Download - Telecom Industry
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Presented By:
Mameet Singh (221069)
Siddharth Kohli (221142)Sonakshi Srivastava (221146)
Vagesha Sinha (221157)
Vishal Jain (221171)
Akshay Maken (221177)
Group 2
Global Economy & Emerging IndustriesTelecom Sector
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Introduction
No other industry touches as many technology-related
business sectors as telecommunications, which, bydefinition, encompasses not only the traditional areas oflocal and long-distance telephone service, but alsoadvanced technology-based services including wireless
communications, the Internet, fiber-optics and satellites.
Telecom is also deeply intertwined with entertainmentofall types. Cable TV systems, such as Comcast, are
aggressively offering local telephone service and high-speed Internet access.
The relationship between the telecom and cable sectorshas become even more complex as traditionaltelecommunications firms such as AT&T are selling
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Telecom Market Segments
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Global Telecom Scenario
The base of global wireless subscribers has grown rapidly,as low-cost providersare making service prices lowenough to be affordable for vast numbers of people inemerging nations.
Inexpensive cellphones are now indispensable toconsumers from Haiti to Africa to New Guinea.
Handsets can be bought for $10 to $20 in such markets,and they can be topped-off with a segment of prepaid
minutes for as little as 50 cents Worldwide telecommunications industry revenue is set to
reach $2.1 trillionthis year according to market researchfirm Insight Research Corp.
Despite the rocky global economy, industry revenue will
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Continued. TheAsian region is seen as a key market and wireless
revenue there is expected to grow 64%.
Mobile broadband services and the transition from 3G to4G will also be key growth drivers.
There are about 6.9 billionmobile connections globally,which are growing at an annual rate of 7.36%.
TheARPUis stagnating to around $24.6 while Minutesof Use (MoU) show an upward trendaround 296 per
connection. 4G had only 2.85% of the world market penetration at
the end of 2013 while 3G had that of 28.45%.
Despite global economic uncertainty, the
telecommunications industry is showing strong revenue
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Factors for creating deep changes intelecom sector today
Shift in business and commercial telephones to VOIP(Voice Over Internet Protocol) services, that is, telephonevia the Internet
A shift in residential and personal telephone use from wired
services to wireless Intense competition between cable and wired services
providers
Steady increases in Internet usage for communications
and entertainment of all types The continuing evolution of advanced wireless
technologies, including more smart phones and wideravailability of 3G services and 4G services
Simply put, a growing number of telecommunications service
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Global Telecom Players
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World Telecom MarketNew cellular,
satellite, VOIP and
wirelesstechnologies
promisecontinuous rapidadvancement
Cost of acellphone call has
become a bargainworldwide,
massive threat totraditionallandlines
Competitionamong handsetmakers is more
intense than ever
Wireless access to theInternet threatenstraditional DSL
broadband suppliers
Smart phoneshave morecomputer
processing powerthan a PC of 10
years ago
Millions of households
and businessesworldwide have signedup for less-expensiveVOIP service as an
alternative to landlines
Companies likeVerizon and AT&T,
are laying fiber-opticcable directly to the
neighborhood, inorder to retaincustomers with
promises of ultra-high-speed Internet
Mergers, acquisitions and other
industry changes redefinedtelecom in recent years. AT&T
and SBC merged and MCImerged into Verizon. Sprint andNextel have combined to create
wireless giant Sprint
Nextel. Qwest has merged intoCenturyLink .
AT&T and its peersare focusing onbundled service
packages(combining wirelessaccounts, very high-
speed Internetaccess and
entertainment such
as video on demandand TV via IP, in
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3 Major Challenges for World TelecomSector
Demand forhigh
connectivity
and speed
Long-termspectrum
availability
Security issuewith Increasing
popularity of(BYOD)
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Emerging MarketsBig Challenges, BigOpportunities
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Sector
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Indian Telecom Sector
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Indian Telecom Subscriber Base
expanded substantially
Indias telephone subscriberbase expanded at a CAGRof 26.8 per cent to 895.5million during 2007-12
Teledensity (defined as thenumber of telephoneconnections for everyhundred individuals)
increased from 23.9 in 2007to 73.3 in 2012
In March 2013, the totaltelephone subscription was898 million, while teledensity
was 73.3
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Telecom Revenues have been
surging ahead
Indian telecom sectorsrevenue grew by 13.4 percent to USD64.1 billion inFY12
Wireless and wirelinerevenue increased at aCAGR* of 11.9 per cent toUSD40.8 billion over FY07-12.
Revenues from the telecomequipment segment in FY12stood at USD23.5 billion ascompared to USD23.4billion in FY11
For 9M13, the telecomsectors revenue grew to
S t b fit f i
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Sector benefits from growing youngpopulation
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National Telecom Policy 2012
Ch ll F d b I di T l
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Challenges Faced by Indian TelecomSector
2G Scam
Fallout of the 2G spectrum scam under the UPA governmentpulled down the telecom sector
Huge Traffic
Wireless economy with fixed wireline penetration being verylimited, New solutions such as M2M, m-governance, m-banking and m-entertainment will lead to voluminous trafficon the wireless networks
Underutilized
Spectrum
Spectrum in all the bands (e.g. 2100 MHz, 1800 MHz, 800MHz and 700 MHz) presently lying unutilized by variousgovernment agencies.
Financial &Operational
pressure
Operators are finding business sustainability a challengingtask.
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Challenges continued.
LowTelecom
Infrastructure
Investment
India accounts for just 11 per cent of the total investments inthe Asia-Pacific region while compared to China, which
accounted for nearly 50% of the investments in the region in2012-13.
Irrational
Taxes
Taxes aggregate presently to 30 percent of the revenuesearned by telecom companies as compared to about 5% in
other Asia-Pacific (APAC) countries
Low RevenueGrowth
While revenue growth remains challenged, dataconsumption is expected to grow at a high rate due to over-the-top services, accelerating demand for networkinvestments.
UnsustainableBusiness
Model
Without a parallel revenue stream to support theseinvestments, it becomes disruptive for the telcos andmakes the business model unsustainable in the long run.Need to monetize these services
Telecom Industrys 5Pt Agenda for new
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Telecom Industry s 5Pt. Agenda for newGovt.
Make morespectrum available for data usage Rationalizethe taxes and levies in the sector
Facilitate introduction of new and efficient
technologies such as M2M and cloud computing Implement the benefits of the status for the
industry in parity with other infrastructure sectors inthe country
Exploring a revenue sharing arrangement betweenthe over the top Internet players and telecomcompanies
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Union Budget 2014Telecom
10% customs duty on telecom products outside thepurview of IT sector, to discourage imports.
Govt. didn't reverse the 2012 retroactive amendment toincome tax lawsor make it prospective, disappointing manyin the investor community and leaving the over six-yr-old
multi-billion-dollar dispute with Vodafone GroupPlcunresolved.
Govt. to launch Rs 500 crore for internet connectivity invillages under National Rural Broadband Vision.
Internet and mobile advertisingnow under service tax net
Digital drive through broadband connectivity at village levelby way of allocating Rs. 500 crore and an additional Rs. 100crore towards governance improvement is in line with theNational Optical Fiber Network projectthat will eventually
connect 2,50,000 gram panchayats.
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Contribution to GDP Indias service sector accounts for roughly 55% of
GDP. Within the services sector, the telecom sectorhas been the major contributor to the countrysgrowth, accounting for nearly 5.3% of the total GDP in2012. (Source: Deloitte)
A 10% increase in mobile and broadband penetrationincreases the per capita GDP by 0.81% and 1.38%respectively in the developing countries. (WorldBank)
The contribution of the telecom sector also has amultiplier effect on growth, due to associatedindividuals and businesses. Further, the GoIsaim toreach rural teledensity of 40% by 2014 from thecurrent levels and achieve broadband coverage of all
250,000 village panchayats under the Bharat NirmanPro ram is ex ected to enhance the contribution of
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Estimated Employment
Besides being one of the largest revenue generators, telecom isalso a major creator of jobs. The telecom sector has led to thegrowth of a range of communication technology-enabled activitiesand services. Operations such as data entry, revenue accounting,processing of insurance claims, call center operations, customersupport centers are popular examples.
The spread of telecom and information services to rural areas isenabling the setup of rural business process outsourcing (BPO).The expansion of the Indian BPO industry is a classic example ofindirect employment.
The Indian telecom industry employs more than 430,000 directemployees, with the majority of these employees being a part of thepublic sector undertakings (PSU). ( Source: EY)
Over the past decade, private telecom players have considerablyexpanded their operations, which has resulted in an increase inemployment opportunities in the telecom sector. The sector hascreated direct employment across various business areas such as
sales and marketing, technology, R&D and customer care, as wellas indirect employment.
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Key Market Players
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Market Share of Top Companies
Wireless market Bharti Airtel is the market leader, with a 21.7 per
cent share of total subscription.
Vodafone follows with a 17.6 per cent marketshare.
The top 5 players- Bharti Airtel , Vodafone,Reliance, Idea and BSNL- account for over 79
per cent of the total subscribers.
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Market Share of Top Companies
Fixed Line market BSNL is the market leader with a 67.7 per cent
share.
MTNL follows with 11.5 per cent market share.
BSNL, MTNL and Bharti together account for 90per cent of the total fixed line market.
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Market Share of Top Companies
Broadband market BSNL has the largest share (66.0 per cent) of the
total broadband market.
Bharti Airtel has the second-largest share (9.3 percent) of the total broadband market.
BSNL, Bharti and MTNL together account formore than 80 per cent of the total broadband
market.
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Telecom industry trends
Average revenue per user (ARPU) is considered to be akey industry profitability benchmark. Average revenue per user (ARPU) and Minutes of Usage
(MOU) are stabilising for both GSM as well as CDMAservice operators.
Monthly ARPU for GSM services increased by 6.14% fromRs.105 in March 2013 to Rs.111 in Jun 2013, with year-on-year increase of 16.73%.
On an all India average, the overall MOU per subscriberper month for GSM services increased by 1.38% from 383in QE March 2013 to 388 in QE June 2013.
Gross Revenue (GR) and Adjusted Gross Revenue (AGR)of Telecom services sector for QE June 2013 has beenRs.572.60 billion and Rs.386.40 billion respectively.
There has been an increase of 5.48% in GR and 9.53% inAGR as compared to previous quarter.
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Critical Success factors
Number of Subscribers According to Porters Five Forces theory, the growth of
subscriber numbers can be related to the strength requiredto compete with existing competitors.
Another potential benefit that results from the steady
growth of number of subscribers in the telecom industry isthat, it gathers crucial customer related information.Operators maintain databases with personal informationand choice, which is collected during the registration andcancellation processes. Customers are normally obliged to
provide personal information as well as personal opinionson the product or service. This information is valuable forthe company and the industry to understand better theircustomers behaviours, preferences, and segmentations,which provides necessary statistics in order to improve theefficiency in marketing analysis.
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Critical Success factors Government Regulations and Policies All industries, irrespective of the product or service, depend
heavily on the support they receive from the government tosurvive in the market. The role of the government is seen as anessential supporter of the industry, employing a host of policiesto contribute directly to the competitive performance of strategicor target industries (Porter, 1990). The telecom industry similarlyenjoys the support from the the Indian government in terms ofvarious policies and regulations that help the sector to thrive.
In 1999, the Indian Government established the NationalTelecom Policy 1999, which played a key role in shaping thesector and later in 2000 introduced the CommunicationsConvergence Bill that setup the autonomous commission called
the Communications Commission of India (CCI) that acts as thesuper/regulatory body to regulate telecommunications, Internetand Broadcasting sectors. The Planning Commission of India inits eleventh five-year plan for the period 2007 till 2012 stated thatthe approach would be towards achieving faster, broader andinclusive growth, with special attention to enhance the rural
connectivity (Planning Commission, 2008).
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Critical Success factors
Technological innovations Today telecommunications is a highly technical
industry, which is constantly evolving, and inventingtechnologies to improve the cost, coverage andquality of communication. It is one of the most R&Dintensive-industries, with leading multinationalcorporations (MNCs) spending on average between10 and 20% of their revenues in R&D in 2003 (MITTechnology Review, 2003).
The telecom-equipment market in India is growing ata rapid pace and competing globally for market share.The telecom infrastructure has seen tremendousadvancement in the past few decades. Echoing themarket growth, most of the global leading telecom-
equipment manufacturing firms have started theiro erations in India. This has facilitated the rowth of
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Competition in the Telecom Industry
The New Telecom Policy was announced by theIndian government in1999 (NTP99) to rationalizecertain expectations in industry growth and services.In the second round of licensing during 2001, thegovernment decided to further open up basic services
without any restrictions on the number of operatorsfollowing the recommendations of the New TelecomPolicy 1999 (NTP99). A total of 25 licenses werepicked up by private operators in 18 service areas,leading to an oligopoly in many service areas.
With new players coming in, the intensity ofcompetition in the industry has increased, especiallyover the last five years. The market share of telecomoperators reflects the fragmented nature of the
industry, with as many as 15 players.
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Industry Structure The Indian telecom industry has undergone
significant structural transformation since itsliberalisation in the 1990s.
During the last decade, the Indian telecom
industry has evolved into a multi-segment,competitive market from a small supplier-dominated market having public sector monopoly.
Coherent Government policies have played acrucial role in shaping the structure of the Indiantelecom sector.
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Industry Value Chain
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Shift in Value Chain for Telecomoperators
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Bharti Airtel
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Bharti Airtel
#1 Operatorin India
1.85 bnAddressablePopulation
US $ 14.2 bnRevenue
#5 Operatorin the world
Present in 20countries
#2 Operatorin Africa
Source:
TRAI and Informa
Telecoms and Media
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Overview
Bharti Airtel Limited is a leading global telecommunications company withoperations in 20 countries across Asia and Africa.
Headquartered in New Delhi, India, the company ranks amongst the top 4
mobile service providers globally in terms of subscribers.
In India, the company's product offerings include 2G, 3G and 4G wireless
services, mobile commerce, fixed line services, high speed DSL broadband,
IPTV, DTH, enterprise services including national & international long distance
services to carriers.
In the rest of the geographies, it offers 2G, 3G wireless services and mobile
commerce. Bharti Airtel had nearly 287 million customers across its operations
at the end of Dec 2013.
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Bharti Airtel becomes the fourth largest mobile operator in the world At the end of the quarter ended June 2012, the Company had over 250
million mobile subscribers across its operations, representing 13% Y-o-
Y growth
(Source: Wirelessintelligence.com (Mobile operator worldwide group
global ranking by connections, Q2 2012)
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Corporate information
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Organizational Structure
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Recent Honours
Ranked the No.1 Service Brand and No.3 in the overall rankings of the annual BrandEquity Most ' Trusted Brands Survey
Telecom Center of Excellence (TCOE) Award for Service Provider with Customer Focusfor Best Delivery of Network Services
Airtel Digital TV (HD) recognized as 'Product of the Year 2012', through an independentsurvey conducted by the research firm, AC Nielsen
'Telecom Center of Excellence (TCOE) Award' for Service Provider with customer focus
for best delivery of Network Services for the year 2011
DSCI (Data Security Council of India) Excellence Award 2011 for Security in Telecom
Rated as one of the Top 5 best employers, by Aon Hewitt's Best Employers in India 2011study
'Golden Peacock National Quality Award' for the year 2011
SSON Excellence Award under 'Excellence in Culture Creation' category for AirtelCenter of Excellence-Finance, RA, HR and SCM Shared Services
Featured amongst the Top 25 Companies globally in a study by Fortune- AON Hewitt onThe Best Companies for Leaders'
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Company Growth
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Core Values
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Diversified Portfolios
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Business Model
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Minutes factory
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Bharti Airtel-The leader
Source:
TRAINotes:
1. As of Feb 28,2014 as announced through TRAI
2. For quarter ended Dec 31, 2013. Calculated on thebasis of Gross Revenue for UASL + Mobile +CMTS
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Strong Spectrum Position
Source:TRAI, Department of Telecom
International Operations Transaction
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International Operations-TransactionRationale
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Africa-Opportunity for growth
Source:
Company Filings, World
Cellular Information Service(WCIS)
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SWOT ANALYSIS
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STRENGTHS
Biggest mobile serviceprovider in worlds second
largest telecom market
Well-established nationwide
High brand equity
Superior overall networkquality and reliability
Weaknesses
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Weaknesses
Highcompetitionin the
telecommarket
Debt andfinances
Africaacquisitions
andoperations
Late
adoption of3G and
advancedwireless
technologies
Opportunities
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Opportunities
Untapped voice
3G and data revenue
LTE
Mergers and Acquisitions
Threats
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Threats
Unfriendly regulatoryenvironment
Spectrum Auctions andRefarming
Mobile Number Portability
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Market Capitalization(as on Jul 10, 2014)Approx. Rs.1,338 billion Closing BSE share price = Rs. 334.65
Closing NSE share price = Rs. 334.05
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Strategic Directions Bharti Enterprise to invest in, build and grow businesses that make a positive difference
to the lives of people and partner Indias economic growth.
Bharti Enterprises strategic intent is to continue to lead in the market, build new
businesses and reinforce its best in class governance model. The new apex level structure
takes this vision & strategy forward.
Bharti Enterprises will be the strategic architect for all businesses of BhartiTelecom,
Retail & Wholesale, Communication & media devices, Insurance & Financial services,Agri business, Realty, software / BPO & Bharti Foundation.
Strengthens empowerment & accountability for business leaders and further enhances
professionalism. Bharti Enterprises will set overall direction, focus on macro strategies &
business reviews and ensure a continued senior leadership pipeline.
Sunil Bharti Mittal to lead Bharti Enterprises as the Chairman and Group CEO. Rakesh B
Mittal will be Vice Chairman, Rajan B Mittal & Akhil Gupta will be Managing Directors.Group Lead Directors, Group/Corporate Directors to form core of the Bharti Enterprises
team.
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Acquisitions
1. Bharti Airtel acquires Loop Mobile in a Rs 700-crore deal, taking India'sbiggest operator to the top spot in Mumbai.
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Airtel acquires Zain Africa
2. In the largest ever telecom takeover by an Indian firm, Bharti Airtel completeda deal to buy Kuwait-based Zain Telecom's African business for $10.7 billion
(about Rs 48,000 crore).
The transaction is the largest ever cross-border deal in an emerging market and
will result in combined revenues of about $13 billion."
On March 30, 2010, Bharti had entered the deal to acquire Zain Telecom's
operations in 15 nations, excluding Sudan and Morocco. Zain has operations in
17 African countries.
Bharti Airtel acquires Warid Groups
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Bharti Airtel acquires Warid Group sCongo business
With an investment of $70-80 million, the deal makes Airtel the largest mobileoperator in Congo Brazzaville, with around 2.6 million subscribers.
This agreement is the third such deal that Bharti is signing with theWarid Group. Earlier, Bharti had acquired Warid Bangladesh and WaridUganda.
This acquisition is in line with the stated strategy of Airtel of
strengthening their market position through in-country acquisitions, asand when suitable opportunities come along.
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Voice data foneto reflect Voiceand ata servicesover Mobile
hones
H d h V d f
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How and where Vodafonedoes Business
One of the world largestcommunications companiesproviding a wide range of servicesincluding voice, messaging, dataand fixed broadband. Over 434million mobile customers and 9million fixed broadband customersacross the globe.
The business is split across two
geographic regions- Europe andAfrica, Middle East and AsiaPacific( AMAP), which includesemerging markets
PROVIDED
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PROVIDED
Voice
We carried 1.2 trillion minutes of calls over ournetwork last yearthats the equivalent ofeveryone around the world talking for two anda half hours.
Messaging
Our network carried 337 billion text, picture,music and video messages last year.
Data
Over 544 petabytes of data were sent acrossour network last yearthats enough data forover 100 billion one minute video clips.
Fixed broadband
We have 9.3 million fixed broadbandcustomers, mainly in Germany, Spain and Italy.
Other services
Includes revenue from mobile virtual networkoperators (MVNOs) using our network in ourmarkets and from operators outside our
footprint using our products and services aspart of our partner market network that spans
S
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MARKETS
Europe: Number one or two mobile operator in most of our Europeanmarkets with market shares ranging from around 25% to over 40%. Holdsa small but growing share in fixed line across Europe, with the acquisitionof Kabel Deutschland and proposed acquisition of Ono boosting ourpositions in Germany and Spain.
AMAP:Number one or two mobile operator in most of our AMAP region.Our mobile market shares var b market from around 20% to over 50%.
The telecommunications industry
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The telecommunications industry
today
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BUSINESS MODEL
ONE COMPANY- MANY ROOTS
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ONE COMPANY MANY ROOTS
The Importance of Diversity
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KEY EVENTS
Vodafone 2015 Strategy
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Vodafone 2015 StrategyShort-term Challenge
A very tough regulatory environment, particularly in Europe and India,
combined with significant macroeconomic pressures in many of ourmarkets, mean that it is currently hard for us to grow their business.Competition, while a fact of life in any industry, is being exacerbated by highunemployment and austerity measures. These force many customers tovalue price over quality. In addition, regulation has lowered barriers to entry
and allowed low or no-capital operators to compete with businesses suchas theirs which have invested significantly over many years.
Long-term growth opportunities
We expect smartphone adoption to accelerate in all markets over the next
three years, with mobile applications and low cost smartphone availabilityincreasing everywhere. With the broad deployment of high speed datanetworks, and the increasing deployment of TV programming, films andmusic streaming across all devices, we expect customersappetite for dataon both mobile and fixed networks to increase significantly. Companies will
increasingly look to consolidate telecoms procurement across borders and
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Vodafone 2015 strategy is theresponse to this dynamicenvironment. This is based on
a new strategic approach totheir consumer offer andpricing in Europe, anincreasing focus on unifiedcommunications, and an
attractive and growingexposure to emerging markets.Fundamental to the success ofthis strategy will be an ongoingenhancement of the consumerand enterprise customerexperience through continuousinvestment in high speed datanetworks, and an increaseddrive towards standardisationand simplification across
the Group to maximise cost
Accelerating Strategy for Growth
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Accelerating Strategy for Growth
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Consumer Emerging Markets
M-Pesa in TanzaniaThe cost of travel prevents many people seeking themedical care they need A local NGO the
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medical care they need. A local NGO, theComprehensive Community Based Rehabilitation inTanzania (CCBRT), is working with the VodafoneFoundation to address this by integrating M-Pesa
into its referral process, to ensure patients sufferingfrom obstetric fistula get to hospital.In 2013, 70% ofCCBRTs fistula patients came via the M-PesaTextto Treatmentinitiative.
Data usage in South Africa
In South Africa wereinvesting in newer revenue streamssuch as data by driving smartphone adoption andenhancing the network. During the year supported a24% increase in the number of active smartphones andtablets, taking the total to eight million devices. Averagemonthly smartphone usage increased 82% to 253MB perdevice and grew 25% to 743MB on tablets. We supportedthis growth by investing in our market-leading datanetwork. We can now provide 3G services to 92% of thepopulation. Were also ready for the future, with 4G
coverage of 20% of the population today.
Egypts literacy programme
Vodafone Egypt Foundation launched an
accredited mobile literacy app in 2013, whichforms part of its Knowledge is Power initiative,supporting national efforts to tackle adult illiteracy.The app uses pictures and a talkback function tomake learning easier and more flexible. TheKnowledge is Power programme uses classroom
and mobile learning to improve literacy skills to
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Introduction: Vodafone India
Vodafone India is a member of the Vodafone Group andcommenced operations in 1994 when its predecessor HutchisonTelecom acquired the cellular license for Mumbai. The companynow has operations across the country with over 150 millioncustomers. Vodafone India has firmly established a strongposition within the Vodafone Group too, making it the largestsubscriber base globally.
Vodafone India has been awarded the Most Admired TelecomOperator and Best 3G Operator at the recent Telecom Operator
Awards 2012. The company has also received the globallyrecognized prestigious Product of the Year 2012 consumer
award for Vodafone Apps Store in the Mobile Services Category.In another survey conducted by Nielsen, Vodafone India was theonly telecom player in the Top 10 MostExciting Youth BrandsinIndia. Vodafone India also features in the Top 10 MostTrustedBrands in India for 2011, in a survey conducted by a leading
financial daily.
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PRODUCTS
Prepaid Cellphoneconnection
Prepaid recharge card
top-ups
Vodafone Postpaid
Calling Cards
Vodafone PCO
Vodafone Handyphone
I-phone 3G
Magic box HandsetWorld Calling Cards
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Competitors in the Market
MARKET SHARES OF KEY
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PLAYERS
Vodafone India rejigsorganisation
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organisationstructure
Vodafone India took a majorrestructuring of its managementwith an eye on the next phaseof growth. The company, whichis also looking at an InitialPublic Offering in the country,
said that the reorganisation hasbeen done to be future fit'.These changes would helpstrike a better balance betweenoperational intensity and the
need to focus on emergingareas for the company. It willallow for better opportunities forour teams to take on largerroles and prepare ourselves for
the future.
Vodafone rethinks strategy to drivegrowth in India
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growth in India After years of focus on voice-based business, British telecom
company Vodafone is slowly changing course to include new areassuch as IT solutions and mobile payments to drive growth in India, asthe telecom business evolves and more players join the business, thecompany knows voice-based service is not going to be leading theway.
To pitch the right tool to the right customer, Vodafone has segmented its
customer as those having revenue over Rs 250 crores and the smalland medium enterprises (SMEs) having sales between Rs 10 croresand Rs 250 crores.
In addition to enterprise solutions, mobile money transfer and paymentservices are another of the companys focus areas. With the Reserve
Bank of India allowing profit-making companies to become bankingcorrespondents who can deliver cash to customers, Bharti Airtel, IdeaCellular and Vodafone have announced mobile wallet service to providean alternative to the money order service through the governments
post office network.
A part of Vodafone's strategy also includes promoting the use of data
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Company Growth
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Total Assets
2009 2010 2011 2012 2013
Total Assets 35,357.62 41,776.12 54,344.70 63,559.00 67,126.00
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
AxisTitle
Bharti Airtel (Rs Crore)
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Total Assets
2010 2011 2012 2013 2014
Total Assets 156.99 151.22 139.58 138.32 121.84
0
20
40
60
80
100
120
140
160
180
AxisTitle
Vodafone (Rs Billion)
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Net Worth
2009 2010 2011 2012 2013
Bharti Airtel 27,643.97 36,737.18 44,111.60 49,429.60 54,146.20
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
AxisTitle
Bharti Airtel (Rs Crore)
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Net Worth
2009 2010 2011 2012 2013
Vodafone 89.82 87.56 78.21 72.48 70.94
0
10
20
30
40
50
60
70
80
90
100
AxisTitle
Vodafone(Rs Billion)
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Market Capitalization
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Market Capitalization
Company Date Amount (RsCrore)
Bharti Airtel Ltd. 04-07-2014 135311.99
Vodafone Group 07-07-2014 85770.00
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Stock Performance
St k P f
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Stock Performance
0
50
100
150
200
250
300
350
400
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
AxisTitle
Apr-10 Apr-11 Apr-12 Apr-13 Apr-14
Adjusted Closing Price 298.4 378.8 310.3 318.75 327.65
Adjusted Closing Price for Bharti Airtel
St k P f
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Stock Performance
St k P f
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Stock Performance
2010 2011 2012 2013 2014
Vodafone 153.09 186.27 189.67 215.33 212.42
0
50
100
150
200
250
AxisTitle
Adjusted Stock Value for Vodafone
St k P f
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Stock Performance
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Annual Sales
S l
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Sales
01 March 2008 01 March 2009 01 March 2010 01 March 2011 01 March 2012
Vodafone 18677.1 21572.87 25028.48 25688.04 30703.64
Bharti Airtel 25703.51 34014.29 35609.5 38017.7 41603.8
0
10000
20000
30000
40000
50000
60000
70000
80000
AxisTitle
Chart Title
A l i f S l
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Analysis of Sales
Airtel (RsCrore)
YOYIncrease
Vodafone(Rs Crore)
YOYIncrease
March08
25703.51 18677.1
March09
34014.29 32.33% 21572.87 15.5%
March10
35609.5 4.68% 25028.48 16.0%
March11
38017.7 6.76% 25688.04 2.63%
March
12
41603.8 9.43% 30703.64 19.52%
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Creditors
C dit (N f d )
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Creditors (No of days)
FY 08 FY 09 FY 10 FY 11 FY 12
Bharti Airtel 258 220 214 192 172
Vodafone 152 152 148 152 159
0
50
100
150
200
250
300
AxisTit
le
Chart Title
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Debtors
Debtors (No of da s)
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Debtors (No of days)
FY 08 FY 09 FY 10 FY 11 FY 12
Bharti Airtel 51 45 44 36 32
Vodafone 22 29 33 26 14
0
10
20
30
40
50
60
AxisTit
le
Chart Title
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Employee Turnover Ratio
Employee Turnover Ratio
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Employee Turnover Ratio
Company 2009-10 2010-11 2011-12
Bharti Airtel 8% 8% 7%Vodafone 13% 15% 15%
FINANCIAL RATIOS
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FINANCIAL RATIOS
USE OF IFRS ACCOUNTING RULES EBTIDA = 29.4% which is 1.1% lower than the
last year.
Dividend per share = 11% which is an 8%
increase YOY.
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2010 2011 2012 2013 2014
LIQUIDITY RATIO 42.15% 42.10% 43.97% 47.60% 47.09%
Column1
Column2
39.00%
40.00%
41.00%
42.00%
43.00%
44.00%
45.00%
46.00%
47.00%
48.00%
49.00%
PERCEN
TAGE
LIQUIDITY RATIO
EQUITY MULTIPLIER
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EQUITY MULTIPLIER
1.6
1.65
1.7
1.75
1.8
1.85
1.9
1.95
2010 20111 2012 2013 2014
Series 1
Series 1
NET MARGIN
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NET MARGIN
2010 2011 2012 2013 2014
Series 1 19.44 17.37 14.99 0.97 154.52
0
20
40
60
80
100
120
140
160
180
PERCENTA
GE
RETURN ON EQUITY
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RETURN ON EQUITY
2010 2011 2012 2013 2014
% 9.79 8.96 8.46 0.58 83.29
0
1020
30
40
50
60
70
80
90
PERCENTAGE
%
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2010 2011 2012 2013 2014
CURRENT RATIO 0.5 0.63 0.83 0.75 0.99
QUICK RATIOS 0.35 0.48 0.65 0.6 0.81
DEBT- EQUITY RATIO 0.32 0.32 0.37 0.41 0.3
0
0.2
0.4
0.6
0.8
1
1.2
RATIOS
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BALANCE SHEET ANALYSIS
INVESTMENTS
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2010 2011 2012 2013 2014
IN BILLIONS 4.81 6.93 8.46 12.88 14.55
0
2
4
6
8
10
12
14
16
C
ASH
AND
SHO
RTTERM
INVESTME
NTS
IN BILLIONS
ASSETS TOTAL GROWTH
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ASSETS TOTAL GROWTH
Category 1 Category 2 Category 3 Category 4
Series 1 -3.67% -7.70% -0.90% -11.92%
-14.00%
-12.00%
-10.00%
-8.00%
-6.00%-4.00%
-2.00%
0.00%
PERCENTAGE
ASSET TOTAL GROWTH
NET PROPERTY PLANTAND EQUIPMENTS
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AND EQUIPMENTS
2010 2011 2012 2013 2014
in billions 20.64 20.18 18.66 17.58 22.85
0
5
10
15
20
25
AxisTitle
in billions
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2010 2011 2012 2013 2014
OPERATING INCOME -41.67 61.86 -40.97 99.91 -57.74
-80
-60-40
-20
0
20
40
60
80
100
120
PERCENTAGE
OPERATING INCOME YOY
REVENUE YOY
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REVENUE YOY
2010 2011 2012 2013 2014
REVENUE 15.67 8.42 3.18 1.16 -4.25
-10
-5
0
5
10
15
20
PERCENT
AGE
160
180
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2010 2011 2012 2013 2014
TOTAL ASSETS 156.99 151.22 139.58 138.32 121.84
TOTAL LIABILITIES 66.18 63.66 61.37 65.84 50.06
GOODWILL 51.84 45.24 38.35 24.39 23.32
0
20
40
60
80
100
120
140
IN
BILLIONS
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ANNUAL REPORTANALYSIS
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With 434 million customers globally, they are one ofthe biggest mobile operators in the world.
The majority and the growing share of their mobilecustomers are in emerging markets. They also have
over nine million fixed broadband customers, andmost of these are in Europe
Mixed operational performance
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AIRTEL
OPERATING PROFITMARGIN
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MARGIN
2010 2011 2012 2013 2014
OPERATING PROFITMARGIN
30.94 33.15 33.58 40.63 41.33
NET PROFIT MARGIN 2.8 3.08 11.95 21.78 20.88
0
5
10
15
20
25
30
35
40
45
PERCE
NTAGE
LIQUIDITY RATIOS
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LIQUIDITY RATIOS
2010 2011 2012 2013 2014
DEBT EQUITY RATIO 1.45 1.36 1.16 0.26 0.47
QUICK RATIO 0.44 0.47 0.32 0.68 0.64
CURRENT RATIO 0.44 0.38 0.44 0.65 0.6
0
0.5
1
1.5
2
2.5
RATIOS
1 2
ASSET TURNOVER RATIO
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2010 2011 2012 2013 2014
ASSET TURNOVERRATIO
0.69 0.71 0.79 0.92 1.1
0
0.2
0.4
0.6
0.8
1
1.2
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BALANCE SHEET ANALYSIS
CASH AND SHORT TERMINVESTMENTS
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INVESTMENTS
2010 2011 2012 2013 2014
CASH AND SHORTTERM INVESTMENTS
362.7 481.2 133.2 54.89 153.44
0
100
200
300
400
500
600
IN
CROR
ES
TOTAL ASSETS
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TOTAL ASSETS
2010 2011 2012 2013 2014
TOTAL ASSETS 67,126.00 63,559.00 54,344.70 41,776.12 35,357.62
0.00
10,000.0020,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
AxisTitle
TOTAL ASSETS
TOTAL LIABILITIES
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TOTAL LIABILITIES
2010 2011 2012 2013 2014
TOTAL LIABILITIES 67126 63,559.00 54,344.70 41,776.10 35357.62
0
10000
20000
30000
4000050000
60000
70000
80000
IN
CRORE
S
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2010 2011 2012 2013 2014
NETWORTH 54,146.20 49,429.60 44,111.60 36,737.18 27,643.97
TOTAL DEBT 12,979.80 14,129.40 10,233.10 5,038.92 7,713.65
RESERVES 52,247.40 47,530.80 42,212.80 34,650.19 25,627.38
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
IN
CRO
RES
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ANNUAL REPORT ANALYSIS
ANNUAL REPORT ANALYSIS
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Bharti AirteL continued to be among the top fourmobile service providers globally with presence in20 countries.
The Company's diversified service range includes
mobile, voice and data solutions using 2g, 3g and4g technologies.
Its service portfolio also comprises of providinglong-distance connectivity in India, Africa and rest
of the world. The Company also offers Digital TVand IPTV services in India.
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During the quarter ended March 31, 2014, theCompany made additional equity investments inits following wholly owned subsidiaries:
i) USD 30 Mn (Rs 1,818 Mn) in Bharti Airtel
International (Mauritius) Limitedii) Rs 550 Mn in Airtel M Commerce Services
Limited
iii) USD 18.60 Mn (Rs.1,152 Mn) in Network i2i
Limited, by way of transfer of its co-ownershiprights in a sub marine cable
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In January, 2014, the Company transferred its co-ownership rights in a sub marine cable to Network i2iLimited, a wholly owned subsidiary of the Companyin exchange of 18.60 Mn equity shares of USD 18.60Mn (Rs.1,152 Mn).
During the quarter ended December 31, 2013, BhartiAirtel Employee Welfare Trust (a trust set up foradministration of ESOP Schemes of the Company)
transferred 237,597 shares to the employees uponexercise of stock options, under ESOP Scheme2005. As of December 31, 2013, the trust held1,472,374 equity shares.
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