Industrial Unit Analysis

Parthiban.S

RamaSubramanian.S

Sabarish.V

SenthilKumar.V

Thirumurugan.S
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 Evolution of the industry-Important Milestones
1851 First operational land lines were laid by the government near Calcutta
(seatof British power)
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable
Communication Company (IRCC)
1947 Nationalization of all foreign telecommunication companies to form the
Posts, Telephone and Telegraph (PTT), a monopoly run by the government's
Ministry of Communications
1985 Department of Telecommunications (DOT) established, an exclusive
provider of domestic and long-distance service that would be its own
regulator (separate from the postal system)
1986 MTNL incorporated to provide fixed-line telephone services in Mumbai and
New Delhi

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CONT…

1986 VSNL incorporated to provide international telecom services

1991 DoT invites bids from Indian companies for cellular licenses in the four
metropolitan circles
1994 Government announces the National Telecom Policy, opening up the
basic service sector to private players
• SEP - Entry guidelines for basic services announced
• NOV - Licenses were issued to cellular operators in the four metros
1995 January - Tenders floated for basic operators as well as cellular
operators in non-metro sectors.
1995 March - Paging services by private operators commence
1996 Licenses for 20 cellular circles issued

1997 Telecom Regulatory Authority of India established by government

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CONT…

1998 ISP business opened up to operators other than DoT and VSNL
1999 Government announces NTP 1999

1999 DoT announces Migration Package for existing operators’ licensing costs,
subject to compliance with certain conditions

2000 TRAI issues the first tariff order and cuts domestic and international long
distance telephony charges and DoT becomes a corporation, BSNL
2001 DoT allows basic operators to provide WLL services on a restricted basis.
2001 Opening of National Long Distance Service to competition and Fourth
Cellular licenses issued

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CONT…

2002 Bharti starts cellular to cellular long distance services with sharp cuts
in tariffs 

Feb. '02 - Government transfers control of VSNL to Tatas through sale

of strategic holding

April-02 - ILD sector opened to competition. End of VSNL monopoly.

Government allows restricted IP Telephony

May '02 - Bharti offers ILD services with sharp cuts in tariffs

Sept. '02 - TRAI decides to 'forbear' from regulating cellular tariffs

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Indian Telecom

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Telecom Policy
Spectrum Allocation

•GSM operators initially get 4.4 Mhz and get 10 Mhz when they have 10 lakh subscribers.
•In 2002, the cost of 4.4 Mhz of spectrum was Rs.1650 crores and in 2007 the cost
remains same.
• The rule mandate that no company should have more than 6.2 Mhz, but Bharti,
vodafone and BSNL have 10Mhz spectrum which will cost the nation Rs.7216 crore
annually.
FDI
•FDI is allowed 49%, but allowed up to consolidated amount of 74% with others such as
NRI’s, Financial Institutions.

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TYPES OF PLAYERS

STATE OWNED BSNL & MTNL

PRIVATE INDIAN OWNED Reliance infocomm, Tata Teleservices

FOREIGN INVESTED Bharti Airtel , Vodafone Essar , Idea

cellular, BPL Mobile, Escotel

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The top players in Telecom
1. Bharti Airtel
2. Vodafone Essar
3. BSNL
4. MTNL
5. Reliance Communications
6. Tata TeleServices
7. Idea Cellular Limited

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Areas of operation
Sl. No. of
No. Service Provider Licensed Service areas Circles
1 BSNL All India (except Delhi & Mumbai) 21

2 Bharti All India 23

3 Reliance All India 23
4 Aircel* All India 23
5 Vodafone All India (except MP) 22
6 Tata Teleservices All India (except Assam, NE, J&K) 20

7 IDEA*** 13 (Delhi, Mumbai, Maharashtra, 13

Gujarat, Andhra Pradesh, Kerala, Haryana, UP-
W, UP-E, Rajasthan, Madhya Pradesh, Himachal
Pradesh, Bihar)
8 BPL Mumbai 1
9 MTNL Delhi, Mumbai 2
10 HFCL Punjab 1
11 Shyam Telelink Rajasthan 1

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 About - Airtel
• Bharti Airtel Limited a group company of Bharti Enterprises, India’s leading
integrated telecom services provider with an aggregate of over 77.24 million
customers as of end of August 2008, consisting of 74.77 million mobile
customers.
• Bharti Airtel is structured into three strategic business units –
• Mobile services,
• Telemedia services and
• Enterprise services.
• The mobile business provides mobile & fixed wireless services using GSM
technology across 23 telecom circles.
• The company primarily operates in India,
• Headquarters - New Delhi
• Employees - 25,543 people (as on March 08)
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CONT…

•It has set a target of 125 million subscribers by 2010

•Prepaid customers account for 88.5% of Bharti’s total
subscriber base, an increase from 82.7% a year ago

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Mile Stones of Bharti Airtel
• Bharti Airtel was established as Bharti Tele-Ventures, in 1995.
• The company offered its initial public offering in 2002.
• During 2004, the company delisted its shares from the Delhi Stock Exchange. It
continued to trade on the National Stock Exchange and the Mumbai Stock
Exchange.
• Vodafone acquired a 10% stake in Bharti Tele-Ventures for around $1.5 billion,
in 2005. Bharti Tele-Ventures renamed itself to Bharti Airtel Limited, in 2006.
• In September 2007, the company signed a managed networks deal for its Sri
Lanka operations with Huawei Technologies Company, a leader in providing
next generation telecommunications network solutions for operators around the
world.
• In October 2007, Bharti Airtel and Indian Institute of Technology (IIT) Delhi
announced their plans to establish the Bharti-IIT Delhi Telecom Centre of
Excellence.
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 CONT…
• In March 2008, the company launched Airtel CallHome service for
calls made from US to India.
• In the same month, Guernsey Airtel, a subsidiary of the Bharti
Group, launched its mobile services in Guernsey (Channel Islands,
Europe). The company offered products and services under the
Airtel-Vodafone brand to customers on the Island. 
• Also in the same month, Airtel Telemedia Services, a private
broadband and telephone service provider, launched airtellive.com,
an all-in-one internet portal for Airtel customers.
• Airtel launched its Iphone in august 2008.
• Airtel successfully tested 3G services in Delhi, Mumbai and
Bangalore and are waiting for the spectrum to be allocated.
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Bharti Enterprises

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Bharti Airtel

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Objectives
By 2010 Airtel will be the most admired brand in
India:
•Loved by more customers.
•Targeted by top talent.
• Benchmarked by most businesses.

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Subsidiaries of Bharati
(i) Bharti Hexacom Limited
(ii) Bharti Comtel Limited
(iii) Bharti Aquanet Limited
(iv) Satcom Broadband Equipment Limited
(v) Bharti Broadband Limited
(vi) Bharti Infratel Limited
(vii) Bharti Telemedia Limited
(viii) Bharti Airtel (UK) Limited
(ix) Bharti Airtel (Canada) Limited
(x) Bharti Airtel (Hongkong) Limited
(xi) Bharti Airtel (USA) Limited and
(xii) Bharti Airtel Lanka (Private) Limited

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 Subscriber Base - Airtel
The Airtel subscriber base according to COAI - Cellular Operator Association of India as of May
2008 was:
•Delhi - 4,055,704 • Punjab - 3,239,200
•Mumbai - 2,468,016 • Haryana - 1,067,990
•Chennai - 1,823,532 • Uttar Pradesh (West) - 1,624,001
•Kolkata - 1,852,838 • Uttar Pradesh (East) - 3,897,278
•Maharashtra & Goa - 4,345,945 • Rajasthan - 4,242,006
•Gujarat - 3,004,824 • Madhya Pradesh - 3,084,776
•Andhra Pradesh - 6,516,332 • West Bengal
•Karnataka - 7,316,500 & Andaman and Nicobar - 2,106,163
•Tamil Nadu - 4,218,705 • Himachal Pradesh - 809,829
•Kerala - 1,703,298 • Bihar - 4,912,900
• Orissa - 1,911,070
• Assam - 939,746
• North Eastern States - 585,213
• Jammu & Kashmir - 1,100,069

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Customer base

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Growth in cutomer base

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Business Partners

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 Partner’s role
Services Partners/Vendors Role

Ericsson and Nokia Network Equipment

partners
Mobile services
1. IBM Daksh, Call center operations
2. Hinduja TMT,
3. TeleTech
4. Mphasis
Telemedia & Enterprise services Siemens Equipment suppliers
Nortel

IT Requirements IBM Group wide technology req

Nortel Call center tech req

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Other Alliances
In 2007 ,Bharti Airtel has entered into following major agreements
and alliances:
• With Microsoft to offer software and services for the Small
and Medium Business (SMB) market in India.
• As part of the agreement, Airtel will bring Google search to
the Airtel Live mobile WAP portal. Google will also incorporate
advertising through its Mobile Ads product on the Airtel Live
mobile portal;
• A three-year contract with Nokia at an estimated value of US$
400 mn to expand its managed GSM/ GPRS/EDGE networks in
eight Airtel circles and deploy a pan India WAP solution across its
networks;

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CONT…

•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.

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Porters Five force model for the Industry
Threat of new entrants :
•In 2002, the cost of 4.4 Mhz of spectrum was Rs.1650 crores and in
2007 the cost remains same.
•Six new licences were given this year.
Threat of Substitute Products:
Wimax allows VOIP which may be threat in future since ISP can
operate it with low cost.
 Barriers to entry
•High capital investments, older and well-established players who have
a nation wide network, license fee, continuously evolving technology
and falling tariffs.

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 CONT…
Bargaining power of suppliers
• Improved competitive scenario and commoditisation of telecom services has
led to reduced bargaining power for services providers.
 Bargaining power of customers
• A wide variety of choices available to customers both in fixed as well as
mobile telephony has resulted in increased bargaining power for the
customers.
 Competition
• The entry of fourth cellular player and commencement of WLL services has
resulted in intense competition in the bigger cities. Reducing tariffs will hurt
the new entrants, as they will be unable to recover their high capital
investments.

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 SWOT Analysis:
Strength:
• Operation in 23 circle in the country
• Higest no of towers (Around 80,000) by airtel
• 22 million subscribers ahead of its nearest competitors.
Weakness:
Too much dependence on domestic market.
Opportunities:
A strong economy and a growing market:
• The Indian telecommunication industry is amongst the fastest growing telecom
markets in the world and
• Higher per capita income and appetite for increased consumption is resulting in a
greater-than-proportionate impetus for telecom growth.
• As an ISP, Bharti can roll out VOIP services if WiMax texhnology is rolled out.

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 CONT…
Threats:
•Dip in ARPU.
•Increased competition may reduce market share and/or revenue
•Mobile Number portability may result in switch over of customers to
competitors.
•Taxation(30% of revenue).
•Vodafone has the advantage in 3G services than Airtel since it has
experience of running the 3G service in other countries.

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Financial Analysis

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Share holding pattern

Share Holding patterns %

Promoters 66.5

MF’s , FI’s & Banks 5.7

FII’s 23.6

Others 4.2

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Revenues and Profits

INR in millions Increase in % from 2007

(march 08)
Revenues 270,249.3 45.9%
Operating Profit 76,455 55.1%
Net Profit 67,008 57.4%

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Market Share

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Market Data

• 52-week range (INR) : 1,149 / 688

• Share in issue (mn) : 1,898.0
• Makcap (INR bn/USD mn) : 1,517/34,805
• Avg. Daily vol. BSE (’000) : 3,898.5

As on 23/aug/08

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Economies of scale and efficient working capital
management helped boost profit margin
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Company’s policy of retaining entire profits helps in
keeping the D/E low despite surging loan book
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Better controls helped check bad
debt losses
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Increasing subscriber base caused higher
fixed asset turnover ratio
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Economies of scale help reduce the percentage
cost of advertisement expenditure
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Thank You

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