Presentation on Telecom industry and its company BHARTI-AIRTEL

Submitted by Pavneet Singh MBE/12-005

Telecom Industry In India The telecom network in India is the

fifth largest network in the world meeting up with global standards. Presently, the Indian telecom industry is currently slated to an estimated contribution of nearly 1% to India’s GDP.

The Indian Telecommunications network with 110.01 million connections is the fifth largest in the world and the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world and represents unique opportunities for U.S. companies in the stagnant global scenario.

History Of Telecom IndustryYear History

1851

18811883192319321947

1985

1986

199719992000

First operational land lines were laid by the government near Calcutta (seat of British power).Telephone service introduced in IndiaMerger with the postal systemFormation of Indian Radio Telegraph Company (IRT)Merger Of ETC and IRT Into IRCC(Indian Radio and Cable Communications)Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by thegovernment's Ministry of CommunicationsDepartment of Telecommunications (DOT) established, an exclusiveprovider of domestic and long-distance service that would be its ownregulator (separate from the postal system)Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunicationsand Mahanagar Telephone Nigam Limited (MTNL) for service inmetropolitan areasTelecom Regulatory Authority of India created.Cellular Services are launched in India. New National Telecom Policy isadoptedDoT becomes a corporation, BSNL

Constraints in Telecom Industry Slow pace of the reform process . It would be difficult to make in-roads into the semi-rural and

rural areas because of the lack of infrastructure. The service providers have to incur a huge initial fixed cost to make inroads into this market. Achieving break-even under these circumstances may prove to be difficult.

The sector requires players with huge financial resources due to the above mentioned constraint. Upfront entry fees and bank guarantees represent a sizeable share of initial investments. While the criteria are important, it tends to support the existing big and older players. Financing these requirements require a little more liberal approach from the policy side.

Problem of limited spectrum availability and the issue of interconnection charges between the private and state operators.

Major Players BSNL, MTNL,IDEA,AIRTEL,VODAFONE,BPL,RELIANCE,TATA

Bharti Airtel- The Leader of Telecom Sector

History and Origin Bharti Tele-Ventures was incorporated on July 7, 1995

as a company with limited liability under the Companies Act, for promoting telecommunications services.

Bharti Tele-Ventures received certificate for commencement of business on January 18, 1996. The Company was initially formed as a wholly-owned subsidiary of Bharti Telecom Limited.

Bharti cellular launched cellular services “AIRTEL” in Delhi in 1995

Comes out with issue of 18.53 crore equity shares through book building route with a floor price of Rs 45 per share, received bid for 18.55 crore shares. Through the issue, it becomes the first company in India to come out with 100% book building issue

History and Origin Issue price fixed at Rs 45 per share, floor price fixed by the company. Raises Rs 834 crore.

Shares listed on BSE, NSE and DSE, opens at 11% premium to its issue price of Rs 45.

Sunil Mittal, Chairman & Managing Director of the company, bags Businessman of the year award by Business India 2003.

2004 Airtel announces the signing of the first-ever bilateral roaming agreement between an Indian mobile service provider

and its counterpart in Pakistan. This facility will be available to pre-paid as well as post-paid customers. AirTel’s roaming agreement is with Mobilink, the only GSM cellular service provider in Pakistan.

The Bharti group finalized a Rs 500-crore deal to share its national long-distance (STD) network with VSNL in a first-of-its-kind accord between two top telecom service providers in a bid to optimize capacities in the NLD segment.

History and Origin Internet gateway and services provider, Videsh Sanchar Nigam Ltd. (VSNL) has signed a Right to Use (RoU)

agreement to deploy mobile telephony major, Bharti Tele-Ventures' existing National Long Distance (NLD) backbone.

2005 India's leading cellular company Bharti Tele-Ventures has bagged the Asian MobileNews operator of the year award in

India and the subcontinent.

Bharti Tele-Ventures Ltd has awarded a million equipment contract to Swedish telecoms company Ericsson.

2006 Bharti Tele Ventures Ltd has announced that Airtel, ICICI Bank & VISA have joined hands to launch mChq - a

revolutionary new service - a credit card on the mobile phone.

Bharti Tele Ventures bags 'Wireless Service Provider of the Year' & 'Competitive Service Provider of the Year' awards

Sunil Mittal bags CEO of the Year award.

History and Origin

Airtel joins hand with Microsoft.Bharti Airtel Ltd has informed that Microsoft and the Company announced a strategic partnership that will offer a range of software and services for small and medium businesses (SMBs) in India.

2007 Bharti Airtel on Feb 11, has been awarded QCI-DL Shah National Award on Economics of Quality.

Airtel signs agreement with HTC for touch screen mobile.

Bharti Airtel Ltd on April 01, 2007, has announced the reduction in International Long Distance Tariffs (ISD) for all its mobile customers in India.

Position in Share Market Listing Information Face Value Of Equity Shares 5 Market Lot Of Equity Shares 1 BSE Code 532454 NSE Code BHARTIARTL BSE Group A Whether The Company Forms A Part Of The Following Indices - Sensex Yes Nifty Yes BSE-100 Yes BSE-200 Yes S&P CNX 500 Yes CNX Midcap No CNX FMCG No Listing On Listed On The Stock Exchange, Mumbai, National Stock Exchange of India Ltd.

India over 10 years

Share-holding Pattern:

Promoter holding

Institutional investor

Others

Current team Of Bharti Name Designation

Sunil Bharti Mittal Chairman and Managing director Ajay Lal Director Arun Bharat Ram Director Chua Sock Koong Director Nikesh Arora Director N Kumar Director Pulak Chandan Prasad Director Rajan Bharti Mittal Director Manoj Kohli Joint Managing Director & CEO Akhil Gupta Director Bashir Abdulla Currimje Director Craig Ehrlich Director Mauro Sentinelli Director Paul O Sullivan� Director Quah Kung Yang Director Rakesh Bharti Mittal Director

The Man Behind Bharti-Airtel One of the main faces behind

the cellular revolution in India, Sunil Bharti Mittal is the chairman and managing director of the Bharti group, which owns India's largest GSM-based mobile phone service. Born on June 15, 1950 in Ludhiana, Punjab, he graduated from the Punjab University and set up a small bicycle business in Ludhiana, not wanting to follow the footsteps of his father who was an M.P. In 1979, he moved to Mumbai and started selling portable generators imported from Japan.

The Man Behind Bharti-Airtel His lucky break came in 1992,

when the government began issuing licenses for mobile phone services for the first time. Sunil Mittal bagged the license for the Delhi cellular circle. In 1995, he founded the Bharti Cellular Limited (BCL) and the brand Airtel was launched. The rest as they say is history. He has won a number of awards including the Asian Businessman of the Year by the Fortune Magazine in 2006, the Business Leader Of The Year by the Economic Times in 2005 and the Ernst & Young Entrepreneur Of The Year in 2004. He is one of richest Indians across the world..

Financial position Comparative Balance Sheet of 5 Years

Sources Of Funds Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Total Share Capital 1,853.37 1,893.88 1,895.93 1,897.91 1,898.24

Equity Share Capital 1,853.37 1,893.88 1,895.93 1,897.91 1,898.24

Share Application Money 2.72 12.13 30 57.63 116.22

Preference Share Capital 0 0 0 0 0

Reserves 2,675.38 5,437.42 9,515.21 18,283.82 25,627.38

Revaluation Reserves 2.13 2.13 2.13 2.13 2.13

Networth 4,533.60 7,345.56 11,443.27 20,241.49 27,643.97

Secured Loans 3,959.88 2,863.37 266.45 52.42 51.73

Unsecured Loans 1,034.41 1,932.92 5,044.36 6,517.92 7,661.92

Total Debt 4,994.29 4,796.29 5,310.81 6,570.34 7,713.65

Total Liabilities 9,527.89 12,141.85 16,754.08 26,811.83 35,357.62

Financial position Comparative Balance Sheet of 5 Years

Application Of Funds Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Gross Block 13,240.63 17,951.74 26,509.93 28,115.65 37,266.70

Less: Accum. Depreciation 3,475.64 4,944.86 7,204.30 9,085.00 12,253.34

Net Block 9,764.99 13,006.88 19,305.63 19,030.65 25,013.36

Capital Work in Progress 994.46 2,341.25 2,375.82 2,751.08 2,566.67

Investments 931.9 719.7 705.82 10,952.85 11,777.76

Inventories 31.58 17.74 47.81 56.86 62.15

Sundry Debtors 715.74 1,076.17 1,418.52 2,776.46 2,550.05

Cash and Bank Balance 174.96 201.81 239.11 200.86 153.44

Total Current Assets 922.28 1,295.72 1,705.44 3,034.18 2,765.64

Loans and Advances 1,354.85 1,937.54 3,160.02 5,103.13 5,602.83

Fixed Deposits 209.17 105.61 541.35 302.08 2,098.16

Total CA, Loans & Advances 2,486.30 3,338.87 5,406.81 8,439.39 10,466.63

Deffered Credit 0 0 0 0 0

Current Liabilities 4,458.80 6,735.36 9,809.83 12,400.38 13,832.49

Provisions 249.32 537.44 1,232.84 1,961.95 634.4

Total CL & Provisions 4,708.12 7,272.80 11,042.67 14,362.33 14,466.89

Net Current Assets -2,221.82 -3,933.93 -5,635.86 -5,922.94 -4,000.26

Miscellaneous Expenses 58.35 7.94 2.66 0.2 0.09

Total Assets 9,527.88 12,141.84 16,754.07 26,811.84 35,357.62

Financial position Profit & Loss Account for the year ending March’09

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

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Income

Sales Turnover 8,142.44 11,259.12 17,851.61 25,761.11 34,048.32

Excise Duty 0 0 0 0 0

Net Sales 8,142.44 11,259.12 17,851.61 25,761.11 34,048.32

Other Income -1,707.95 26.94 105.62 104.04 -1,261.75

Stock Adjustments 11.57 -13.84 30.07 9.05 5.29

Total Income 6,446.06 11,272.22 17,987.30 25,874.20 32,791.86

Expenditure

Raw Materials 83.67 53.56 52.16 42.9 17.7

Power & Fuel Cost 0 0 0 0 0

Employee Cost 475.86 734.2 1,076.95 1,297.88 1,397.54

Other Manufacturing Expenses 2,365.51 3,299.73 5,017.27 7,339.01 8,627.13

Selling and Admin Expenses 1,951.25 2,804.85 4,030.48 5,892.50 9,385.68

Miscellaneous Expenses 280.05 314.37 444.28 535.46 1,409.89

Preoperative Exp Capitalised 0 0 0 0 0

Total Expenses 5,156.34 7,206.71 10,621.14 15,107.75 20,837.94

Financial position Profit & Loss Account for the year ending March’09

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

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Operating Profit 2,997.67 4,038.57 7,260.54 10,662.41 13,215.67

PBDIT 1,289.72 4,065.51 7,366.16 10,766.45 11,953.92

Interest 317 236.81 282.07 393.43 434.16

PBDT 972.72 3,828.70 7,084.09 10,373.02 11,519.76

Depreciation 1,019.36 1,432.34 2,353.30 3,166.58 3,206.28

Other Written Off 161.34 127.39 137.8 266.07 178.82

Profit Before Tax -207.98 2,268.97 4,592.99 6,940.37 8,134.66

Extra-ordinary items 22.23 17.64 9.92 -60.67 -46.15

PBT (Post Extra-ord Items) -185.75 2,286.61 4,602.91 6,879.70 8,088.51

Tax 353.6 273.68 566.79 632.43 321.78

Reported Net Profit 1,210.67 2,012.08 4,033.23 6,244.19 7,743.84

Total Value Addition 5,072.66 7,153.15 10,568.98 15,064.84 20,820.24

Preference Dividend 0 0 0 0 0

Equity Dividend 0 0 0 0 379.65

Corporate Dividend Tax 0 0 0 0 64.52

Comparison between different Telecom players

Balance Sheet ------------------- in Rs. Cr. -------------------

Bharti Airtel Reliance Comm Idea Cellular Tata Comm TataTeleservice

Sources Of Funds Mar '09 Mar '09 Mar '08 Mar '09 Mar '09

Total Share Capital 1,898.24 1,032.01 2,635.36 285 1,897.19

Equity Share Capital 1,898.24 1,032.01 2,635.36 285 1,897.19

Share Application Money 116.22 0 3.76 0 0

Preference Share Capital 0 0 0 0 0

Reserves 25,627.38 50,658.31 906.91 6,513.05 -2,265.52

Revaluation Reserves 2.13 0 0 0 0

Networth 27,643.97 51,690.32 3,546.03 6,798.05 -368.33

Secured Loans 51.73 3,000.00 5,454.43 1,288.82 2,036.13

Unsecured Loans 7,661.92 27,903.61 1,060.33 1,039.05 1,076.16

Total Debt 7,713.65 30,903.61 6,514.76 2,327.87 3,112.29

Total Liabilities 35,357.62 82,593.93 10,060.79 9,125.92 2,743.96

Comparison between different Telecom players

Balance Sheet ------------------- in Rs. Cr. -------------------

Bharti Airtel Reliance Comm Idea Cellular Tata Comm TataTeleservice

Application Of Funds Mar '09 Mar '09 Mar '08 Mar '09 Mar '09

Gross Block 37,266.70 37,941.15 12,791.22 5,890.00 4,552.63

Less: Accum. Depreciation 12,253.34 6,533.38 3,123.83 1,792.06 1,653.55

Net Block 25,013.36 31,407.77 9,667.39 4,097.94 2,899.08

Capital Work in Progress 2,566.67 3,643.86 941.13 536.38 218.07

Investments 11,777.76 31,364.75 569.93 2,723.67 75

Inventories 62.15 253.14 27.62 1.56 2.01

Sundry Debtors 2,550.05 1,482.22 198.59 1,342.22 240.73

Cash and Bank Balance 153.44 534.89 147.67 109.21 27.48

Total Current Assets 2,765.64 2,270.25 373.88 1,452.99 270.22

Loans and Advances 5,602.83 23,272.50 950.88 3,209.51 299.91

Fixed Deposits 2,098.16 0.26 349.38 263.16 0

Total CA, Loans & Advances 10,466.63 25,543.01 1,674.14 4,925.66 570.13

Deffered Credit 0 0 0 0 0

Current Liabilities 13,832.49 5,774.74 2,709.98 2,869.12 981.61

Provisions 634.4 3,590.72 81.82 288.61 36.71

Total CL & Provisions 14,466.89 9,365.46 2,791.80 3,157.73 1,018.32

Net Current Assets -4,000.26 16,177.55 -1,117.66 1,767.93 -448.19

Miscellaneous Expenses 0.09 0 0 0 0

Total Assets 35,357.62 82,593.93 10,060.79 9,125.92 2,743.96

Contingent Liabilities 4,104.25 6,555.82 2,308.87 8,449.09 979.37

Book Value (Rs) 145.01 250.43 13.44 238.53 -1.94

Impact of Airtel on Common Person

We can see how Airtel market its product

Brand Ambassadors Airtel manages to have all Big names of India. Including Oscar

winner AR Rahman, Cricket God- Sachin Tendulkar, Badshah of Bollywood- Sharukh Khan and others

Airtel Goes Global Airtel is near its historical deal of $23 million with MTN(Telecom

leader in South Africa).

And still more to go

Conclusion Based on the detailed analysis of Indian Telecom Industry, Bharti Airtel

Limited and its competitors we conclude the following regarding the

financial health of Bharti Airtel Limited: Growth: The company’s sales have a remarkable growth in the last 5 years. It

stands at Rs 34,048.32 Crores in 2009 up from Rs 8142.44 Crores in 2005. Bharti Airtel Ltd is the market leader in mobile phone services with over 32% market share in terms subscriber base. With about 6 million mobile subscribers being added every month in India, the future growth of Bharti Airtel Ltd looks very strong.

Conclusion Profitability: With the remarkable increase in sale in five (5) years, Its profit is also

increased from Rs.1210.67 crores to Rs.7743.84 crores. Thus we can say its profit is increased 6 times to what it was in 2005

All these parameters suggest that the company is achieving increased

levels of profitability in spite of massive growth. Solvency: The Debt Equity Ratio has been decreased from 1.1 in 2005 to 0.28 in

2009. The Interest coverage ratio has also increased dramatically from 6.6 to

46.28

Conclusion Liquidity: Liquidity is a cause of concern. Current Ratio and Liquid Ratio is 0.69 and 0.65.

But it has been improved from 2005. The low liquidity could be attributed to the fact that the company invests heavily

in growth.

Efficiency: Total Assets Turnover Ratio has increased from 0.75 in 2005 to 1.00 in 2009.

Debt Turnover Ratio, Fixed Assets Turnover Ratio and Current Assets Turnover Ratio have all improved and are higher as compared to its competitors. This points that Bharti Airtel Limited is more efficient in using its resources.

Overall the company has very strong fundamentals for future performance.