Industry Overview of Telecom Industry

An Overview

India is the second most populous country in the world with the

Overall GDP of $1.85 trillion (10th overall)

World’s largest democracy system with multi party model at its

core.

Indian telecom industry is the second largest in the world (behind

china) on the basis of telephone users (Both fixed and wireless).

The Industry grew over 30 times from 37 million users in 2001 to

960.09 million (Both fixed and wireless) in 2013.

Fixed lines stood at 31.53 million in May 2013.

An Overview

Total mobile phone active were at 929.37 million in 2013.

Total Wireless Teledensity were at 79.37% in 2013.

Total monthly additions were at 8.35 million by May 2013. (Both

fixed and wireless lines).

Fixed line rural density is at 33 % as of May 2013.

Projected Wireless Teledensity is at 84%.

The Industry in India is rapidly transforming into Next Gen Network

through various telephone exchange, mobile switching centers

and media gateways using optical fiber or microwave radios.

An Overview

1.18% of household in India have broadband access.

There were 14.31 million internet users in India as of May 2013.

Lowest mobile tariffs in India due to high competition.

Total revenue generated in 2014 by telecom sector to be estimated upward of

US$50 billion.

Types of Services

•Telephone •Broadband services•Broadcasting

Telephone

Types of Services

Telephone (Fixed and Wireless).

Fixed connections: - Based on copper or optical fibers.

The cost per connections depends upon the regions with northern sectors being the cheapest.

Besides adding future connections the introduction of FDI also adds to the demand for wired

connections.

Digitization in fixed lines were recently introduced.

Bulk of the population rely on landline for their internet connections thus adding to the future

demand.

Interconnectivity charges to be paid to BSNL.

Fixed Telephone

With 31.6 million connections in India following are the key players

BSNL

MTNL

BHARTI

TATA

RELIANCE

QUADRANT

SISTEMA

VODAFONE68.86

11.07

10.49

4.044.04

0.610000000000001 0.16 0.07

SHARE

BSNL MTNL BHARTI

TATA RELIANCE QUADRANRT

SISTEMA VODAFONE

WIRELESS

WIRELESS

•Subscriber base of more than 929 million.

(second largest in world)

•Cost per user fluctuates at $1.7 to $2.2.

•India has 7,36,354 base transreceiver stations

. 20% of them can handle 3G services.

•India has 75 million Smartphone users.

•Smartphone's will grow at a CAGR of over

30% (US$18 billion)

•Wireless handset service grew 16.7% in 2013

with revenues adding up to Rupees 2,88,882

crore or US$ 64.4 billion.

20.58%

16.88%

14.83%

12.77%

10.93%

8.66%

7.26%

4.64%

1.85% 0.58% 0.53%0.34%0.17%

MARKET SHARE

BHARTIVODAFONERELIANCEIDEABSNLTATAAIRCELUNINORSISTEMAMTNLVIDEOCONLOOPHFCL

Wireless

•Third highest Teledensity in world with bulk in urban areas, marked by high prospect of growth in rural areas.

•3G and broadband services were auctioned at US$19.2 billion in 2010.

•4G services have been slow to roll out due to high price, unforeseen policies. Indian government requires local operators to partner with global giants to ease the burden of the costs.

•Private sector hold 88.49% of the market share; whereas government held agencies account for remaining 11.51%.

•High competition with at least 7 to 12 companies in the same circle.

•GSM is the dominant form of technology with around 80% and CDMA being at 20% of total wireless consumers base.

•Wireless alone generates revenue of upwards US$31.6billion of estimated US$35.6 billion.

•Lowest ARPU among fellow nations fostered by stiff competition and govt. regulation policies.

BROADBAND SERVICES

BROADBAND SERVICES

Introduced in 1995.

•Current users at 14.82 million from

14.62 million. Increase of 1.37%

•Annual growth of 16.78%

•The global trend of offering internet as

valued added services being followed in

India.

•Government mandated 256Kbps as a

requirement, however India still ranks at

110Kbps in Internet speed.

63.90%9.30%

7.20%

19.70%

MARKET SHARE

BSNL BHARTI

MTNL OTHERS

BROADBAND SERVICES

BSNL

BHARTI

MTN

L

YOU B

ROADBAND

HATHW

AY0

2

4

6

8

10 9.47

1.37 1.060.68 0.37

NO OF CONNECTIONS (IN MILLIONS)

NO OF CONNECTIONS (IN MILLIONS)

• Bulk of these users are concentrated in urban areas, whereas rural areas have limited exposition.

•155 Internet service providers in India.

• Internet services have grown in 2013 with the advent of mobile payment services in India.

•User subscription rate to go over 20 million by 2015.

•About 75% of the connections are landline based.

PRESENT TELECOM MARKET SHARE

23%

10%

10%12%

15%

5%12%

Indian Telecom (Includes phone, broadband and broadcasting subscriptions) in 2013

AIRTEL

IDEA

VODAFONE

RELIANCE

BSNL

TATA

OTHERS

•Bharti Airtel Limited is a leading global telecommunications company with operations in 20 countries across Asia and Africa.

• Headquartered in New Delhi, India, the company ranks amongst the top 4 mobile service providers globally in terms of subscribers.

• In India, the company's product offerings include 2G, 3G and 4G wireless services, mobile commerce, fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including national & international long distance services to carriers.

•In the rest of the geographies, it offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had nearly 287 million customers across its operations at the end of Dec 2013

Company Overview Bharti Airtel Limited is a leading global telecommunications company with operations in 20 countries across Asia and Africa

Bharti Airtel had over 269 million customers across its operations at the end of March 2013

Business Divisions

Telemedia services

Mobile services

Airtel business Mobile services

RATIOS

2013 2012 2011 2010 20090.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.32

0.73

0.31

0.67 0.65

Current ratio

Current ratio

2013 2012 2011 2010 20090

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.494106696314792

0.502690695453737

0.484135692198877

0.372535195932189

0.610197326773861

Debt Equity ratio

Debt Equity ratio

RATIOS

2013 2012 2011 2010 20090.19

0.20

0.21

0.22

0.23

0.24

0.25

0.26

0.27

0.24

0.22

0.23

0.24

0.26

Payable t/o

Payable t/o

2013 2012 2011 2010 20090

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.0539227582221657

0.0547756083849057

0.0602497297948342

0.0686594554989974

0.0693304445919585

Total asset t/o

Total asset t/o

2013 2012 2011 2010 20090

0.5

1

1.5

2

2.5

2.07020290781275

2.31363585808032.1317539531

2325

1.52998088036263

Receivable t/o

Receivable t/o

MARGINS

2009 2010 2011 2012 201356.0%

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

72.0%

69.7%

61.9%

70.9% 70.8%

69.1%

GP Margin

GP Margin

200 2010 2011 2012 20130.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

38.8% 39.3%35.1%

32.8%29.7%

EBITDA Margin

EBITDA Margin

2009 2010 2011 2012 20130.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

28.9% 27.8%

23.0%

18.6%

14.7%

EBIT Margin

EBIT Margin

2009 2010 2011 2012 20130.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

23.8%

29.9%

23.0%

16.7%14.2%

PBT Margin

PBT Margin

CASH FLOW

2009 2010 2011 2012 2013

-200000.0

-150000.0

-100000.0

-50000.0

0.0

50000.0

100000.0

150000.0

200000.0

137115.0126927.0 132154.0

114378.0

138847.0

-151754.0

-106018.0 -109750.0-126118.0

-107259.0

20648.0

-25393.0

56465.0

14008.0

-31857.0

CFFO CFFI CFFF

CASH FLOW

2009 2010 2011 2012 2013

-200000

-100000

0

100000

200000

300000

400000

693922726

-175602

-20397

119,988.00 109,428.00

289,980.00

159,244.00

CAPEX Free Cash Flow

!dea

2009 2010 2011 2012 20130.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

CURRENT RATIODEBT-EQUITY RATIO

1 2 3 4 50.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2009 2010 2011 2012 2013

2010 2011 2012 2013 -

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2010 2011 2012 2013 160.00

165.00

170.00

175.00

180.00

185.00

190.00

2010 2011 2012 20130.00

0.50

1.00

1.50

2.00

2.50

2010 2011 2012 2013 0.50

0.52

0.54

0.56

0.58

0.60

0.62

0.64

0.66

Receivables Turnover Inventory Turnover

Payable Turnover Total Asset Turnover

TURNOVER RATIOS

2009 2010 2011 2012 2013

-150,000.00

-100,000.00

-50,000.00

-

50,000.00

100,000.00

150,000.00

CFFOCFFICFFF

CASH FLOW

CASH FLOW

2010 2011 2012 2013

-40000

-20000

0

20000

40000

60000

80000

100000

CAPEX

Free Cash Flow