Bharti Airtel

Type Public, BSE: 532454

Founded 1985
Headquarters New Delhi, India
Key people Sunil Mittal (Chairman and CEO)
Industry Telecommunication
Mobile and Fixed-Line Telecommunication
Products
operator
Revenue $6 Billion
Website Bharti Group Airtel

Bharti Airtel, formerly known as Bharti Tele-Ventures LTD (BTVL) is India's largest
and world's third largest cellular service provider with more than 82 million subscribers
as of December 2008. It also offers fixed line services and broadband services. It offers
its TELECOM services under the Airtel brand and is headed by Sunil Mittal. The
company also provides telephone services and Internet access over DSL in 14 circles.
The company complements its mobile, broadband & telephone services with national and
international long distance services. The company also has a submarine cable landing
station at Chennai, which connects the submarine cable connecting Chennai and
Singapore. The company provides end-to-end data and enterprise services to the
corporate customers through its nationwide fiber optic backbone, last mile connectivity in
fixed-line and mobile circles, VSATs, ISP and international bandwidth access through
the gateways and landing station. SingTel owns over 30% of the Bharti Telecom.
Vodafone is also a shareholder of Airtel with 4% of the shares. Thus making it a sister
company of the brand.
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The
Bharti Group, has a diverse business portfolio and has created global brands in
the telecommunication sector. Bharti has recently forayed into retail business as
Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business.
It has successfully launched an international venture with EL Rothschild Group to
export fresh agri products exclusively to markets in Europe and USA and has
launched Bharti AXA Life Insurance Company Ltd under a joint venture with
AXA, world leader in financial protection and wealth management.

Company Profile

Bharti Airtel is one of India's leading private sector providers of telecommunications services
based on an aggregate of 42,685,530 customers as on May 31, 2007, consisting of 40,743,725
GSM mobile and 1,941,805 broadband & telephone customers.

The businesses at Bharti Airtel have been structured into three individual strategic business units
(SBU’s) - mobile services, broadband & telephone services (B&T) & enterprise services. The
mobile services group provides GSM mobile services across India in 23 telecom circles, while the
B&T business group provides broadband & telephone services in 94 cities. The enterprise
services group has two sub-units - carriers (long distance services) and services to corporates.
All these services are provided under the Airtel brand. Company shares are listed on The Stock
Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE).

Business Divisions
The Bharti Airtel Group

• Offers GSM mobile services in all the 23-telecom circles of India and is the largest mobile
service provider in the country, based on the number of customers.
• Offers high speed broadband internet with a best in class network..
• Focuses on delivering telecommunications services as an integrated offering including
mobile, broadband & telephone, national and international long distance and data
connectivity services to corporate, small and medium scale enterprises.
• The Company compliments its mobile and broadband & telephone services with national and
international long distance services. It has over 35,016 route kilometers of optic fibre on its
national long distance network. For international connectivity to east, it has a submarine cable
landing station at. For international connectivity to the west, the Company is a member of the
South East Asia-Middle East-Western Europe – 4 (SEA-ME-WE-4) consortium along with 15
other global telecom operators.

Partners

The company has a strategic alliance with SingTel. The investment made by SingTel is one of the
largest investments made in the world outside Singapore, in the company. The company’s mobile
network equipment partners include Ericsson and Nokia. In the case of the broadband and
telephone services and enterprise services (carriers), equipment suppliers include Siemens,
Nortel, Corning, among others. The Company also has an information technology alliance with
IBM for its group-wide information technology requirements and with Nortel for call center
technology requirements. The call center operations for the mobile services have been
outsourced to IBM Daksh, Hinduja TMT, Teletech & Mphasis.
Factsheet

Name Bharti Airtel Limited.

Business Provides mobile, broadband & telephone (fixed line) and enterprise services (carriers
Description & services to corporates)

Established July 07, 1995, as a Public Limited Company

Rs. 184,202 million (year ended March 31, 2007-Audited)

Proportionate
Rs. 117,255 million (year ended March 31, 2006-Audited)
Revenue
As per Indian GAAP Accounts

Rs. 74,407 million (year ended March 31, 2007-Audited)

Proportionate
Rs. 42,250 million (year ended March 31, 2006-Audited)
EBITDA
As per Indian GAAP Accounts

Shares in Issue 1,895,934,157 as at March 31, 2007

The Stock Exchange, Mumbai (BSE)

Listings
The National Stock Exchange of India Limited (NSE)

Market
Approx. Rs1,597 billion. Closing BSE share price= Rs.842.50
Capitalisation

40,743,725 GSM mobile and 1,941,805 broadband & telephone (fixed line)
Customer Base
customers (Status as at month ended May 31, 2007)

Provides GSM mobile services in all the 23 telecom circles in India, and was the first
Operational
private operator to have an all India presence.
Network
Provides broadband (DSL) and telephone services (fixed line) in 94 cities in India.
Organisation Structure

As an outcome of a restructuring exercise conducted within the company; a new

integrated organizational structure has emerged; with realigned roles, responsibilities and
reporting relationships of Bharti’s key team players. With effect from March 01, 2006,
this unified management structure of 'One Airtel' will enable continued improvement in
the delivery of the Group’s strategic vision.
SHAREHOLDING PATTERN/OWNERSHIP

1st Quarter: 45.38% of the total shares were held by the “promoter and promoter group”.
54.62% of the shares were held by the public institutions.

2nd Quarter: 60.97% of the total shares were held by the “promoter and promoter group”.
39.03% of the shares were held by the public institutions.The shareholders belonging to the
“public” category and holding more than 1% of shares were:
Vodafone International Holding BV
Citigroup Global Markets Mauritius Private Limited
Morgan Stanley And Co International Limited
Life Insurance Corporation Of India Under Various Scheme
The Growth Fund Of America Inc

3rd Quarter: 60.96% of the total shares were held by the “promoter and promoter group”.
39.04% of the shares were held by the public institutions.

4th Quarter: A major portion of the shares are held by the “promoter and promoter group”. They
held 60.95% of the shares, the two promoters being Bharti Telecom Limited and Pastel Limited.
The remaining 30.05% shares were held by non-institutions

BUSINESS DECISIONS

• Bharti Enterprises announces new Apex Level Strategic Organisation Structure

• Bharti announces a Strategic Roadmap for its Retal Venture.
• Bharti Group has an arrangement to buy 5.6% direct interest of Vodafone in Bharti Airtel
Limited for US $ 1.6billion

Audit Committee
Composition of Audit Committee

The Audit Committee of Bharti Airtel Limited comprises of following six members,
two-third of which are independent directors.
S. No. Member Director Category
1. N.Kumar (Chairman) Independent Director
2. Rakesh Bharti Mittal Non-Executive Director
3. Arun Bharat Ram Independent Director
4. Ajay Lal Independent Director
5. Pulak Chandan Prasad Independent Director
6. Mr. Quah Kung Yang Non-Executive Director
Secretary

• The Company Secretary or his/her nominee act as the Secretary of the Committee.

Meetings

• The Committee shall meet at least four times a year. The time gap between any
two meetings shall be less than 4 months.

Annual General Meeting

• The Committee Chairman shall attend the Annual General Meeting.

Key Functions

The key functions of the Audit Committee include the following:

• Oversight of the Company’s financial reporting process and the disclosure of its
financial information, to ensure that the financial statements are true and accurate
and provide sufficient information.
• Recommending to the Board, the appointment, re-appointment and, if required,
the replacement or removal of the statutory auditor and the fixation of their audit
fees.
• Approval of payment to statutory auditors for any other services rendered by the
statutory auditors.
• Reviewing, with the management, the annual financial statements before
submission to the Board for approval, with particular reference to:

i. Matters required to be included in the Director’s Responsibility Statement, which

forms part of the Board’s report in terms of clause (2AA) of section 217 of the
Companies Act, 1956.
ii. Changes, if any, in accounting policies and practices and reasons for the same.
iii. Major accounting entries involving estimates based on the exercise of judgment
by management.
 iv. Significant adjustments made in the financial statements arising out of audit
findings.
v. Compliance with listing and other legal requirements relating to financial
statements.
vi. Disclosure of any related party transactions.
vii. Qualifications in the draft audit report.

• Reviewing, with the management, the quarterly financial statements before

submission to the Board for approval.
• Reviewing, with the management, performance of statutory and internal auditors,
adequacy of the internal control systems.
• Reviewing the adequacy of internal audit function including the structure of the
internal audit department, staffing and seniority of the official heading the
department, availability and deployment of resources to complete their
responsibilities and the performance of the out-sourced audit activity.
• Discussion with internal auditors with respect to the coverage and frequency of
internal audits as per the annual audit plan, nature of significant findings and
follow up thereof.
• Reviewing the findings of any internal investigations by the internal auditors into
matters where there is suspected fraud or irregularity or a failure of internal
control systems of a material nature and reporting the matter to the Board.
• Obtaining an update on the Risks Management Framework and the manner in
which risks are being addressed.
• Discussion with statutory auditors before the audit commences, about the nature
and scope of audit as well as post-audit discussion to ascertain any area of
concern.
• Review the reasons for substantial defaults in the payment to the depositors,
debenture holders, shareholders (in case of non payment of declared dividends)
and creditors, if any.
• To review the functioning of the Whistle Blower mechanism and the nature of
complaints received by the Ombudsman.
• Carrying out any other function as is mentioned in the terms of reference of the
Audit Committee.

The un-audited/ audited quarterly financial results of the Company are also specifically
reviewed by the Audit Committee before these are submitted to the Board for approval.
Minutes of each Audit Committee meeting are placed before the Board for noting.

The Audit Committee is empowered, pursuant to its terms of reference, to:

• Investigate any activity within its terms of reference and to seek any information
it requires from any employee.
• Obtain legal or other independent professional advice and to secure the attendance
of outsiders with relevant experience and expertise, when considered necessary.

Bharti Airtel Limited has instituted internal processes and systems to insure that the
Audit Committee has access to all the material information, and reviews on a regular
basis the following:
 • Management discussion and analysis of financial condition and results of
operations.
• Statement of significant related party transactions (as defined by the audit
committee), submitted by management.
• Management Certificates on Internal Controls and Compliance with laws &
regulations, including any exceptions to these.
• Management letters / letters of internal control weaknesses issued by the statutory
auditors.
• Internal audit reports relating to internal control weaknesses.
• The appointment, removal and terms of remuneration of the Chief Internal
Auditor.
• The financial statements, in particular the investments, if any made by the unlisted
subsidiary companies.

The Audit Committee is also presented with the following information on related party
transactions (whenever applicable):

• A statement in summary form of transactions with related parties in the ordinary

course of business.
• Details of material transactions with related parties, which are not in the normal
course of business.
• Details of material transactions with related parties or others, which are not on an
arm’s length basis along with management’s justification for the same.

Miscellaneous

The Committee may invite other Directors/ Officers of the Company to attend the
meetings of the Committee as ‘Invitees’ from time to time, as and when required.
Minutes of the Audit Committee are placed before the Board in its subsequent meeting.

Exchange Listings
The Stock Exchange, Mumbai (BSE)
The National Stock Exchange Of India Limited (NSE)

Few Key Milestones

Date of Incorporation July 07, 1995
First private operator to offer fixed line telephony June 04, 1998
Became a public limited company in India February 18, 2002
First telecom company to have an all India mobile footprint
(Presence in all 23 telecom circles in India) March 30, 2005

Bharti Airtel – Performance At A Glance

1. Annual financial highlights for the year ended March 31, 2005, 2006, 2007 and
2008 are based on consolidated audited results as per United States
Generally Accepted Accounting Principles (US GAAP).
2. Financial highlights for the quarter ended June 30,2008, September 30, 2008
and December 31, 2008 are audited and are based on the
consolidated results as per United States Generally Accepted Accounting
Principles (US GAAP).
3. Income before income taxes for the full year ended March 31, 2006, March 31,
2007 and March 31, 2008 as well as quarter ended June 30, 2008,
September 30, 2008 and December 31, 2008 are after fringe benefit tax.
4. Exchange rate for Rupee conversion to US$ is (a) Rs. 43.62 for the financial
year ended March 31, 2005 (b) Rs. 44.48 for the financial year ended
March 31, 2006 (c) Rs. 43.10 for the financial year ended March 31, 2007 (d) Rs.
40.02 for the financial year ended March 31, 2008 (e) Rs. 42.93
for the quarter ended June 30, 2008 (f) Rs 46.45 for the quarter ended
September 30, 2008 and (g) Rs.48.58 for the quarter ended December 31,
2008 being the noon buying rate as announced by The Federal Reserve Bank of
New York at the end of the respective periods.
5. Net Debt to Stockholders Equity for the period amounts to 0.12 times
exclusive of fully and compulsory convertible, non-cumulative, unsecured and
interest free Debentures.
 Bharti follows bold strategy for growth - Company
Business and Marketing
India's first private operator to make cellular profits has an aggressive strategy in all areas
of fixed and wireless telecoms.

Indian telecoms company Bharti Enterprises is undertaking a bold expansion through a

series of acquisitions, new network build and forays into the international arena. In so
doing the New Delhi-based company is aiming to become a force to compete with the
government-run Department of Telecommunications (DoT) and state-owned Mahanagar
Telephone Nigam Ltd. (MTNL).

"We would like to become a customer-driven one-stop-shop for a range of telecoms

services, including fixed-line networks, mobile, Internet access [and] VSATs [very small
aperture terminals]," said group chairman and managing director, Sunil Mittal.

Bharti started out in the Indian telecoms market offering cellular phone services in Delhi
in 1992. Its mobile division, Bharti Cellular, is the first private operator to make
operational profits in the capital intensive mobile phone business in India, making a net
profit of around 165.8 million rupees (US$3.8 million) in the last financial year (1998-
99), and its Airtel brand, operating in Delhi and the state of Himachal Pradesh, now has
more than 175,000 customers.

"For most of India's private operators, telecoms is one of their many business interests,
but for Bharti it is the only one," said Mahesh Uppal, a New Delhi-based independent
telecoms consultant.

This focused approach and some aggressive marketing have helped it grow its user base,
According to Mittal the company is adding "about 10,000 cellphone subscribers per
month in Delhi."

Sanjay Kapur, chief operating officer of Bharti Cellular Ltd., said Airtel is offering Web-
based short messaging services--such as e-mail alerts and news--and has linked up with
financial institutions ICICI Ltd. and Housing Development Finance Corporation Ltd. to
offer banking services over its mobile phones.
Meanwhile parent company Bharti Enterprises has been raising funds for acquisitions by
selling equity stakes in its holding companies--including Bharti Televentures, which has
stakes in the cellular interests, and Bharti Telespatial, the holding company for Bharti's
foray into Internet access and VSAT services-to strategic investors, including Intel Corp.,
BT, Telecom Italia and Warbur Pincus.

The funds have enabled Bharti Cellular to make a strategic entry into southern India. Last
December it acquired an 18% stake in JT Mobile (JTM) for Rs4 billion (US$93 million),
and a 51% stake in Skycell for Rs1.2 billion.

Now with a combined subscriber strength of around 245,000, Bharti is closing in on

India's largest cellular operator, BPL Mobile, which has some 267,000 subscribers.

According to the Cellular Operators Association of India (COAI), the total number of
subscribers in India is currently 1.6 million.

"Bharti's buyout of stakes in JTM and Skycell is a vote of confidence in the

[government's] new telecom policy, but it has to turn its purchases into profitable
businesses," said T.H. Chowdhry, director, Centre for Telecom Management & Studies,
in Hyderabad. "The company is moving in the right direction and will be a real
competitor to DOT/MTNL," he added.

With these acquisitions the company's fixed and cellular footprint extends from north and
central India to south India and would give the company a major competitive edge for
operating national long-distance services.

To this end, Bharti is laying around 18,000 kilometers of optical fiber network and
leasing more from infrastructure providers. The first phase to lay some 3,800 kilometers
of fiber will begin this month.

The project is scheduled to be completed by June 2001, and the total cost will be around
Rs2O billion (US$465 million).
Long-distance building

The domestic fixed-line long-distance market, currently monopolized by the DoT, is

scheduled to be opened to competition in the near future. The government has yet to take
a decision on the timing, but analysts agree that licenses will be given to operators for
basic inter-state services by the end of the year.

Meanwhile, VSNL has the monopoly on international long-distance services until 2001.

Bharti started offering fixed-line network services in the state of Madhya Pradesh in
1998, competing with state-owned DoT, and has already garnered around 70,000
subscribers, It is the first Indian private operator to offer alternative services in the state,
and in many other states the DoT remains the sole provider, with the 1999 telecoms
policy to establish competition still not fully implemented. Although licenses have been
issued in 7 of the 22 states in India, not all the private operators have begun offering
fixed-line services.

Bharti was also the first Indian company to offer telecoms services abroad. In October
1999 it was awarded a license to provide a range of domestic and international mobile,
fixed and satellite services in the Seychelles, through subsidiary Bharti Global. It
aggressively positioned its tariffs 50% lower than those of competitor Cable and Wireless
plc, of London, forcing it to reduce its cellphone tariffs.

Following its success in the Seychelles, Bharti is now planning to expand its overseas
operations to Yemen, Botswana and Indian Ocean rim nations such as Mauritius. The
company is also exploring a NASDAQ listing in the second quarter of this year to raise
funds to the tune of $2 billion-$3 billion.