Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. In India, the company has a 24.6% share of the wireless services market, followed by 17.7% for Reliance Communications and 17.4% for Vodafone Essar.
Bharti Airtel is one of India's fastest growing companies, going from 7 million customers in 2004 to 96.6 million customers in 2009.
Bharti Airtel has 5 business segments: (i) Mobile Services; (ii) Telemedia Services; (iii) Enterprise Services - Carriers; (iv) Enterprise Services - Coprorates; and (v) Passive Infrastructure Services.
The Mobile Services segment provides prepaid and postpaid mobile and fixed wireless services in all of India's 23 telecom circles.
Airtel offer mobile services using GSM technology on 900MHz and 1800MHz bands, and are the largest wireless service provider in the country, based on the number of customers. Airtel 93,923,248 mobile customers accounted for a customer market share of 24% of wireless market, as on March 31, 2009.
Airtel offer post-paid, pre-paid, roaming and value added services through their extensive sales and distribution channel covering 1,191,323 outlets. Airtel network is present in 5,060 census towns and 414,906 non-census towns and villages in India, thus covering approximately 81% of the country’s population. Post Airtel launch on January 12, 2009, Airtel services are now fully operational in Sri Lanka. These services have been launched on a state-of-the-art 3.5G network.
The Enterprise Services - Carriers segment provides long distance voice and data services to carrier customers and other Airtel segments.
The Enterprise Services - Corporates segment provides voice and data services to corporates and SMEs.
In 2008, Bharti Airtel formed a joint venture with Vodafone Essar and Idea Cellular to merge their respective passive infrastructure assets in 16 telecom circles across India. A subsidiary, Bharti Infratel, was set up to manage the company's assets in this joint venture and provide passive infrastructure services to all telecom operators in India on a non-discriminatory basis.
The Indian promoter, Bharti Telecom Ltd, holds 45.3% of the total shares of Bharti Airtel Ltd. The foreign promoters, Pastel Ltd and Indian Continent Investment Ltd, hold 15.6% and 6.3% respectively. Private corporations that hold more than 1% of the total shares of Bharti Airtel include the Life Insurance Corporation of India (4.2%) and Europacific Growth Fund (1.7%).
The Indian wireless market has an average revenue per user (ARPU) of $6.8, one of the lowest in the world. In the 3rd quarter of 2009, the company's Mobile Services segment had an ARPU of $6.7 or Rs. 324, down 2.1% from the previous quarter and 9.5% from the 3rd quarter of 2008. In the same quarter, Bharti Airtel had a net profit margin of 22.4%, down 1.3% from the previous quarter and 9.3% from the 3rd quarter of 2008. The company's subscriber base, however, stood at 85.7 million, up 10.4% from the previous quarter and 55.3% from the 3rd quarter of 2008. In other words, although the company's ARPU and net profit margin have been decreasing, its total revenues and net profit have been increasing due to its growing subscriber base. Bharti Airtel has also been partnering with competitors to keep costs low, expand coverage and leverage larger economies of scale. In 2008, the company formed a joint venture with Vodafone Essar and Idea Cellular to merge their respective passive infrastructure assets and provide related services to all Indian telecom operators on a non-discriminatory basis.
Average minutes of usage (MoU) for the Indian wireless market is 449 minutes, one of the highest in the world. In the 3rd quarter of 2009, the company's average MoU was 505 minutes, down 4.0% from the previous quarter, but up 6.5% from the 3rd quarter of 2008. In the same quarter, Bharti Airtel increased population coverage from 77% to 79% with the addition of 7 new census towns and 17,361 non-census towns and villages. Given that just 2% of India's rural population has access to mobile phones and that the company is adding far more non-census towns and villages than census towns to its network, Bharti Airtel expects 55.0% of its new subscribers to come from B and C telecom circles located primarily in rural India. For low income subscribers, a mobile phone is often nothing more than a status symbol where outgoing calls are made infrequently and incoming calls are free. As a result, the addition of more rural subscribers could lower the company's average MoU.
With access charges, license fees, revenue share and spectrum charges totaling between 17% and 26% of total revenue, Indian telecom operators have some of highest levies and duties imposed on them. In the 3rd quarter of 2009, regulatory charges amounted to Rs. 23,456 or 24.4% of total revenues for the quarter. Nonetheless, the company's 32.5% return on capital employed (ROCE) was still higher than the 7.8% average for the Indian telecom industry. A host of government agencies regulate Bharti Airtel and its competitors, including the Department of Telecommunications (DoT), the Central Government of India and The Telecommunications Regulatory Authority of India (TRAI).
Buyers are becoming accustomed to more choices at various price points. With India's average annual per capita income of Rs. 25,000 and average spending of 4% of per capita income on communication-related expenses, Macquarie Research estimates that handset prices need to fall to Rs. 1,000 in order to improve the rate of penetration in rural India. Keeping in mind the launch of Motorola's $30 handset targeted at emerging markets and that manufacturers like Nokia, Samsung, Motorola and Flextronics are all moving production to India, handset prices are expected to fall. Given that Bharti Airtel expects 55.0% of its new subscribers to come from rurally-located B and C telecom circles, falling handset prices could increase the penetration rate of mobile devices in these areas.
In the 2nd quarter of 2009, the Indian Department of Telecommunications announced a new 3G policy which set the base price for access to the Indian 3G spectrum at Rs. 20.2 billion, allowed foreign players to participate in 3G spectrum auctions and imposed a hoarding cess of 2.5% per quarter if awarded telcos failed to rollout 3G services. Third generation wireless, or 3G, is a technology that enables high-speed wireless data transfer for applications like mobile video, secure mobile e-commerce, location-based services and mobile gaming. Using a 2.0G or 2.5G network, a 3 minute song takes between 6 and 9 minutes to download. Using a 3G network, however, the time taken is between 10 to 90 seconds. The launch of 3G services would enable the company to shift existing high-usage 2G subscribers to the 3G spectrum, thus freeing up space for new subscribers in the 2G spectrum.
Using its experience in providing telecommunications services to developing regions, Bharti intends to expand its services to countries outside of its native Indian market in the coming years. The company hopes that expansion beyond the borders of the extremely competitive, low margin Indian market will help to increase the company’s profit margin. In January 2010, Bharti purchased a 70% stake in Warid Telecom, one of Bangladesh’s largest cell phone service providers, for $300 million  . The deal, while only marginally increasing Bharti’s subscriber base, offers the company a toehold in a country with relatively low tele-density, offering a high potential for future growth. In March 2010, Bharti acquired the majority of Zain’s African assets for $9 billion . This deal dramatically increased the Bharti’s global reach, making it the World’s fifth largest wireless company. The deal increased the number of countries the company operates in to 18 and expanding the company’s customer base to around 180 million. Additionally, the countries Bharti has expanded operation to have low tele-densities, offering high growth prospects.