April 2011
2.Largest Telecom operator in the world with 207.8
million subscribers across 19 countries at the end of
2010
3.Only Indian operator, with VSNL, that has an
international submarine cable
4.High brand visibility
5.Strong advertising with celebrity brand
ambassadors

Strength
Oppurtunity

SWOT

1.Fast expanding cellular market

2.Latest and low cost technology
3.Untapped rural market

Challenging Model

1.New entrant's low price offering

2.Saturation point in Basic telephony service
3.Mobile Number Portability

Threats

Company Analysis of Bharti Airtel

Revenue Market Share

Revenue Market Share

Reliance; 8%

Others;
3%
BSNL+MTNL;
7%

Aircel; 5%

Tata Docomo; 9%
BSNL+MTNL
Aircel
Bharti Airtel
Vodafone
Idea
Bharti Airtel; 30%

Idea; 15%

Tata Docomo
Reliance
Others

Vodafone; 23%

Source:

Company Analysis of Bharti Airtel

10

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

Subscribers Market Share
23.00%
18.00%
15.00%
13.00%
11.00%
7.00%

8.00%
6.00%

Source: TRAI

The above chart explains the subscribers 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%.

Company Analysis of Bharti Airtel

11

Spectrum Position

Source:

TRAI, Department of Telecom, Company Filings

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

Company Analysis of Bharti Airtel

12

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

Conclusion

Company Analysis of Bharti Airtel

13

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).

Annexure

Company Analysis of Bharti Airtel

14

------------------- in Rs. Cr. -------------------

Balance Sheet of Bharti Airtel

Mar '14

Mar '13

Mar '12

Mar '11

Mar

12 Mths

12 mths

12 mths

12 mths

12 mths

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

64,729.3
0

52,247.40

47,530.80

42,212.80

34,650.19

0.00

0.00

0.00

0.00

2.13

66,728.0
0

54,146.20

49,429.60

44,111.60

36,737.18

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

75,250.7
0

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

Gross Block

73,949.2
0

71,911.80

63,885.40

59,457.90

44,212.53

Less: Accum. Depreciation

34,071.0
0

28,729.20

23,444.60

18,757.20

16,187.56

Net Block

39,878.2
0

43,182.60

40,440.80

40,700.70

28,024.97

Sources Of Funds

Reserves
Revaluation Reserves
Networth
Secured Loans

Application Of Funds

15

Company Analysis of Bharti Airtel

Capital Work in Progress

1,244.20

1,030.80

4,466.50

6,479.20

1,594.74

Investments

34,523.9
0

28,199.10

12,337.80

11,813.00

15,773.32

1.10

2.10

32.10

34.40

27.24

2,165.50

2,246.80

2,134.50

1,461.90

2,104.98

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

19,945.2
0

12,859.10

20,430.80

10,960.20

7,072.42

0.00

0.00

0.00

0.00

761.86

22,557.8
0

15,470.70

23,078.60

12,589.70

10,021.39

0.00

0.00

0.00

0.00

0.00

Current Liabilities

21,798.6
0

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

22,953.4
0

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

0.00

0.00

0.00

0.00

0.00

Total Assets

75,250.7
0

67,126.00

63,559.00

54,344.70

41,776.12

Contingent Liabilities

87,232.1
0

123,273.00

8,261.10

6,852.10

3,921.50

166.93

142.58

130.16

116.16

96.24

Inventories
Sundry Debtors
Cash and Bank Balance

Fixed Deposits
Total CA, Loans & Advances
Deffered Credit

Miscellaneous Expenses

Book Value (Rs)

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

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

57,791.50

48,422.90

48,712.50

46,868.00

37,716.06

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

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

139,862.0
0

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

Gross Block

198,569.3
0

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

140,614.5
0

136,923.80

133,582.10

128,874.30

50,849.06

0.00

0.00

0.00

0.00

2,435.94

Reserves
Revaluation Reserves

Minority Interest

Total Liabilities

Application Of Funds

Capital Work in Progress

16

Company Analysis of Bharti Airtel

Investments

15,530.80

6,769.30

1,815.60

622.40

5,162.07

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

0.00

0.00

0.00

73.60

1,567.90

27,031.90

23,630.10

21,663.90

17,009.70

11,462.74

0.00

0.00

0.00

0.00

0.00

42,138.30

38,713.80

33,804.60

38,115.20

15,573.92

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

139,862.0
0

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

149.40

132.51

133.27

128.42

104.32

Inventories

Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions

Book Value (Rs)

17

Company Analysis of Bharti Airtel

18