Indian Institute of Management Kozhikode

IIMK/CS/20/OB&HR/2008/01

Bharti Airtel 2008*
Bharti Airtel Limited was one of the world's fastest growing telecom companies that carved for itself a leadership position in the global telecommunications sector. In October 2007, it achieved the distinction of becoming the fastest private telecom company in the world to reach the landmark of 50 million customers in a single country, within a short period of 143 months of start of operations1. It was India’s leading private sector provider of telecommunications services, covering a wide spectrum comprising mobile, fixed line, broadband and enterprise services. As of December 2007 it was India's largest integrated private telecom service provider with 55.16 million mobile subscribers constituting a market share of 24.09% of the entire mobile telephone industry (refer Exhibit 1a for the subscriber base of all players in the industry)2. It was present across 4,855 towns covering 62% of the Indian population3. Bharti Airtel was the first telecom company to have an All-India footprint by covering all the 23 telecom circles of India4. It was one of the five largest companies in India in terms of the market capitalization5, and the flagship organization of Bharti Enterprises, one of India’s leading business groups with diverse interests such as telecom, agro products, insurance and retail. Its brand 'Beetel' wass the country’s largest manufacturer and exporter of world class telecom terminals. It was ranked amongst the best performing companies in the world in the Business Week IT 100 list 2007. Bharti Airtel was a pioneering force in the telecom sector with many path-breaking initiatives to its credit. It was instrumental in bringing the mobile communication to the masses by launching several services at much lower price levels. It revolutionized the telecom industry by following ARPM model (i.e. Average Revenue Per Minute) rather than the ARPU model (i.e. Average Revenue Per Minute) which was the standard across the globe6. It adopted a unique business model through its strategic partnerships with Ericsson, IBM, Nokia, and Siemens in IT and network realms which had set a trend in the global cellular industry. Indian Telecom industry Indian economy witnessed robust growth levels fueled by favorable demographics and rising income levels from nineties onwards. This era of rapid economic growth was accompanied by exponential growth in the telecom sector. This growth began with the liberalization of the Indian Telecom Sector in 1994 (refer to the Exhibit 2 for a summary of the reforms) and the mobile subscriber base in India has since then been increasing manifold. Telephone services in India were provided by the government through its Department of Telecommunications till 1985. In line with the reforms in the government, Mahanagar Telecom Nigam Ltd (MTNL) in 1986 and Bharat Sanchar Nigam Ltd (BSNL) in 2000 were created as public sector organizations out of DoT to offer services in Mumbai and Delhi and rest of India respectively. A detailed overview of the Indian Telecom industry can be obtained from Exhibits 1a to 1d and Exhibit 2. The Indian mobile telecom market was continuing to attract a lot of attention in the global telecom sector owing to the fact that it was one of the world's fastest-growing telecommunications markets (Exhibit 1b). Despite the significant growth in subscriber base, the mobile penetration level in India

* Written by S. Jeyavelu and A. Radha, IIM Kozhikode based on secondary data. 1 Airtel breaks into world's Top 10 with 50 mn users, Economic times, 2 Oct, 2007 2 http://www.india-cellular.com/Market-Share.html accessed on 6 Feb, 2008 3 http://www.coai.in/archives_statistics_2007_q2.htm accessed on 4 Feb, 2008 4 Congratulate Sunil Bharti Mittal, Economic Times, 27 Oct, 2007 5 Bharti Airtel Limited Annual report 2006-07 6 Lifetime offers may dent ARPUs for operators. http://www.moneycontrol.com/ mccode/news/article/news_article.php?autono=195771 accessed on 6 Feb, 2008

was still around 20.5% as compared to the world average of 50%, which was amongst the lowest in the world and was a clear indicator of the huge potential for further growth7. The two technologies used for mobile services in India are Global System for Mobiles (GSM) and Code Division Multiple Access (CDMA)8. GSM and CDMA technologies were not currently compatible or interchangeable with each other and required separate types of wireless phones and network infrastructure. In 2008, all the major players in the industry were aggressively investing in infrastructure, primarily in network upgradation and rollout. Competitors The Indian mobile telephony market was highly competitive and the top five players Bharti, Reliance Communications, Vodafone, BSNL-MTNL and Tata Tele controlled 83% market share. The other players such as Idea cellular (11 circles), Aircel (9 circles) Spice telecom (2 circles) had lined up plans to expand their presence and become a pan India operator to get a sizeable share of the growing market. The growth in both the GSM and the CDMA segments was phenomenal and the total number of GSM subscribers had reached 121.43 million by March 2007. Bharti Airtel was holding a 30.6% share of this market with 37.1 million customers at the end of March 2007, followed by Bharat Sanchar Nigam Ltd (BSNL) with 27.4 million (22.6% market share). Vodafone’s Hutch-Essar had 26.4 million subscribers (21.8%), while Idea had 14 million customers (11.5%). Exhibits 1a, 1a & 1d gives industry statistics. Reliance Communications, the flagship company of the Anil Dhirubhai Ambani Group (ADAG) of companies, was the second largest wireless telecom operator in the Indian telecom industry with presence in both CDMA and GSM segments and also the largest provider of long distance carrier services. It was the leading player in the CDMA market and had a subscriber base of 34.8mn and a market share of 17.7% with a pan India CDMA and 8 circles GSM presence. The company owned and operated FLAG telecom, which owned 76,500 km of submarine cable system, the largest submarine cable system in the world. There was a stiff competition between Reliance Communications and Bharti Airtel for market leadership and in March 2006, Bharti Airtel was lagging behind Reliance Communications in terms of market share. But post FY06, Bharti had not only gained a leadership position in the Indian mobile industry, but also consistently increased its market share, consequently widening the gap between itself and Reliance Communications. Bharat Sanchar Nigam Ltd. was the second largest GSM operator in the country. It was formed out of the former DoT in October 2000 as a public sector unit. It was the World's 7th largest Telecommunications Company providing comprehensive range of telecom services in India comprising Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLSVPN, VSAT, VoIP services, IN Services etc. MTNL holds the license to provide cellular services in Delhi and Mumbai, and commenced its cellular services during February 2001. Vodafone Group Plc was the world's leading mobile telecommunications company, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the Company's subsidiary undertakings, joint ventures, associated undertakings and investments. It was keen on entering the Indian mobile telephony market and ventured into it through its acquisition of interest in Bharti Airtel. Later, it acquired Hutch, one of the top players in the Indian GSM segment to

http://www.cellular-news.com/story/28809.php; and http://investing.reuters.co.uk/news/articleinvesting.aspx? type=media&storyID=nL29172095&pageNumber=1&imageid=&cap=&sz=13&WTModLoc=InvArt-C1ArticlePage1 accessed on 7 Feb, 2008. 8 GSM works by dividing a single radio frequency into multiple time slots so it can support multiple calls. CDMA technology works by encoding individual conversations into a series of digits and then spreading the transmission of the sequence over available spectrum.

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get a firm foothold in the market. It was expected to offload its ownership in Bharti Airtel in the coming years to avoid any potential conflicts of interest. Idea cellular, a part of the prestigious Aditya Birla Group, provided mobile telephony services on the GSM platform in 11 out of the 23 circles in India. IDEA Cellular's footprint in 2008 covered approximately 45% of India's population and over 50% of the potential telecom-market. It operated in the circles Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttaranchal, Haryana, UP-West, Himachal Pradesh and Kerala. The company had a subscriber base of 21mn and an overall market share of 9.2% in the mobile industry. Spice amongst top 6 private GSM operators in India with a customer base more than 3.0 million. It had tie-ups with over 448 international operators across 208 countries and was the first to introduce unique VAS services in India. History of Bharti Airtel Bharti was founded by Sunil Mittal in 1976 in his hometown of Ludhiana, after he graduated from Punjab University. He was a first generation entrepreneur who started his venture with a capital of about Rs. 20,000, borrowed from his father, a congress party politician. He was involved in a variety of trades before he ventured into the mobile phone business. He started by making crankshafts for local bicycle manufacturers. Within three years he set up two more plants, one that turned out yarn and the other that produced stainless-steel sheets used for surgical utensils. In 1980 he sold both the plants and shifted base to Mumbai, where he reinvented himself as a trader who sold imported stainless steel, brass, plastics, and zip fasteners. Though this business was good, Mittal's first real break came in 1982 when he became the exclusive India agent for Suzuki Motor Company of Japan for importing portable generators. He took up this business after recognizing that the portable generators presented a great business opportunity in India while they did not have a huge market in Japan. The portable generators could attract many buyers in India owing to the frequent and regular power outages that many regions in the country were subjected to. He was proved right with his business doing very well and within two years Mittal established a national distribution network with offices in four cities. But the complex industrial licensing regime took its toll on him and his business was wiped out all of a sudden when the government banned import of generators in India in order to support the large industrial houses that ventured into that business. Mittal viewed this setback too as an opportunity and luckily, by this time, he was already fascinated by the touch-tone phones that he came across in Taiwan. In those days Indians were exposed only to the rotary phones, and Mittal could see that these sleek phones had a huge potential. Immediately, he signed a contract with a Taiwanese supplier and months later, he was selling the gadgets to customers in India under the German-sounding brand name Mittbrau, a short form for Mittal brothers9. But the regulatory environment was still stringent and the government did not allow import of push button phones. So he entered into a tie up with Siemens, to manufacture the company's push-button telephone models for the Indian market. In 1986, Mittal incorporated Bharti Telecom Limited (BTL) and his company became the first in India to offer push-button telephones under the brand ‘Beetel’, establishing the basis of Bharti Enterprises. When this business started flourishing, the regulators decided that touch-tone phones should be made in India and they handed out licenses to 52 Indian firms, relegating Bharti to second-tier status behind other larger industrial groups. Since phones weren't a priority for the big groups, his venture continued to do well and as of 2008 Bharti was the only player existing out of the original 52 licensees. He expanded the company’s manufacturing capacity in the telecommunications market and by the early 1990s, he also launched the fax machines and cordless telephones in the country for the first time.

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Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1

In 1991, the liberalization gave a new lease of life to the entrepreneurs. In 1992, when the telecom services business was opened up to private players and bids were welcomed for licenses to operate India's first mobile-phone networks, Mittal saw a huge opportunity and moved to London to learn more about this fledgling industry and to assemble a world-class tender offer10. Even though it was unwilling to match the sky-high offers of competitors, Bharti managed to win licenses in India's four largest cities, in collaboration with French telecom major Vivendi. This dramatic start was dampened due to a series of legal battles by some rejected rivals and Bharti was able to start its operations only in Delhi. This proved to be a blessing for Bharti as the mobile phone service license in India was highly overvalued and the service proved to be costlier than what anyone had imagined. On 7th July 1995, the cellular operations of the organization was incorporated as Bharti Tele-Ventures Ltd (BTVL) for promoting investments in diversified telecom service projects and rolled out services under the Airtel brand in Delhi. The company was formed as a 80:20 joint venture between the Bharti Group through its subsidiary Bharti Telecom and STET International Netherlands NV, a company promoted by Telecom Italia, Italy. Exhibit 3 gives the mile stones in the history of Bharti Airtel. Growth story After beginning its operations in Delhi, the company began slowly expanding into other regions and in 1996, the services were extended to Himachal Pradesh11. In 1999, Bharti sold a 20% equity interest to the private equity firm Warburg Pincus which chose it over its competitors as it was the only mobile company in India with a clear business model and used this capital inflow to finance its next stage of growth. In the same year, Bharti Enterprises acquired control of JT mobiles, and extended cellular operations to Punjab, Karnataka and Andhra Pradesh. With this, it became the largest private sector telecom operator in India. It also acquired a 30.20% equity interest of Telecom Italia in Bharti Telenet and 18.8% from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bharti Tele-Ventures. Starting from 2000, Bharti began to get licenses to operate in new circles and began to establish an All-India footprint while consolidating its position by buying up all the struggling competitors. In 2000, Bharti acquired control of Skycell Communications in Chennai and in 2001, the company acquired control of Spice Cell in Calcutta. Despite this consolidation and continued growth, Bharti was not big by international standards. It wanted to consolidate its presence and become a permanent, sustainable business player in the market. Bharti Enterprises went public in 2002, and was listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). It raised $172 million in its initial public offering (IPO) and when it plowed its resources into bringing its assets up to speed, formidable players entered the fray12. This resulted in Bharti's stock plunging to less than half its IPO price early in the year and the company was almost written off by all quarters. But the company pulled up its socks and regained its position through its consolidation and branding efforts. In 2003, Bharti Tele-Ventures, with the market leadership at a 20% share, was at a strategic inflection point. While the market showed huge potential with the number of mobile subscribers almost doubling every year, the competition in the market was rising with the entry of large Indian conglomerates and foreign players. To retain its market leadership, there was need for fast growth in the network infrastructure and people. But Mittal did not have the resources to meet the challenge of managing the breakneck growth. It was at this point that he initiated his unique outsourcing deals where he outsourced the network and the IT and later the call centers through long term partnerships which proved to be one of the most critical drivers of Bharti Airtel’s growth. In the same year, after a brief corporate restructuring, all the mobile operations were merged into Bharti Cellular Limited and all fixed line, long distance and data services into Bharat Infotel Limited. Also the cellular phone operations were rebranded under the single Airtel brand. Bharti, which lost
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Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1 Bharti Airtel Limited Annual report 2006-07 12 Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1

money every year until 2003, posted rising profits every year since then. In the year 2003-04, it joined the US$1 billion revenue club and also launched BlackBerry wireless solution in India. In April 2004, BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd were merged with the company. It also acquired control of Hexacom and entered Rajasthan. In 2005, the company launched its mobile operations in seven new circles of Assam, Bihar, Jammu & Kashmir, North East, Orissa, Uttar Pradesh (East) and West Bengal. Bharti, became the first private service provider in the country to have an All-India footprint when it launched its services in Assam – the 23rd circle on April 13th 2005. During 2005-2006, Vodafone, the world’s largest mobile service provider, acquired 10% interest in the company by way of subscription of convertible debentures in Bharti Enterprises Limited, representing an indirect economic interest in Bharti Airtel Limited and acquisition of direct interest in the company from Warburg Pincus LLC. In 2005-06, Bharti Airtel became India’s largest integrated private operator based on the total customer base. In 2006, the name Bharti Tele Ventures Ltd was changed to Bharti Airtel. In 2006-07, it made a foray into the USA with the launch of Airtel CallHome service for Non resident Indians based there. During 2007, the company also incorporated Bharti Airtel (USA) Ltd, Bharti Airtel (UK) Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hong kong) Ltd as a wholly owned subsidiaries of the company for providing international calling services and wholesale voice switching and data products in the respective countries13. In Jan 2008, it covers an addressable 59% of the total population of India. Refer to Exhibit 3 for the major milestones in the growth of the organization. The organization The company was structured into three strategic business units, Mobile Services which offered Global System for Mobile communication (GSM), Infotel Services which provided broadband & Telephone, national and international long distance services, and Enterprise services which offered services to Carriers and other business customers (refer to Exhibit 4). Mobile Services - The Company’s mobile communication services include information services, short message, and prepaid and post paid services, as well as wireless application protocol-enabled Internet access and roaming services. In addition to being the largest GSM player in the country, it was also the largest wireless service provider in the country, with a share of 23.4% of wireless market (as on September 30, 2007). Broadband & Telephone Services – The company’s telephone services include telephone services, dial-up services, special phone plus services, unified messaging, and audio conference services; and broadband services comprise integrated services digital network, leased line, virtual private networks, and wireless fidelity networks. It offered supply & installation of fixed-line telephones providing local, national & international long distance voice connectivity and broadband Internet access through DSL. The business also provided value added services such as intelligent network based advance management services, viz. toll free numbers, virtual private automatic branch exchange networks, ring back tones and call forwarding among others. Enterprise Services - The company offers enterprise services, such as voice services, mobile services, satellite services, managed data and Internet services, and managed e-business services. This division comprises of the Carriers and Corporate Business units. Carriers business unit was India's first private long distance communications service provider, offering a portfolio of wholesale services in data and voice domain with both national and international long distance services. Corporate business unit serves as the single point of contact for all data and telecommunication needs for large business customers and small and medium enterprises (SMEs) and provides end-to-end telecom solutions.
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http://www.valuenotes.com/q22008/Bhartiairtel_q2.pdf accessed on 6 Jan, 2008

Talent focus The company employed more than 20,000 employees and always had a talent-oriented HR strategy that emphasized talented manpower as a key strength. In line with this talent focus, the company emphasized on acquiring the right talent at all levels and in this endeavor, it employed a competency based selection methodology to get the right talent in the organization. It managed to establish itself as a recruiter of choice across top business schools and engineering colleges across the country. This was done by leveraging its size to offer its talent the space and empowerment they need. It was also recognized as an organization that facilitated faster growth by providing its employees with high responsibilities early in their career as well as multiple avenues to reach the top14. It used a comprehensive program called the "young leader" program through which the fresh talent pool with an innovative mindset, were brought in every year. In order to retain its talent, the company used ESOPs, in addition to which it lays great emphasis on development of leadership skills and on building employee motivation. The organization also used policies like Continuing Education Policy (CEP) which provided higher education opportunities to its employees who are keen on pursuing further education and Flexible Time Policy (FTP). In addition, the organization also relied heavily on internal sourcing to fill up the talent requirements in an endeavor to prepare its people for greater responsibilities15. Corporate Social Responsibility Bharti Airtel always looked at ways to contribute to the society and had its own foundation which works for several causes that help the society. Its foundation, the Bharti Foundation was established in 2000 with the vision “To help underprivileged children and young people of their country realize their potential.” Thus the foundation created and supported programs that bring about sustainable changes, predominantly in the field of education. The flagship program of the foundation was 'Satya Bharti Schools', which were high-quality pre-primary and primary schools intended to provide quality education to poor, migrant underprivileged children in rural areas, especially to girl children. This program had set an impressive aim of establishing 1000 village-based schools. The company had promoted active community involvement in the rural areas and owing to its belief in Public Private Partnership, had actively sought the help of village panchayats to make the ventures successful. The company also partnered with other government schools and anganwadis to provide mid day meals for children and also offered several scholarships for higher education in many institutions. It also opened several Bharti Computer Centres and Bharti Libraries. Bharti Computer Centres was one of the key programs, which aimed at improving learning levels of underprivileged children, using computer-aided learning. It also provided computer exposure and training to disadvantaged youth in the communities. Bharti Library and Activity Centres aim at improving basic reading ability and learning levels of children. Mid-day-meal program of Bharti Foundation provided mid-day meals to underprivileged children in Vrindavan. Bharti Scholarship Scheme was initiated to enable financially weak meritorious students pursue higher education. The foundation funded IIT Delhi to establish Bharti School of Telecommunication Technology and Management, and Bharti Centre for Communication at IIT Bombay. Bharti Airtel formulated its policies and practices after due consideration of its CSR and had constantly showcased its social responsibility through its various initiatives which operated on the foundation of sound environmental conservation. These various policies were intended to minimize the consumption of energy and optimize the use of material produced out of natural resources, which
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Bharti Airtel Limited Annual report 2006-07 www.pwc.com/ceosurvey, accessed on 4 Feb, 2008

were continuously monitored and improved upon. These efforts have been widely recognized and won several laurels. During 2003-04, it was assigned highest Governance and Value Creation (GVC) rating viz. ‘Level 1’ rating by CRISIL, indicating that the company’s capability with respect to creating wealth for all its stakeholders was the highest, while adopting sound Corporate Governance practices. This rating was re-affirmed by CRISIL on April 20, 2006. The Bharti Foundation also received the prestigious Golden Peacock Award for CSR for 2007. Other Businesses Bharti had a joint venture with ELRo Holdings India Ltd. – ‘FieldFresh Foods Pvt. Ltd’ - for global distribution of fresh fruits and vegetables grown in India to supermarkets in Europe. Bharti also had a joint venture - ‘Bharti AXA Life Insurance Company Ltd.’ - with AXA, world leader in financial protection and wealth management. It was on its way to transform India's underdeveloped retail market by partnering with Walmart. In August 2007, Walmart formally marked its entry into India by signing two agreements with Bharti Enterprises. As per these agreements, Bharti Retail Private Limited would be set up as Bharti’s wholly owned subsidiary, in which Bharti would handle the front end and Walmart would take care of the back-end supply chain management. This would enable them to leverage the strengths of both the sides, the excellent customer service of Bharti and the expertise in logistics, sourcing, and supplychain management of Walmart16. Bharti Retail Private Limited was planning to open hundreds of stores over the next five years in formats ranging from supercenter to neighborhood market, and predicted that investment in the venture will exceed $1 billion. Strategic Partnerships Many foreign players like SingTel, Singapore's state-owned telecommunications firm, and British firm Vodafone, had a stake in Bharti Airtel. In Jan 2008, the stake of Bharti Enterprises in Airtel stands at 26%, while SingTel owns 31% of Bharti Airtel. Vodafone had acquired 10% of Bharti Airtel in 2006, mostly from early Bharti investor Warburg Pincus. In 1999 Mittal had sold an 18% stake in Bharti to Warburg Pincus for $294 million which Warburg unloaded, reaping a net gain of $1.9 billion. The technology alliances proved to be the key factor in the business strategy of Bharti Airtel. These helped it surge ahead of the other service providers and retain its top slot in the industry. Not just in terms of getting the best possible technology, these partnerships also enabled Bharti to focus on core competencies. By freeing itself from managing technology, the company has used all its resources to focus on its core competencies – strategic management i.e building their own strategy without external consultants; people management (identifying, motivating and empowering talent); financial management; and working with regulation and regulators17. The company deployed the finest technology and operates state-of-the art networks using the services of its partners like Ericsson, Nokia and Siemens. The company had an information technology alliance with IBM for the group-wide information technology requirements and with Nortel for call center technology requirements. During 2006-07, Bharti Airtel entered into agreement with Microsoft to offer software and services for the Small and Medium business market in india. It also had an agreement with Google to offer services on Airtel Mobile. Sunil Mittal says We have a transparent relationship with our partners, and on a scale of 10 we are at 10. We are transparent and honest in our dealings18.
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Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1 http://www.gidabyte.com/focus/106/ accessed on 6 Feb, 2008. 18 http://voicendata.ciol.com/content/speak/106083102.asp accessed on 6 Feb, 2008.

Leadership of Mittal One of the main faces behind the cellular revolution in India, Sunil Bharti Mittal was the owner and the chairman and group managing director of Bharti Group. Sunil Mittal was born in 1957 to Sat Paul and Lakshmi Mittal. He was a graduate of Punjab University and completed the owner/president management program at Harvard Business School in 199919. Since the time he started his bicycle parts manufacturing business after graduating from Punjab University, his life had revolved around his business. He always had a hands-on approach towards his business which changed in 2007 when he took on his new role as the chairman and group managing director of Bharti Enterprises with the apex-level strategic reorganization of structure. He started to shift focus towards macro issues and on mentoring, strategy and governance20. Manoj Kohli who was groomed personally by Sunil Mittal assumed office as the CEO. In addition to his responsibilities at Bharti, Sunil held several other leadership positions. He was the president of Confederation of Indian Industry (CII) and a member of the Prime minister's Council on Trade and Industry. He served on several boards including the Board of Standard Chartered PLC, the International Advisory Board of the Center for the Advanced Study of India (CASI); University of Pennsylvania, Harvard Business School India advisory board, International Business Council of the World Economic Forum, Global GSM Association, Indo-British Partnership (IBP), Singapore-India partnership foundation, the Indian Institute of Management, Lucknow, and the Indian Institute of Technology, Mumbai. For the numerous awards that he received, refer to Exhibit 5. Innovations Bharti's strong management team had continuously focused on innovating, improving services offerings with a strong focus on the front-end activities and at the same time outsourced the non-core activities of the business. The Company's prime focus was on ensuring customer satisfaction through superior network quality, customer service and continuous innovation in value-added services that would help expand its mobile customer base and drive up volumes. Bharti Airtel had numerous innovations to its credit, the most pertinent being its path breaking partnerships with companies like Nokia, Siemens, Ericsson and IBM for its network planning, supply & management and IT requirements respectively21. These deals became trend setters in the global telecommunication industry. In addition, the company was a pioneer in bringing many new and innovative services to the market. Recently, the company and the GSM Association had launched the Global money transfer pilot project in India which would enable 25 million Indians abroad to remit money to India through their mobile phones22. It entered into strategic partnerships with Google for setting new grounds in mobile search and with Microsoft, thus became the first telecom operator to offer Microsoft Windows mobile 5.0 technology. During 2005 the company introduced new products like BlackBerry wireless solution, Airtel Live and Ring back tones (Hello Tunes) which were all firsts in the country. Also the company was the first to introduce Stock and Portfolio Tracker on the mobile in association with the Bombay Stock Exchange. During the year 2005, the Company introduced new and innovative products that were received well in the market and enabled the Company to maintain its leadership position despite competitive pressures. The Company launched 'Future Factory - Centres of Innovation' to incubate pioneering
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http://www.businessweek.com/it100/2006/10.htm accessed on 6 Feb, 2008. At 50, Mittal to turn mentor at Bharti, Hindu business, Oct 08, 2003 21 Bharti Airtel Ltd, Capitaline Plus 22 Bharti Airtel Limited Annual report 2006-07

mobile applications. The Future Factory was conceptualized with the purpose of developing applications to cater to the needs of customer segments across the entire spectrum. Brand characteristics Bharti Airtel always had a brand focused approach and it even puts forth its services as ways towards dissolving global boundaries and to enable people to stay connected. It always sought brand ambassadors who communicate the right brand equity. Hence the key factor in zeroing in on the brand ambassadors was the extent to which there was a fit between the core values of the brand and the personality of the ambassador. The company went for a variety of advertising using different brand ambassadors, starting from cricket icon like Sachin Tendulkar to renowned music composer A. R. Rahman to cine stars like Shahrukh Khan, Kareena Kapoor, Madhavan etc. It also adopted combinations of functional and symbolic campaigns, national and regional campaigns, but all with a common theme running across. It always went for high visibility advertising, targeting a variety of customer segments. In the year 2003, Sachin Tendulkar was signed as their brand ambassador and they unveiled a new brand campaign `Express Yourself' to communicate Airtel’s vision, which was to make mobile communications a way of life and on enabling customers to make their point in the most expressive way anytime, anywhere and in any manner23. It also introduced in the same year, its brand campaign featuring the signature A. R. Rahman melody, which had set a world record with over 4 million single ringtone downloads. Later, their other brand ambassador Shahrukh khan was signed on. The rationale for signing icons like Sachin Tendulkar and Shahrukh khan was based on the studies which showed that Shahrukh Khan's core values of being a self made actor with his success and glamour and Sachin Tendulkar's dedication, innocence and performance acted as drivers of self-identification amongst the masses24. Also their nationwide appeal was a key factor which was in line with the presence of Bharti Airtel’s services across the length and breadth of the nation. In the year 2006, the brand ended its association with Sachin Tendulkar which was seen as a reflection of his falling rating based on his performance on field25. The company also used stars like Madhavan and Kareena Kapoor for its campaigns for brief periods. Bharti Airtel always used an advertising strategy that concentrated more on its brand and its values than its products and services. Some of the main factors that the organization brings out about itself through its advertising are its patriotism through its India-focus and Indianness, emphasis on customer value, trust and human bonding and its pioneering role. These factors also brought out very clearly in most of its campaigns, resulting in coherence between the organization’s values and its communication and also in its communication itself. Bharti Airtel bagged several awards for marketing and brand excellence as well as for distribution and service excellence over the last few years. In the year 2004, the Bharti Airtel was adjudged the "World Communications Best Brand of the Year". This was a prestigious award that recognized outstanding performance by companies and brands from across the world in the telecommunications industry. It also emerged as ‘The Second most trusted Brand' in the most trusted Brand 2007 survey conducted by The Economic Times (ET) Brand Equity. Bharti Airtel was acclaimed for its innovative campaigns in accordance with the changing times with different themes. Some of its innovative advertisements which captured the imagination of the country were the Airtel Showdown campaign featuring the icons Sachin Tendulkar and Shahrukh
23 24

Tendulkar, Airtel's brand Ambassador, Hindu business, Oct 08, 2003 http://www.indiantelevision.com/mam/headlines/y2k5/mar/marmam103.htm, accessed on 5 Jan, 2007 25 Airtel drops Tendulkar as brand ambassador, Press trust of India, November 02, 2006

Khan which proudly announced that Airtel was the largest GSM provider in the country and its latest television commercial to promote Google Search on Airtel Live, which had the look of a Hollywood period film26. The brand focus of the company can be understood from the chairman's quote "refine your processes, strive for dominance and build a brand", which was Exhibited prominently in the website. Its belief in partnerships was reflected in its positioning as an enabler and in some of the catchy slogans, the company promoted in order to cement its relationship with all stakeholders: ‘With You’; ‘Let's Talk Leadership; ‘Building Telecom, Building Partnerships’. Strategy Bharti's strength was grounded in its brand management, people management and customer management capabilities. These strengths were based on the turnaround process that the company initiated in 2002-03, when it went in for its unique outsourcing partnerships with the top firms of the world. These partnerships form the core of the strategy of Bharti Airtel. By 2003, Bharti obtained licenses for mobile operations in 15 out of the total 23 circles. It had a 25% market share of the total Indian mobile market and 6 million mobile subscribers. And by this time, the Indian mobile market had grown to be highly attractive with the number of Indians taking up mobile services was growing exponentially, and at the same time, highly competitive. There were seven major operators in the Indian telecommunications market: Bharti, BSNL, Hutchison, Reliance, Tata, Idea Cellular, and MTNL. There were also several strong regional mobile operators, such as Spice and BPL. Mobile rates were as low as three to four U.S. cents per minute, and ARPU (the average monthly revenue per customer unit) had fallen by 50% in three years as telecom providers fought to capture new subscribers27. With industry consolidation, the focus was switching from having a national footprint to having the ability to provide value-added services. Operators needed 2.5G or 3G technologies to provide those services, and the transition upward from 2G represented a major capital investment challenge for any telecom operator. Bharti Airtel adopted a sustainable business model which enabled it to scale up to serve the growing market and also differentiate its services to tackle the competition. The company also signed a managed capacity expansion contract with Ericsson to provide managed services and expanded its GSM/GPRS network into rural India in 15 circles. To achieve the objectives of sustainable business model and differentiation, Bharti Airtel went in outsourcing the build and management of its telecom and IT network to its key telecom network equipment vendors, Ericsson, Nokia, and Siemens; and to its IT equipment vendor, IBM. Thus after having roped in the best-inbusiness technology providers, it took upon itself the task of managing the brand and customers and in creating and marketing new telecom services. By passing on its entire IT system to IBM, Bharti not only benefited from getting a robust IT platform to handle scale but also drew a lot of value from IBM expertise in expanding its business capabilities across the board. Thus it was able to upgrade its technical infrastructure by having IBM handle functions like rollout of an ERP system and improving its intranet. In addition, a very comprehensive business intelligence and data warehousing capability were also introduced to Bharti which helped it understand better the market segmentation and customer usage pattern. This model of outsourcing became the oft-quoted example of IBM’s “On Demand” model of customer relationship and for its business transformation outsourcing (BTO) which IBM was seen to be promoting aggressively as the future of the partnerships. Bharti strengthened partnership with IBM further in November 2007, by signing a new agreement estimated at US$ 150 million, for using IBM’s expertise in implementing IT systems that will enable it to launch differentiated services in its
26 27

http://www.indiantelevision.com/mam/headlines/y2k5/mar/marmam103.htm, accessed on 5 Jan, 2008 Strategic Outsourcing at Bharti Airtel Limited, HBR, December 4 , 2007

new thrust areas of DTH and IPTV. This would also be geared towards helping to leverage the current channels of Bharti Airtel to deliver new services. Though outsourcing the traditional information technology was not a radical departure from the normal outsourcing practice, Bharti Airtel was the first telecom company in the world that handed over its network operations over to third parties, albeit to world leaders like Nokia and Ericsson28. It gave its networks, which were built by those vendors back to them to manage and told them that it would only pay for traffic that came out of the networks29. Bharti’s arrangement with the telecom vendors was made on the basis of installed erlang30 capacity and was structured in two parts. The first outlined the network design and installation and the second concerned the maintenance and running of the network once it was installed. The scale of the success of the deal can be understood by the vast business opportunities that it opened up for companies like Ericsson and NSN, as based on this deal, both added close to 150 similar clients across the world between themselves. A critical factor that has aided the success of this arrangement was the nature of engagement, which was reflected even in the model of payment which was based on a predetermined percentage of Bharti’s revenues rather than for services based on hours worked or some other standard method. That way, as Bharti grew and demands on its service providers expanded, their compensation would increase in lock step31. Thus the vendors had to be partners in true sense to Bharti Airtel as their fortunes were closely associated with that of Airtel. Though the deal proved to be a great success in terms of enabling Bharti Airtel scale up to achieve the required capacity and in helping its partners realize sufficient benefits in terms of the revenues and a new model which brought them many additional deals and businesses, it was not without its share of difficulties. At the start of the implementation of the deal, the management at Bharti had to contend with the high internal expectations from the deal as suddenly IT requests were pouring in from every office. This required a great deal of internal communication to clarify the limits of the agreement with IBM and the process that would be used to handle requests. Another chief difficulty was due to the different objectives of the partners from the deal which stemmed from the vastly diverse cultures at the two organizations. While Bharti had its start-up culture, IBM was quite the opposite and thus while Bharti looked at the deal to enable it to respond better in a high-intensity environment, IBM looked at it as long term arrangement wherein the objective was to generate a world class infrastructure. Thus there were many initial glitches in reconciling these two diverse objectives, but the discussions between the partners helped in sorting this to a great extent. Another important issue was the transfer of personnel from the IT and infrastructure teams to the partner organizations. The employees were skeptical about their future owing to their attachment to Bharti Airtel and the cultural differences between the two organizations. To take due care of this, the deal had a clause which provided the employees till two years after the deal, with an option to return to Bharti Airtel if they were not satisfied with their new workplace. Considering the uncertainties like the frequent changes in the telecom policy, this kind of an arrangement provided the company adequate strength to tackle them effectively. The level of trust that underlies the deal was the foundation on which the deal stands. Bharti Airtel even involved its partners in its internal strategy meetings, in order that they are aligned to the common goal of revenue maximization. Another factor that helped in improved engagement and trust was the long term nature of the arrangements—12 years with Ericsson and NSN and 10 years with IBM. These deals turned out to be a model for business partnerships and several Fortune 500 companies contacted the top
Bharti: A case study in how to manage outsourcing, BusinessWeek, October 15, 2007 Profile: Sunil Bharti Mittal, Financial Times, Nov 27, 2006 30 a unit of traffic intensity in a telephone system 31 Bharti: A case study in how to manage outsourcing, BusinessWeek, October 15, 2007
29

28

management of Bharti, NSN, Ericsson and IBM to know more about their successful outsourcing partnerships. It was also featured on the cover page of the Wall Street Journal as an Indian company that pioneered a phenomenon of “reverse outsourcing”. Refer to Exhibit 6 for the list of awards that Bharti Airtel has been honored with. The Road Ahead Bharti Airtel was the only integrated telecom player with a predominant emphasis on mobile telephony. It has a vision to be the most admired brand in India by 2010 on three accounts-loved by more customers, targeted by top talent and benchmarked by more business32. Having already overtaken China to become the fastest-growing market, with only 20% mobile penetration, the Indian mobile telephony market was poised for greater growth. The company planned to get the lion’s share of this market and hence made considerable investments in Network expansion, around $2 billion in 2007 to double the size of its network and cover 50% of India's population, up from 40% currently33. Manoj Kohli, MD of Bharti Airtel mentioned at a conference in Management Development Institute, Gurgaon on December 13, 2007 the objectives, “We should be able serve any location where a match box is sold”; “We would reduce the price to one cent per minute”. It aims to establish a presence in all 5,200 census towns and over 500,000 villages across India by 2010, covering 95% of the country’s total population34. The Cellular Operators Association of India (COAI) reported that significant growth opportunities existed in rural areas, where penetration remained around 1%, while worthwhile growth prospects also remained in urban areas, where penetration was running at 40%. Bharti intends to reach new customers in rural areas, and aims to cover 75% of India's largely rural population35. It also aims at servicing the rural market to stay ahead of the increasing competition. The company’s strategic focus was on further strengthening the Airtel brand through best-in-class customer service, backed by wide national distribution and the direction in the broadband & telephone business was to focus on the cities with high revenue potential36. Bharti was all set to establish itself in the emerging Broadcasting segment by launching its direct-to-home television service (DTH) and TV over the internet (IPTV) in 200837. The company also planned to expand its telecom operations internationally in select markets and in line with this, was expected to start its first international operations in Srilanka to provide 2G and 3G mobile services wireless operations by March 2008. The future looks very promising and the company looks all set to establish itself as one of the leading players in the world telecommunication industry arena. Will it be able to continue the remarkable growth it has shown in the past? And what are the challenges in maintaining or bettering its past performance? (Exhibit 7 gives the consolidated results for the period 2004-7). Manoj Kohli, the CEO of Bharti AirTel says catering to the demands of the three screens, the mobile screen, the television and the computer screen will be the major challenge facing him38. Sunil Mittal was surprisingly Indian in his expectation from Bharti Airtel, Well, Bharti should represent the innate goodness of the house of Tatas with the speed of Reliance. I would like it to be a hybrid of two great companies.39

32

www.bhartiairtel.in accessed on 5th January, 2008 http://www.businessweek.com/it100/2006/10.htm 34 Bharti Airtel Limited Annual report 2006-07 35 Bharti Airtel Limited Annual report 2006-07 36 www.bhartiairtel.in accessed on 5th January, 2008 37 Bharti Airtel Ltd, Capitaline Plus 38 Meet the lord of the rings Sunil Mittal, Economic Times, 19 Oct 2007. 39 Meet the lord of the rings Sunil Mittal, Economic Times, 19 Oct 2007.
33

Exhibit 1: Indian Cellular Industry Exhibit 1a: Market share as of 31-12-200740 Organizaiton Airtel(GSM) Reliance (CDMA + GSM) Vodafone Essar(GSM) BSNL(GSM) Tata (CDMA) IDEA(GSM) Aircel(GSM) Spice(GSM) MTNL(GSM) BPL(GSM) HFCL (CDMA) Shyam (CDMA) Total No of Subscribers in million 55.16 40.63 39.86 32.71 21.74 21.05 9.42 3.80 2.95 1.24 0.25 0.10 228.94 % 24.09 17.75 17.41 14.29 9.50 9.20 4.12 1.66 1.29 0.54 0.11 0.04 100.00

Exhibit 1b: Number of GSM subscribers and the year-on-year growth rates 41 Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Dec) Subscribers 794, 200 1, 070, 600 1, 599, 400 3, 107, 500 5, 478, 900 10, 480, 400 21, 991, 700 37, 378, 900 58, 503, 100 105, 430, 000 172, 219, 135 Annual growth 35% 49% 94% 76% 91% 110% 70% 57% 80% 63%

40 41

http://www.india-cellular.com/Market-Share.html, accessed on 4 Feb, 2008 http://www.coai.in/cellularstatistics.htm , accessed on 4 Feb, 2008

Exhibit 1c: Mobile subscribers and market share by region/circle (as on June 2007)42 Circle No. of service areas 4 5 Region/Circle Mumbai, Delhi, Calcutta & Chennai Corresponds to Andra Pradesh, Maharashtra, Gujarat, Karnataka & Tamil Nadu Corresponds to Uttar Pradesh, Punjab, Rajastan, Haryana, Kerala, Madhya Pradesh & West Bengal Corresponds to Bihar, Orissa, North East Assam, Jammu & Kashmir, Himachal Pradesh, & Andaman and Nicobar Islands Subscribers (million) 33.06 65.92 Market share 18% 35.8%

Metros Circles A

Circles B

8

66.63

36.2%

Circles C Total

6 23

18.31 183.92

10.0% 100%

Exhibit 1d: Licenses per cellular service provider (CDMA &GSM)43 Service provider* BSNL Reliance Aircel Vodafone Tata Teleservices IDEA BPL MTNL Spice communications HFCL Shyam Telelink *as on 31 March, 2007 Licensed service areas All India (except Delhi & Mumbai) All India All India All India All India Select circles Mumbai Delhi, Mumbai Karnataka, Punjab Punjab Rajasthan No. of circles 21 23 23 22 20 13 1 2 2 1 1

42 43

http://www.trai.gov.in/annualreport/AReport2006-07English.pdf, accessed on 4 Feb, 2008 http://www.trai.gov.in/annualreport/AReport2006-07English.pdf, accessed on 4 Feb, 2008

Exhibit 2: Reforms in the Indian mobile telephone industry44
Year 1854 1914 1950 1985 1986 1989 1992 1994 Event Telegraph facilities were opened up for public with the opening of a separate department of the government Postal department and the telegraph department were merged during World War I 196 telephone exchanges were absorbed from princely states with installed capacity of 13362 lines and 11296 working connections Two separate departments for post and telecommunications were created (DoP and DoT) Departmental reorganization with secondary switching areas as basic units Bombay (Mumbai) and Delhi telephones were separated to form Mahanagar Telephone Nigam Ltd (MTNL) Telecom Commission constituted Telecommunication sector in India liberalized and private sector is allowed to participate The National Telecom Policy was announced with the objective of universal service coverage across the country. Government began to offer licenses for the metros Delhi, Mumbai, Chennai and Kolkata. It was to be a duopoly with not more than two licensed cellular operators in each telecom circle, under a fixed license fee regime for 10 years. 19 more telecom circles get mobile licenses In August 1995 Kolkata became the first metro in India to have a cellular network Telecom Regulatory Authority of India (TRAI) was set up to provide effective regulatory framework and protect consumer interests through fair competition The National Telecom Policy was announced with additional emphasis on balance between universal service to uncovered areas and high level services to meet countries economy Amendment of TRAI Act to overcome implementation difficulties Bharat Sanchar Nigam Ltd (BSNL) created as a public sector unit from the department of telecommunications to operate telephony services across the country except Mumbai and Delhi Broadband policy was announced recognizing the potential of broad band services influence on GDP growth and societal transformation through tele medicine, tele education, e governance and employment generation

1995 1997 1999 2000

2004

44

http://www.coai.in/aboutus-history.htm, and Indian Telecom History Vol I http://www.telecomindiaonline.com/indiantelecomhistory.pdf accessed on 4 Feb, 2008

Exhibit 3: Major milestones in the history of Bharti Airtel Year 1976 1982 1984 1986 1991 1992 1995 1996 1999 1999 1999 1999 2000 2001 2002 2003 200304 2004 2005 200506 2006 200607 2007 Milestone Bharti founded in Ludhiana to make crankshafts for local bicycle manufacturers Bharti begins import of portable generators as the India agency for Suzuki Motors of Japan Bharti goes in for nationwide distribution & the GoI bans the import of generators Bharti Telecom Limited (BTL) gets incorporated, becoming the first in India to offer push-button telephones under the brand ‘Beetel’ Sunil Mittal launches country's first fax machines and its first cordless telephones. Bharti bids for a license for India's first mobile phone business in collaboration with Vivendi Bharti Tele-Ventures Ltd. (BTVL)) gets incorporated and services commence in Delhi Extends the services to Himachal Pradesh Bharti sells 20% equity interest to the private equity firm Warburg Pincus and uses this capital inflow to finance its next stage of growth. Acquires control of JT mobiles Extends cellular operations to Punjab, Karnataka and Andhra Pradesh and becomes the largest private sector telecom operator in India Acquires a 30.20% equity interest of Telecom Italia in Bharti Telenet and 18.8% from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bhati Tele-Ventures. Bharti acquires control of Skycell Communications Acquires control of Spice Cell in Calcutta. Bharti goes public and gets listed on BSE and NSE. With the entry of formidable players, its stock plunges to less than half its IPO price and the company gets almost written off A brief corporate restructuring was done to group all the operations under two divisions - Bharti Cellular Limited and Bharat Infotel Limited. Also rebranding of all cellular operations under a single brand ‘Airtel’ Joins the US$1 billion revenue club BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd merged with the company. Becomes the first telecom company to have an all India mobile footprint Vodafone, the world’s largest mobile service provider, acquires direct and indirect economic interest in Bharti Airtel The name ‘Bharti Televentures’ changed to Bharti Airtel Forays into the USA with the launch of Airtel CallHome service for Non resident Indians based there Incorporates Bharti Airtel (USA) Ltd, Bharti Airtel (UK) Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hong Kong) Ltd as a wholly owned subsidiaries of the company for providing international calling services and wholesale voice switching and data products in those countries Bharti Airtel becomes the fastest private telecom company in the world to reach the landmark of 50 million customers in a single country, within just 143 months of start of operations

2007

Exhibit 4: Airtel structure

Airtel

Infotel Services

Mobile Services (GSM)

Enterprise Services

Broadband & Telephone

Long Distance

Carriers

Corporate

Exhibit 5: Awards and recognition to Sunil Mittal Year 2006 2006 2006 2005 2005 2004 2002 2002 Award ‘Asian Businessman of the Year’ by the Fortune Magazine ‘CEO of the year 2005’ at the Frost and Sullivan Asia Pacific ICT Awards ‘Telecom Person of the Year’ by Voice & Data Institutional Investor ‘Best CEO, India’ `Best Asian Telecom CEO' at the Telecom Asia Awards 2005 Ernst & Young ‘Entrepreneur of the Year’ ‘Dataquest IT Man of the Year 2002’ Business India “Businessman of the Year – 2002”

Exhibit 6: Awards and recognition to Bharti Airtel Year 2007 2006 2006-07 2006 2006 2006 2006 2006 2006 Award Ranked third globally in ‘The Infotech 100’ list for best returns to the shareholders by the BusinessWeek Magazine ‘Best Indian Carrier’ in the Telecom Asia awards 2006 ‘Wireless Service Provider of the year’ and 'Competitive Service Provider of the year 2006' by Frost & Sullivan Asia Pacific ‘Competitive Service Provider of the year award’ in the Telecom Asia Awards 2006 ‘Most Preferred Cellular Service Provider Award’ in the telecom category at the CNBC Awaaz Consumer Awards 2006 ‘MIS Asia II Excellence Award 2006’ for Best Knowledge Management ‘Most Customer Responsive Telecom Company in India’ by the AvayaEconomic Times Global Connect Awards 2006 ‘The Nasscom IT Innovation Award’ for the Business Model Innovation for 2006 In the Indian MAKE study, which rated Indian organizations against a framework of eight key knowledge performance dimensions, Bharti Airtel was recognized for its organizational learning, and managing customer knowledge abilities 'Mobile Operator of the Year, India Award', 'Best GSM carrier in Asia' in the Telecom Asia Awards 2005, 'Best Indian Carrier' in the Telecom Asia Awards “Avaya GlobalConnect Customer Responsiveness Awards, 2005” for Best Customer Service in the telecom sector Forbes Global 2000 leading companies in the world for the year 2005 ‘Best GSM Carrier in Asia’ Ranked 2nd among the 'Best Managed Company' in India, in Asia's Best Companies 2005 poll conducted by Finance Asia 'Indian Mobile Operator of the Year 2005' by Asian Mobile News Became the top-most Telecom Company and was featured amongst the top three companies across the sectors in the ET 500 'Market Leadership Award for Managed WAN Services Market, 2005' by Frost & Sullivan ‘India’s Best managed company in 2005 by Asia Money Was featured in the Forbes’ ‘400 list of the Best Big Companies’ and was ranked 2nd among the 'Best Managed Companies' in India

2005 2005 2005 2005 2005 2005 2005 2005 2005 2005

Exhibit 7: Financials
Customer Statistics45 Total Customer Base (000s) Mobile Services (000s) Broadband and Telephone Services (000s) 2004 7141 6504 637 2005 11842 10984 857 2006 20926 19579 1347 2007 39013 37141 1871 30-Jun-07 44676 42704 1972

CONSOLIDATED FINANCIALS AS PER US GAAP Revenue (INR Million) EBITDA (INR Million) Cash profit from operations (INR Million) Income before income taxes (INR Million) Net income (INR Million) 48320 15968 13588 5976 5076 80028 116215 185196 30128 28132 16604 14978 43374 40862 25366 22567 74508 73070 48860 42571 59046 24466 26218 18901 15116

KEY RATIOS EBITDA Margin (%) Net Profit Margin (%) Net Debt to funded Equity ratio (times) Return to stockholders equity (%) Return on capital employed (%) 33 10.5 0.89 11.7 9.7 37.6 18.7 0.66 28 18 37.3 19.4 0.48 29.5 21.3 40.2 23 0.45 37.4 28.2 41.4 25.6 0.22 40.8 29.3

45

Bharti Airtel Limited Annual report 2006-07

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