Download - Telecom Sector-BhartiAirtel
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Security Analysis and Business Valuation
Telecom Sector Bharti Airtel
Project team Group 4
Manish Bhasin (23)
Aryadipta Dash (09)
Prince Yadav (34)
Yogesh Yadav (68)
Samdarsh Nayar
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Company Overview One of worlds leading providers of telecommunication
services Presence in 19 countries including
India & South Asia and Africa
Largest wireless service provider in India
Customer Base (status as on March 31, 2012) India & South Asia:
188,008,000 GSM mobile
3,270,000 Telemedia customers and
7,228,000 Digital TV Services
Africa: 53,140,000 GSM mobile customers.
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Company Overview- Business Division
India and South Asia B2C Services
Mobile Services GSM in South East Asia across India, Bangladesh , Sri-lanka.
Rs. 188 million customers in these geographies (181.3 million in India)
Post-paid , Pre-paid ,Roaming, Internet , m-Commerce and VAS
Launched pan IndiaAritel Moneyperson to person money transfer service
Telemedia Services Broadband (DSL), Data, Land Line telephone service.
Launched 4G services in Kolkata based on TD-LTE
Superfast access to HD streaming etc..
Digital Services Airtel Digital TV 7.2 million base.
HD-Set top box and Digital TV recorder
B2B Services Airtel Business
Airtel business offers network infrastructure, integration & management with a combinationof cutting edge global network infrastructure, technical skills and world-class servicesthrough
Passive Infrastructure Owns 42% in Indus Tower
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Company Overview - Trends
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Economic Analysis
World Economy Turmoil in the Euro-zone - World economy shaky again after
brief recovery
Eurozone likely to slip into recession again
IMF projection - Global economic growth dwon from 4% in 2011to 3.5% in 2012, before picking up to 4% in 2013.
The worst-case scenarios for the global economy have not cometo pass
The bond, inter-bank and sovereign debt markets in Europeremain jittery
Political gridlock in many major countries, makes it difficult tostrike the right trade-offs between growth and fiscal andmonetary restraint
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Economic Analysis Indian Economy
Growth momentum slowed considerably over the past year
Growth in industrial production in the April 2011-February 2012 period slid to
3.5%, compared to 8.1% during the same period last year Major slippages on the fiscal side
The current account deficit, in the April-December 2011 periodwidened to 4.0% of GDP, a clear warning sign
Rupee depreciation free fall?
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Economic Analysis Indian Economy Indian Economy
Inflation, particularly in food items, remains high
Oil prices, taxes, supply side issues
Interest Rates have now come to constant growth or may decline
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Industry Analysis
Telecom sector - 2.5% of GDP but impacting 919 millionlives
Total telecom subscribers in India (GSM + CDMA +Wire-line) at the end of March 2012 rose by 7.85 mnsubscribers to 951.34 mn as compared to February2012
Tele-density - 78.66% at the end of March 2012
The urban wireless tele-density - 162.82%
Rural wireless tele-density - 38.33%
Industry is however directly impacted by differentRegulatory Environment
License cancellation 2G licenses alloted in 2008
2G scam
Clarity on policies like sharing of 2G specturm , allocation etc
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Industry Evaluation-Porters 5 Force
Bargaining Power of Buyers- Lack of service differentiation among service providers. Mobile number portability almost 0 switching cost
Highly competitive pricing.
Bargaining Power of Suppliers A number of competitors vying to supply equipment and network
management services to the Telecom operators (e.g. Nokia-Siemens,Ericsson, Alcatel Lucent, Motorola, Cisco and so on)
Emergence of Chinese vendors has worsened the competition amongsuppliers leading to lower price points and competitive offerings.
An ecosystem exists for sharing of Tower infrastructure among differentoperators. Co-dependence.
-Medium cost of switching as changing h/w infrastructure can impactdeployment architecture.
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Industry Evaluation-Porters 5 Force
Threat of New Entrants Strong entry barriers. High infrastructure cost and License Cost
Strong brand pull of existing players like Vodafone, Airtel and Ideamakes it difficult for new players to gain a firm footing easily.
Stringent Govt Policy for Spectrum and License allocation
Threat of Substitutes No Major threat (e.g Satelite Phone)
Rivalry among competitors Hyper-competition, especially in the wireless market to gain customer
share. Price wars and competing for new and better services
Huge Exit Barriers 5-6 players in each region, with big players present in majority of
region.
Innovations are replicated fast and all use network elements from fixedvendors
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Company Analysis - SWOT
Strength Operations in 23 circle in country. Maximum subscriber base way
ahead of competitors
Highest no of towers by Airtel making it easier to launch 3G/4Gservices using the same passive infrastructure making it costcompetitive
Strong brand pull
Strategic partnership (e.g. with SingTel that enables it to expandrapidly and get investment) and others like technology, networks andinfrastructure partnerships
Quick to introduce technologies like 3G and Airtel Money and gainingfirst mover advantage
Weakness Still majority of revenue from domestic market, need to globalizemore
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Company Analysis - SWOT
Opportunity Large untapped landscape Huge scope for growth in Rural India as
well as Africa
New technologies like 3G/4G opening up new avenues for growthusing VAS
Indian telecom industry is one of the fastest growing telecom marketin the world and Airtel is already market leader. Positioned forgrowth
Threat Regulatory environment
Increased competition may reduce market share and/or revenue
2G spectrum re-allocation
Change in Govt policy on FDI in telecom sector, may allow big globalplayers to enter Indian market.
Number portability has enable competitors to switch customers atlow cost.
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Valuation
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