BHARTI AIRTEL

JOINT VENTURE

BHARTI

Big Transformations. Brave Actions.A story of global telecom company

Founded in 1976 with an initial capital of $ 1000. Started as a small scale manufacturing unitBegan manufacturing telephones in technical collaboration with Siemens AG, Tie-up with Takacom.

Formed Consortium with Vivendi and others to bid for Cellular Licences

Bharti Airtel started operations by launching mobile services in Delhi

OUR BEGINNINGS

1976

1985

1992

1995

OUR BUSINESSES

OUR PARTNERSTELECOM SERVICES

FINANCIAL SERVICES

RETAIL / WHOLESALE

EMERGING BUSINESS

HISTORY OF

BHARTI AIRTEL

Sunil Bharti Mittal founded the Bharti Group In 1983

In 1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in India to offer push-button telephones.

By the early 1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless telephones.

In 1992, Mittal won a bid to build a cellular phone network in Delhi.

In 1995, Mittal incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi.

HISTORY

In 2003, the cellular phone operations were rebranded under the single Airtel brand.

In 2004, Bharti acquired control of Hexacom and entered Rajasthan.

In 2009, Airtel launched its first international mobile network in Sri Lanka.

In 2010, Airtel acquired the African operations of the Kuwait based Zain Telecom.

Today, Airtel is the largest cellular service provider in India and the third largest in the world.

HISTORY Contd…

Incorporation and history

Bharti Airtel Limited formerly ‘Bharti Tele-Ventures Limited - BTVL’) was incorporated on July 7, 1995 under the laws of India for promoting investments in telecommunication services.

Bharti Airtel together with its subsidiaries is here after referred to as ‘the Group’.

The Group is a leading telecom service provider in India.

BACKGROUND

In February 2002, the Company successfully completed an Initial Public Offering (‘IPO’) of 185,336,700,

Fully paid equity shares of Rs. 10 each at a premium of Rs. 35 per equity share, aggregating to Rs. 8,340,152.

With effect from April 24, 2006, the name of the Company has been changed from Bharti Tele-Ventures Limited (‘BTVL’) to Bharti Airtel Limited (‘Bharti Airtel’).

BACKGROUND Contd…

VISIONTo Be The Largest Emerging Markets Telecom Company in the World.

Bharti Airtel –An Integrated Telco

Quest for becoming global –Emerging markets

Bharti Airtel: A Case in Point

Bharti Airtel - positioning in the world and India.

3rd LARGEST wireless operator in the world1

LARGEST private INTEGRATED telecom company in India

5th LARGEST INTEGRATED telecom operator in the world

LARGEST WIRELESS operator in India

LARGEST private FIXED LINE operator in India

LARGEST operator in NLD, ILD and VSAT business

LARGEST TELECOM company listed on Indian Stock Exchanges

NEW SERVICES BY BHARTI AIRTEL

• 3G

• 4G

• Airtel money

• Airtel broadband

• Airtel digital TV

“In a country like India, which is so vast, with a very dismal penetration of fixed line broadband, I think wireless is the only solution. Like for most Indians the first call, the voice call, was on a wireless device; similarly, for most Indians, the first access to Internet will be also through a wireless device.”

— Sanjay Kapoor, CEO, Bharti Airtel

Bharti Airtel (India), along with Loop Mobile, Idea Cellular, Reliance Communications and Vodafone, was issued notices by Telecom Regulatory Authority of India (TRAI) for violation of Mobile number portability (MNP) regulations. According to TRAI, they had received complaints from customers regarding unwarranted rejection of porting requests by telecom operators and 10 had been charged for a message requesting porting code throughnumber 1900.There has been lot of criticism about Airtel for its unauthorised VAS activation.

Several thousands of users were falsely billed, for example downloading wallpaper or ringtones.

CONTROVERSY

4 Factors Troubling Bharti Airtel

Competition

The recent licenses issued after January 2008 by the Supreme Court has prompted new players such as Etisalat and S Tel wind etc.

Despite this, the competition in the 2G segment remains cutthroat. Bharti's average revenue per user (ARPU) has fallen by 16% since March 2010 to Rs 185 in the June 2012 quarter.

Even though mobile subscriber base rose by 47% to 18.7 crore. "Globally, there are 3-5 operators in a single market but in India, we have NINE Telecos…

Slower Adoption of 3G

Telecom operators had bid aggressively two years ago to obtain licenses for 3G services.

Private operators had paid nearly Rs 51,000 crore through borrowed money to acquire licenses in the hope that the data driven nature of 3G services would help in boosting revenue and profitability.

Though most operators have launched 3G services, these are yet to acquire necessary traction.For Bahrti, interest outgo as a percentage of revenue shot up to 4.2% in the June 2012 quarter from 2% two years ago.

This has adversely affected profitability of the company.

Stagnation in Cash Generation

The efficiency in generating cash from operations is vital for capital intensive business such as telecom.

Bharti's free cash flow has not grown in tandem with the growth in its subscriber base.

Free cash flow is the cash available for stakeholders of a company after paying for working capital and capital expenditure requirements.

In the June 2012 quarter, it fell sharply by 41% sequentially to Rs 2,272.9 crore as capex rose by 50% to Rs 3,576 crore.

Margin Pressure in Africa

Bharti's decision to enter African markets by acquiring Zain's operations in 16 countries has met with some challenges.

ARPU of the African operations fell by 23% to $5.7 Crore in the June 2012.This has resulted in 170 basis point reduction in operating margin.

Bharti is expected to reel under pressure in the near term.

Its 3G initiatives will take some more time before they start contributing significantly to profits.

And, if Bharti decides to participate in the ensuing 2G auction in select circles, it may result in higher debt burden thereby further dragging itsperformance.