Bharti Airtel (BOM:532454)

The Economic Times  Apr 25  Comment 
A failure to take such short-term pain, he said, could leave the market leader weaker if it’s unable to hold on to data customers.
The Economic Times  Apr 25  Comment 
Airtel said that it took the decision after having received the recommendation from its Committee of Directors.
The Hindu Business Line  Apr 25  Comment 
Shares of Bharti Airtel jumped as much as 4.71 per cent to 425.40, their highest in nearly a month, as Q4 metrics surprised analysts.The stock was the
The Economic Times  Apr 25  Comment 
Earnings of Bharti Airtel were a surprise even as its India business floundered.
The Economic Times  Apr 25  Comment 
Equity markets were in the red following weakness in the global equities after the US bond yields rose above 3 per cent.
The Economic Times  Apr 25  Comment 
In line with global peers, the domestic equity market started on a negative note.
The Hindu Business Line  Apr 24  Comment 
DTH and B2B units deliver healthy growth
The Hindu Business Line  Apr 24  Comment 
Regulator had redefined SMP, sought information on segmented offers
The Economic Times  Apr 24  Comment 
Bharti Airtel erased early losses and closed up ahead of its March quarter results.
Financial Times  Apr 24  Comment 
Quarterly pre-tax profit drops 82% as dispute rages with upstart Jio


Bharti Airtel (BOM:532454) is India's largest telecommunications company by subscriber base, which stood at 96.6 million at the end of 2009, and total revenues, which were Rs. 373 billion.[1]

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom.[2] 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.[3]

Bharti Airtel is one of India's fastest growing companies, going from 7 million customers in 2004 to 96.6 million customers in 2009.[1]

Company Overview

Bharti Airtel is India's largest telecom company by subscriber base. It offers GSM services in all of India's 23 telecom circles.

Business Segments

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.

Mobile Services (69.7% of revenue)

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.

Telemedia Services (9.1% of revenue)

The Telemedia Services segment provides fixed line telephone and broadband (DSL) services in 15 telecom circles across India.

Enterprise Services - Carriers (14.0% of revenue)

The Enterprise Services - Carriers segment provides long distance voice and data services to carrier customers and other Airtel segments.

Enterprise Services - Corporates (4.4% of revenue)

The Enterprise Services - Corporates segment provides voice and data services to corporates and SMEs.

Passive Infrastructure Services (1.9% of revenue)

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.

Shareholding Pattern[4]

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%).

Business Growth

FY 2009 (ended March 31, 2009)[1]

  • Net revenue increased 38% to Rs. 373 billion.
  • Net income increased 23% to Rs. 79 billion.
  • The company's customer base at the end of the fiscal year was 96 million people.

Key Trends and Forces

Decreasing ARPU and net profit margin offset by increasing subscriber additions

The Indian wireless market has an average revenue per user (ARPU) of $6.8, one of the lowest in the world.[5] 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 MoU could fall due to increasing rural demographic of new subscribers

Average minutes of usage (MoU) for the Indian wireless market is 449 minutes, one of the highest in the world.[5] 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.[6][5] 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.[7] As a result, the addition of more rural subscribers could lower the company's average MoU.

Regulatory charges are between 17% and 26% of total revenues

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.[8] 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.[8] 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).

Falling handset prices could increase wireless penetration rate in rural India

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.

New government policy to facilitate faster rollout of 3G spectrum

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.[9] 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.[10] Using a 3G network, however, the time taken is between 10 to 90 seconds.[10] 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.[9]

Expansion into other Emerging Markets

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 [11] . 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[12]. In March 2010, Bharti acquired the majority of Zain’s African assets for $9 billion [13]. 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[14].


  • Reliance Communications is an integrated communications service provider. It has established a pan-India, next-generation, integrated (wireless and wireline), convergent (voice, data and video) digital network that is capable of supporting services spanning the communications value chain, covering over 20,000 towns and 450,000 villages. It is India’s second-largest wireless operator by subscriber base and is only one of two operators along with Bharti to have coverage in all 23 circles in India.
  • BSNL/MTNL the incumbent operator, is India’s third-largest wireless operator by subscriber base and along with government-owned MTNL (incumbent in the key cities of Delhi and Mumbai), provides wireless services in all 23 circles of India.
  • Vodafone Essar is the second largest telecom company in India in terms of subscriber base.Vodafone Essar,[15] previously Hutchison Essar provides 2G services based on 900 MHz and 1800 MHz digital GSM technology, offering voice and data services in 22 of the country's 23 licence areas.
  • IDEA Cellular is a global system for mobile communications (GSM) Mobile Services operator. The Company operates in two segments: mobility services and national long distance. It has licenses to operate in 11 circles.
  • Tata Communications is India's largest telecommunication company in international long distance, enterprise data and internet services.


  1. 1.0 1.1 1.2 Bharti Airtel 2009 Annual Report pg. 4
  2. "Bharti Airtel reports 37 percent jump in Q2 net profit, becomes world's third largest mobile operator" International Business Times
  3. "Telecom Subscriber Update", India Infoline
  4. Bharti Airtel 2009 Annual Report pg. 3
  5. 5.0 5.1 5.2 Investor Presentation (Jan 2009), Bharti Airtel
  6. Quarterly Performance Analysis of Companies (Aug 2008), India Telecom Report, Cygnus Business Consulting and Research
  7. A Review of the Indian Mobile Market, Mobile & Wireless
  8. 8.0 8.1 Unlocking the Indian Telecom Industry’s Potential (Apr 2006), Frost & Sullivan
  9. 9.0 9.1 Telecom Update (Sep 2008), ArthaMoney
  10. 10.0 10.1 AT&T answers the need for speed in Suffolk County (Jul 2008), AT&T Media Newsroom
  11. Bharti-Warid Deal Gets Regulatory Nod “TelecomAsia”
  12. Bangladesh Approves Bharti’s Warid Buyout “”
  13. Bharti and Zain Seal the Deal “DealBook”
  15. Indian Telecom Sector report - Macquire Research
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