Bharti F Pages March 2010 Final With Audit Report

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CONSOLIDATED FINANCIAL STATEMENTS

BHARTI AIRTEL LIMITED AND SUBSIDIARlE& For the years ended March 31, 200& and 2009

end the three month period and Year ended March 31. 2.01.0 With Report ofIndependeni Auditors

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1111111111'"

111111111111111111111111111 Ell ERNST & YOUNG

Mis Ernst & Voun" 6th I'"100r. HT House

113'20 Kasturlla Gandhi Marg New Delhi-110 001. India

Tel: +91 114 3633 000

Fax: +911143633200 www_ev_com/indla

Report of Independent Auditors

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The Board of Directors of Bharti Airtel Limited

We have audited the consolidated balance sheet of Bharti Airtel Limited (the "Company"} as of March 31 •. 2010 and 2009, and the related consol1dated statements of income and cash flows for the years ended March 31, 2010 and 2009 and three month period ended March 31, 2010 and the consolidated statement of stockholders' equity for the year ended March 31, 2010 and 2009 (collectively, the "March Financial Statements"). These financial statements are the responsibility of the Company's '-managemenr."· Out' . responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the unifecr'srafes~ Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for deSigning audit procedures that are appropriatedlO),. the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in tI'Tlf"c' . financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audite--"· provide a reasonable basis for our opinion.

In our opinion, the March Financial Statements referred to above present fairly, in all material respects, the consolidated financial position of Bharti Airtel Limited at March 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for the years ended March 31,2010 and 2009, and three month period ended March 31, 2010 in conformity with accounting principles generally accepted in the United States.

As discussed in Note 14 to the consolidated financial statements, the Company adopted ASC 740 (Accounting Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty.'irv"· . Income Taxes"), effective April 1, 2007.

April 28, 2010 New Delhi, India

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BHARTI AIRTEL LIMITED AND SUBSIDIARIES

Consolidated Financial Statements

For the years ended March 31, 2008, 2009 and the three month period and year ended

. March 31, 2010

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Bharti Airtel Limited Consolidated Balance Sheets

(Amounts in thousandsof Indian Rupees, except share and per share data and as stated otherwise)

As of" As of As of
M ..... h ::11.2009 M .... ~h 31.2010 Marrn 31. 2010
(Unilud.t"d)
A_ETS (UEiD ODD's)
Cash and cmh equlv.alent-s as. 11~144".jI'16 as. 13,902,718 USC 307,991
Accounts recelvabl .. , net of ~Iow...., ... for doubt lUI debts 18,261,554 1~1"57,t_'1 ~04,767
Llnbilled r .. cavables 10,266,472 10 .. '577,695 2341~5
Inventories 1;162,675 48~,SIS5 10,71~
Short tQrm nvas:tments 37.!:125,345 63,1:30,97S 1,398,~
Oeferred taxes on hcorn8 8,910,355 10,120,630 224,20:;
Oerlvatlve flnandCli e-rstnsnents :l.1_S4I4,8SI5 :3~47S,1S0 77,053
R.e.trlcted cash 94,288 ~,OQ7 2,lQS
P,egald 8IIP8rn&1S and oth. currant as.ets 251,956,572 21,329,303 472,:;14
0 ..... !tom noIatad porU ... 15,121,820 2,467,0'5i =:i4~e53
rotal cunant A,Q-sets 144.079,683 13g,::I46.BS!i 3.CJ86.ggL
Property,and ~t. net 405I,1a5,672 443,807,977 9.6::11,612
AcqUIred Int~bIB assets, net 13,309,!500 1.!5,90qJ44~ ~2,336
Gt>"dwlll 27.054,057 36,770;573 914,590
Investment In Jo.'1t ventures i27,727 171,832 3,S07
Restricted c.;.s:h. non-CUR'ent 11,913 292,5(;9 6,~O
Other asset; 10.230,013 10,113,556 224,049
TDtal As ... ~ Rs. 603,9"17.46:5 Rs. 0"CI,"'I07,747 USD :L4.32D,D"~
LlABlUT1ES AND STOCKHOLDERS' EQUITY
Current Llabilltl_
shOl't-_m borrowhQs and ClJrTSnt portion of long-term debt Rs. 54,,907 .. 794 Ro. 17,165.7:24 U5D ~,277
Trade ,payable'S. 19,770,942 :21,372,391 473,469
Equprnent 5uilIJly IJaval:Jle5 02 .. .3:58 .. 157"" 11",7315 .. 882 924/610
Accrued 1liNl:j).~t; 31J35B.L5S 29 .. 929,541 663.016
Une.i;lrnecl Income 30,911,601 27.L19,767 I5m,7!:12
lklearned Income - l.-defeaSible ~ght to use sales 291,!;Il1 291,5ll 6,458
Derivative """;,nclal ~tn..rnent5 49a,91Q 662,306 14,672
pUG! to re1ated partie; 39,711 36,670 812
other currerlt'llabIlrtes 9,147,823 .... 1:.30"'750 202,275
, Deferr;Bd texes QI'l' ~ 36 656",921" 1 ..... 775
Total Cu,.. .. nt Llabilltle" 217 ;19!i.16!3 148.:1'l1.45~ ::1.281.155
WYIg·t8rm drobt, net of current portion 53,992,5Ofi 47,452,5:39 1,051,230
Oeferrecl ta.lI~ on Income 7 .. S!S6J1121 11,329 251
u"e .. ........,! income - InctafeaolblQ right to u= ~"QJ; 3,330,49:3 3,040,9150 67,~5
Other i.!ibiltles 7,234,067 S,603,59L 12~,1351
Total LI .. blllt ..... 2B9,298.3.56 204-t2~g~7a1 4,524,141
COntlr.;iencies and Cdmmltments fR_AIoht ,27)
Equity
Stgcktmid"r.- Eqult.,
Ce:orn!"TlOn stock~ par value- R.s.5 per share 19,9Q2,3ge 18.11'997,650 .... 20,639
, (5,tXJO,OLJO,O(JO M1IJ/ty ~.JiJ~ ~ 3,~4?R592 imd
~7P7.S:llo,.O&I6 DuUt~~P"" .. _A$ 5p~ -.. ~ Dr
~ si; '2009'""" ~h :J1, 20.10,. ~tIVeIy)
SUbscriptton. u::iIc8lvad In .adv.at"'IICS 2,932
Additional pal:t In ~alJltal 74.102j19re 97,7-10,,781 2,155.2a~
Traa:sury stock (4,.190,490 md 3,.130.495 .D'M6Ich 3.1, 2rXJ9 (107,~64) (00,399) (1.791.)
,.."o~h U 20.10,. r~tAI6Iy, m t'<Ut)
R.etaklad eiirnln'!il~ 210,663,4£1£1 297J2 ... 7,-o17 .... 6~5S5,o.13
Accumufatad oij1E!r col"!"lPl'shensi\ls ~o:Ime 300,702 (196,913) (4.362)
TDtal Btodtholder~' EqultV 303,944;'5Iaa 413,5!ilS,593 9,l.64,790
N~ ccntro~ng lntB(sst 3SJ49S,3?:a 631.1.34
,Total EJ:jUity 442.187,_5 9.795,924
t~1 LIabilities and EqUltl' RS. 646,4D7.74 U'BD 14,320,06:5
an Intlg'al part of IIIese consolidated flnanClal SUllemenlS, •

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CEO

Gurgaon, india April 18,2Il10

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• Bhartl Airtel Limited
Consolidated statements of Income
• (Amounts in thousand~ except share and per share data and as stated otherwise)
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Ended
• Manh-91c2[}OO--Marthgl,2009-Mmh-91,-'1010-March11,2(J10--March11;-2111D
(Unaudited)
• RerenlJllS (UsDOOO'sl
SIMes lis. 269,002,633 Rs, 356,250,365 Rs, 98,B59,1193 Rs, 300,1132,771 u:v 8,640,513
• ~ rijlt to U!l!s;S ~36,m l,fB7,S47 1,113,512 5,214,047 115,9J8
~ OW,416 1,767,fJIj 395,422 903,411 O{),OH
• loti RBVellle5 2711,249,348 369,615,517 100,558,027 396.150,229 a.n6,1l3!1
Operating El'DeI1ses
• CO:!ts of sentes ·l52,551,2'-I 213,:03,25:1 61,Q25,912 237,59l,67ti 5,253,'1<14
• Costs of EtWra1I Sol9s 6f/J,727 1,<i48,03B 342,711 715,149 15,843
seq tjEIl!I'aI nl admstJaltlel!llEflSl!S 4O,S81,1ti5 ~,~7,~ 16,4!lJ,S03 93,(l32,IN2 1,285,619
• J!re.q:JeralirJtmIs: 117
lotal CfJeratingEl'DerJSeS 193,793,95\1 21i'ir'i18,1140 78,265,416 29ti,33~,B67 fir'i64,906
• OperltifgIlIDme 76,455,389 lIM,D96,677 22,2!l2,fi01 g9,elO,362 2,2il,l29
• IIltaesI ffimj 1,713.207 16,Dli,m 5,029,723 18,215,788 403.540
intBrBSI8Il8lS8 4,053.699 27,617,939 3.193,026 12,433,786 2/5,'1<19
• 5hfi of (gah) IIJsses II )Jilt vamres 917 713,154 (2,610) (292,265) (6,475)
OIIErimrli 2,740,479 l,W19 4~,2lj 1,274,6n 211,238
• r.b1 cpel'ati1g expetaI:; 317,416 219,920 2,6':!J 191,323 4,017
• Income Before Iilcome {axes . 16,537,1J43 93,on,956 24,585,515 106,!l71,!IIl3 2,369,916
!o:ure till experm 8,378,110 6,614,632 . 3,451..3201 13.958,115 3')9,218
•• NatInmme Rs. 69,158,933 IU. Bli,458,324 Ri, 21,134,191 Rs. 93,o19~ USO 2,oOO,69ll

• NetrmreattrbJt<b1e to 1m tan1rdi'Ig ilteert 1,150,746 1,159,0{)1 583,615 1,r:m,m 44,169
~ i'1raIl3 attrfIIt<tE to Imti 61,101,181 84,691),123 2O,5!lI,S7Ii 9l,02ti,D91 2,Olfi,529
• . NetJnoome Rs, 66,151l,93l Rs, B6,4511,324 IU, 2i,134,191 Rt. 93,019,BfoB lJSO 2,060,691)
• Earnings per share
• lIN: Rs, IHoU As, 2234 As, 5.'12 lis. 2-1,00 USO 0.532
Wed Rs, 17,65 Rs. 22.32 Rs, 5.'12 lis. 23,99 USIJ 0.531
• Weighted 8~~ I1II!IbeI' of.mares used In OOIIllIUting e.9rnln~$ persllare
wadtal ~rWb!:f lIf umJUlsliel (JJtIwm:Js) 3,769,713 3,791,881 3,793,748 3,793,054 3,793,054
• weltled 3verag;1 rurta of clrted k6 (tT tInMlds) 3,JIlj,'2fil 3,794,333 J,793,1IiB 3,794,125 3,794,125
The ao:<JII1Il'Inying ~ob!s form ;,n 1..reg",1 ,,,,,I: of th8so! rnnsoIIdottd flnandlll statements.
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Srlbnth Balachand".
• Chief Financial Offlc:er
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0 Gurgaon, india
A ~128 2010
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Bharti Airtel Limited

Consolidated Statements of Cash Flows

(Amounts in thousands of Indian RlJ/JOOSJ except as stated otherwise)

C8§h flows from gperallng sctlvttes Netnol11ll

Adjustml!l1ts tn reconcile net lncDme tD net tash prwlde;d bV operating actIvllles:

Ilsp'sclatm NJd ~rmlUllon 03fBred lax eopEII168/ (b<n3IIt) snn ~f bas n 101'\1 ¥«lbn

l.o8se9! (gan) rn salli of~ty a'ld llIJl~ment ~a:crete:I cin·FCC8e

51Dd<basad co~

U'reatl!i!d fa~ valle Iot;a I (gal'\) <nl1adO;i!leCU"1tles eah on sale of*«t IBrm ~rnne

Ur6a1l<ed ftrelJ1 BI.dlin;!B (g;iTJ)/ bn (flet) Pro'Itslon few tlrfil~ment ofreCel\l<i!oo a'ld adlonms DeI!t Cl'g~cos1s ~

Far vaw kiss I (gah) 01 derl\latl¥e& n odler Inorclal ~5 Mmrityhllnsl

Jrdo ..... 1l1e r~ 10 use ",,00·

~ &'om Ir1cIafusblt rflt1t to _""lao Changes In _ts and labilities

Aa::rU'1ts recel\l<i!!e

lrWntJrles

Ikblied I'ElC8Nabtes and otEr anent assets Trade ~abiee

Arow;;I~

I.hImlad halme and otIler tlJ'rent bblillm 9l!rt lerm Il\IeStlJIIJlIs

os.... fU).ttrnI1t 11ab~1IIe3.

Ncnru'IW1t assaIs .

Due ID Ilium lSiaEd.parttes, ret

Nat ~8Sh ~vldod by oparstng actJvlUes

Qtsh fkIwce 'Wm [pygrtlng apt"iitiea PtsdIasI!of~a'ld ~~rtS1t

~ &-om S<l1e ofpropertr and a;rJ!pment IIcqUIaI&n of htao;Jble a=ls NaI-o.milt~

_~lEdtash

salei' iJ'I,rdl&ss) ofhlnlt n.bht venbre li:a1ce enIry fees

Proceeds tom sale of sbIka h Mh!~

cash patl fi¥ iDfJlsltto of 9btlWBs, net of.ash acqurecl- Talel11!da c...h pat! few~tsl~ of ..JJst;llarlao, net of<:OSh ~- W~t;I

Net cashussdlrtlnY8stlng activities .

[js&b lIgws[rgmflnimdlJp act!yltle$

Net mOYemri h (aSh tfi.dli IIriI b;ri( overdrift f'roce9js fi"Omlssuari:e of ~m 1:arowO;ta REpayRBlt of sluMBrm bQrrowrgs

I'roceIIdi Ii'om~ of IIing-1arm 1mowO;ta Repa)'II81t!lf ag,n:rJll txrrow~ ~ ra;etved IIad1iHB

I'roaieds.fi'om amn:1Ie of sID:I: rpII!m

cash pat;l by rnmrll)'tIJ a!:1jIl~ rl!tllll, h:reaso h -Itf Share DIloIBdPald

ca;hpat;l ti:Ir debt ISlItJe costs

Net cash pro~bV lnancing actlllalas

. Net (decrea8) /Increase kt cash and cash eqUivalents duiillll the period Adl: B:.i>IInl ,llS.M1he BallIRt8 as at the en

GtJrgaOll, India ApJiI Z8, ZOIO

Re. 67,Il00,197 Rt-. 9'1,699,123 Re.
3II}121,725 ~6,683.7S2
(35,8014) (3,795,422)
917 713,154
6'1,827 8,7\14
1.,311 l,059
m,D22 1m,2!B
(S,Im) (112,12-1)
(_59O,m) (2,592,360)
1,2<7,[1204 111,107,973
3,2a9,S67 3,694,538
273,149 266,S37
(903.942) (11,050\,143)
1,150,7<16 1,759,:201
(43fI,2!l9) (1,~,"m
100,5$ 1.,3J6,036
(6,9:37,940) (6,196,396)
(23D.L53) 119,620
(16,9!>I,693) (3,690,228)
1,825,619 338,:356
5,B17,~ 11,B.l5,296
l1,417jll199 7,092,913
(45,439,600) l2.934.fill
555,9111 79-1,995
(l,149,1SS) (D,:JJ6,2-IB)
381,737 (13,449,<00)
51 ,!!44,o79 140,431.751
(l26.257,949) (H5,129,471l)
12J269,945 2,00;,453
(2.195,101) (1.2t9,696)
m,m
44,787 46,i7:2
(58,974) (2II,2IJ'J)
(455,902) (27,m)
20,2:'11,599 1,186,500
(5,358,917) (106,800)
(lDl,2!!(],3!Dl [14:3.793,134)
2,226,506 ~297,182)
2,229,«>3 7,609,535
(1,'i54,094) ~229,403)
5D,S61,6'lS 19,3111,9O!i
(9,673,161) (14;394,218)
12,318
m,291 198;279
154,938
(]5?,2'30) (W,o;ffl
43,549,668 . 7/l?9,7SS
(006,636)
7 453 632
Rs.67769% Rs. - 6-

three month Year cmt:Ied Yerwended
ped;;UeifdOd March 31, 2O111 Mardi 31. 2010
March 31, 2D1D
(tmllUdlted)
(USDOOO's)
2O,S5O,576 Re.· 91,026,091 , I.a) 2,0l6,529
15,599,993 SlJ,06S,7:32 UlS,5Dl
(1,418,191) (,II, l86,4.36) (181,351)
(2,6W) (292.265) (6,475)
2Ci4,1iO'I 454,l36 10,061
2,0&1 %
329,395 1 .. 392,282 30,9«
3oIS,2ffi <5'0,206) (12,100)
(079.341) (1,879,763) (41,643)
(3,782,917) (13,544I,Zi9) (,m,~)
447,205 5,054,957 111,!l9oI
54,559 :1155,1127 5.839
2,S20,317 8,<I<I6,45!I 187,117
5113,615 l,fR3,m 44,1t.9
(I;03,5!2) (5,<14,0<17) (115.~
1,205,500 4,Il22,OCIJ 106,82:3
(1162,2fr1) 1,356,122 30,264
312,640 479,910 10,607
(517,041) C,~,83J 145,211
O,na,e41) (520,092) (11,522)
S34,'i69 (,l,~.371) 04,200)
(4,417,S3II) (3,544,6'14) (78,526)
8,875,ID7 (22;775,601) 1,S04,553)
(<aJ,637) (1,i92,IIOt) (39,7l7)
(lrIl,E) (112,683) (2,496)
e,495,078 12,939,888 'i!ffl,7fN
36,%7,669 132,148;003 2,g27,533

~,:m.619) (101,693.1i04) . (2,252,940) .
220,1112 412,'lCiO 9,149
(3S,S28) (602,379) (13,345)
(l) (1)
3,753 1,005 22
(OO,rm) (l,Q!I4)
(13,195) (l.,D35)
(J.164) (J.164) ~!
(20,115,747) (102.O<!6,91B) (2,260;619)

190,631 (l,neJ,SOO) (09,3<17)
4,239,030 15,874,551 351,674
(3;o:D,169) (17.3S7,~4a) (3&1,5<6)
0,138 .1£0
~ (9,4ffi,774) (1!1,859,S2a) (439,1150)
(39.013) (2,~ (e5)
n,7'53 194,348 ",as
(4,442,114) (911,407)
m.lD?) @!!!l
(?,98!!,492) (27';343;052) {iSIIS,7S61
Ol,099
246.9'J1I •
USD 3D7,9Yl •

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Consolidated Statements of cash Flows

(Amounts in thousands of Indian Rupees- except as slated otherwise)

Supplementary information to consolidated statements of cash flows Cash paid during the period:

V_ended Vearended Three month Vearerdi!d Vear6llded
Marth 31, 20118 March 31, 2009 pll'lod ended March 31, 2010 March 31, 2010
March 31, 2010
(1M1!IUdIb!d)
,(11m Doo's)
Irmmetal! Rs. 9,321,1~7 Rs. 12,838,132 Rs. 9,789,23'1 Rs. 23,320,726 USD 516,631
Towm AaJ.il9ltion ciSlbskjI<fes - Warld 13,~12,l7S 1~,912,I7S 3IlI,201
InlerEBl 3,9':l9,1l5fi 4,:119,539 722,9 ~CJ54,345 97,002

Non - cash Items:
YetJ#'ended Vearended Thr ...... onth V_ended Vear_dad
""8.<11 31, 2008 Maret. 31; 2009 parlod ended Man:h 31; 2Dl0 March 31, 20ID
March 31. 2010
(Un.lJItted)
(USDDDD'lio)
comrrm o1rd: IsslEd NI CD1'i8I'tIal ofFCCBo Ro. 17,243 Re. 934 Re. (1) RI, 6S3 lJSO 14
,1rOCrQaSOa III APlC on dlkJuon 90111 III 6.J:IotUary 22,1~,cog 22,140,009 4«1,474
IncreaIie'III AP!C m o:rn98m ofFCals 411,899 22.921 16.681 37lJ
Doaeose III AP!C on -.:Ioe ofESOPs 1,450 4,010 . (S.~EO) (9,695) (193)
oeaease to T.......uy S1OO,DI'l EruIf<oae of€9OFs (1,4:10) (~,DlU) ~~(jIJ 8,_ 193
_onAI'D Ro, ' 156,051 Ro. m,m RO. :!l,_ Re, ~16,365 ' USO ~,793 The accompanying notes form an integral part of these consolidated financial statements.

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• Bharti Airtel Limited

Notes to Consolidated Financial statements

• (Amounts in thousands of Indian Rupees, except share and per share data and as stated otherwise)

•

ill ~l~. __ ~BA~C~K~G~R~O~U~N~D~ ___

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a. Incorporation and history

Bharti Airtel Limited (Bhartl Airtel' or 'the Company') was incorporated on July 7, 1995 under the laws of India for promoting investments in telecommunication services. Bharti Airtel together with its subsidiaries is hereinafter referred to as 'the Group'. The Group is a leading telecommunication service provider in India.

The Group's principal shareholders at March 31, 2010 included Bharti Telecom, Limited and Singapore Telecommunication International pte Limited.

The shares of the Company are listed on the National Stock Exchange ('NSE') and the Mumbai Stock Exchange ('BSE'), India.

b. Description of business

The current businesses of the Group include:

• mobile services

• telemedia services (formerly broadband and telephone services)

• enterprise services

• passive infrastructure services

c. Industry overview and licensing structure

The key regulations governing the Group's businesses are detailed below:

Mobile Services

In 1994, the telecommunications sector was partially deregulated for Cellular Mobile Telephony services ('CMTS').

The licenses were Issued by the Department of Telecommunications ('DOT) to the Group upon payment of fixed amounts as annual license fees and were valJd for an initial period of 10 years. In addition, the Group was required to pay a fixed amount for wireless and spectrum charges to the Wireless Planning Commission ('WPC') - a section of the DoT. This regime is collectively referred to

herein as the "old license fee regime". ~

The Government of India ('Gol') approved the New Telecom pOlicy, 1999 ('NTP-99') on July 6, 1999, which came into effect from August 1, 1999, providing for the payment of a "one-fime license entry feel' and annual fees payable under a revenue sharing arrangement. Also, the license period was extended from the original 10 years to 20 years. This regime is collectively referred to herein as the

, "NTP-99 license fee regime".

For the existing mobile and fixed line services operators, license fees payable up to July 31, 1999, under the old license fee regime, as adjusted for the notional extension of the effective date of the original licenses by six months, were deemed to be the one-time license entry fees. New licensees would pay a one time upfront fee plus the revenue share.

The Group provided its unconditional acceptance of the terms and conditions for migrating to NTP-

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-t. __ -----~I"'-n'--'S=e_p-tember 2001[ the DoT fixed the license fees pgy..a.bIf___bY- the mobile service providers aU2%, __ ~_

of adjusted gross revenues ('AGR'), as defined in the regulation, in category A drdes, 10% in

category B drdes and 8% in category C circles. The rates for payment of license fees have since

• been further revised and currently a licensee is required to pay 10%, 8% and 6% of its AGR for A, B

• and C categories of circles, respectively.

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ShaRi Airtel Limited


(Amounts in thousands, except share and per share data and as stated otherwise)

Telemedia Services (formerly Broadband and Telephone Services)

In September 1994, the Gol announced guidelines for private sector entry into the flxed-llne telecommunication services, whidl provided for the granting of licenses for the provision of fixed line services to one new licensee in each of the telewmmunication circles. Within each Circle, the new licensees would compete with Mahanagar Telephone Nigam Umited ('MTNL') (in Delhi and Mumbai) and Bharat Sanchar Nigam Limited CBSNL') (in all other circles). The licenses would be valid for a period of 15 years. The Group obtained the licenses from the DoT to provide fixed line services in Madhya Pradesh, Delhi, Haryana, Karnataka and Tamil Nadu circles. These licenses were granted by the DoT on a non-exclusive basis.

The revenue share percentages have been fixed by the Gol at 10%, 8% and 6% of the AGR for A, B and C categories of circles, respectively.

Amendment to NTP 99: Introduction of a Unified Licensing Regime

In November 2003, the DoT dedded to issue licenses for Unified Access (Basic and Cellular) Services. The services under UASL Ii~nse cover collection, transmission and delivery of voice/nonvoice messages in designated service areas and include provision of all type of access services

utilizing any type. of network equlprnent, .

ConSidering the option available to migrate to the new UASL regime, the Group migrated its CMTS licenses in Chennai, Deihl, ·Kolkata, Mumbal, Gujarat, Haryana, Himachal Pradesh, Kerala, Madhya pradesh, Maharashtra, Tamilnadu, uttar Pradesh (West), Andhra Pradesh, Karnataka and Punjab to UASL after obtaining the necessary approvals from the DoT with effect from April 27, 2004. Further, the Group surrendered Its Basic Service Ucenses In Delhi, Haryana, Kamataka and Tamilnadu effective October 1, 2004 and in Madhya Pradesh with effect from December 12, 2004. The Group continues to provide basic services in these circles on the basis of the UASL that it had received for these cirdes resulting from the wnverslon of the mobility licenses. The service area, roll out obligations, bank guarantees and revenue share payable as license fees by a UASL licensee are the same as specified for a fourth cellular operator.

National a~d Intemationa, Long' Distance

On November 29, 2001, the Group entered ilifo a license agreement with the DoT, on a nonexclusive basis, to install, operate and maintain national long distance servkes ('NLD') within India. The license is valid for a period of 20 years extendable for a period of 10 years. The Group commenced data services in December 2001 and voice services in January 2002. In addition to the entry fees, the annual license fees were in the form of a revenue share at 10% of its AGR plus a prescribed contribution towards a Universal Service Obligation Fund ('USO') with a maximum fee at 15% of Its AGR. The rate for payment of license fee has been revised from 15% to 6% with effect from January 1, 2006.

In March 2002, the Group was awarded a license to provde International Long Distance CILD') services. The license is valid for a period of 20 veers. The Group commenced ILD operations in July 2002. The rate for payment of revenue share license fee has been revised from 15% to 6% with effect from January 1, ·2006.

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Bharti Airtel Li mited

Notes to Consolidated Financial Statements


Interconnection between Op-""e....,ra"_,t.,,o""rs"'-- __;_ _

The Group has entered into interconnect agreements with BSNL and other private sector operators for terminating outgoing calls from its network. The interconnection agreements with BSNL require the Group to make payments based on the number of points of connectivity with BSNL's nelwork. The Group's interconnection agreements with .other private sector operators are based on mutually agreeable terms and conditions.

Interconnection between operators is now governed by the Interconnect Usage Charges ('IUe') Regulation, released by the Telecom Regulatory Authority of India ('TAA!'), whIch defines charges payable on the principle of origination, carriage and termination. The IUe Regulation has been revised by the TRAI from time to time.

d.

Business

The Group conducts its businesses through Bharti Airtel and it's directly and indirectly held majority owned subsidiaries, whidl are as follows:

Entity

Bnftrt. CeUul,.r Umlted ("BeL") {r,"er (I) ,.nd (II) b~low)

Bnartllnfotel Umlted {"en.") {refer (I) lind (III) below) ahartl Alml Services limited (formerly Shortl Comtel

. limitQd) ("BASl") (reFPr (I) below)

Bhartt Aqu.ne! Limited ("BA,QL") {rafer {II) below} IJhertl Hexac'lm umtte.:l {"H~com") (refer (Ill) below) .

S"tmm Brn,.db"nd equipment limited (ftSUeL') (refer (1\1) below)

9flertl Br<»dband Umlted {"Bill"} {refer (Iv) below)

Netwotk 121 Umlted (refer (ivY b<!low)

8~rti Jnrretel Umited ("al!-')(refer (II') below)

BhllrU lnfratel VanturilS' Limlted("Bl\Il") (refer (v) below) .

Bfl!lrtl Airtel (USA) limited Bhllrtl. AlJ1ei (UK) L1mlt4d

Bhartl Alrtel (OIn~dll) Limite;! Bh8rtl Alrtel (Hon{lklinu) Umlted

Bharti. Airtel {Sil1llapo .... ' PVt Umlbld (BASPL)(refer

~ (VI) below)

Bhllrtl Anal Lilnka (Pvt:) Urrllted

IlKertf A!rtel Holdings (Singapore) Pte ltd (refer (VB) below)

Bh"rtllnfrlllel Lanka (I'Itt}Llmlted (refer (1Fi1i) below)

8hartl Telemedle Limited (IX)

Wa.ld T ...... rom Intam"U"",,1 limited ()!>

ahart[ Intem!ltionel (Singapore) pte. Ltd (xl) Bhllrtl Alrtal Inmmlltionlll (!'fatherlands} B.V (Xli)

Principal Serv'lce

Pareent::age h .. 1ei .... of

Marcil 31,2009 Marcil 31. 2010

eroedb~nd end Talephone 5eMc:u Admlnlstretlvesupport to Bh"rtl Alrtel and tradIng ~ctIvlljes

L<lndlng stlltlon Mobile AlVlces

100

100

IIA 70

1'1" 70

Enterprise SeNlces COrporiIW Enterprise Servlc;es COrporata

Submllrlne ~ble SystEm PaSSIve infrastructure Services

NA

NA

NA

100 92':>1

loa 80.09

~sslve lnf ra slrudure

Stn'Vlc;ore It1te~oMj cdlnB card JOtI!mallOl'lel c~lIlng eere lt1tern~tl.oll~j cloiling eerd Interruttionel'celUng card Inlernlltlonal·Galllng«lrd

~

92.51

100 100 lOO 100 100

100 100 100 HIO 100

Mobile Service!

InVestment comp"ny

Passiw> IniTl)structure

100 100

UIO 100

100

100

Direct To Home Venture Mobile service In Bangladesh

Other lnWstrnent Comp~ny Other Investment Compcany

95 70 IOU 100

i) BASL was incorporated on December 5, 1997, as a wholly owned subsidiary of Bharti Telecom limited (BTL') under the laws of India. On 26 Marro, 2001, It became a wholly owned subsidiary of Bharti Infotel Umited, which subsequently amalgamated with Bharti Airtel, BASt. provides administrative support to Bharti Airtel's operations and trades in VSATs and related equipment. BASL is consolidated in the consolidated financial statements.

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__ ---------'.!jii) BAOL was incorp-orated on October 3, 2000, as a wholly- owned subsidiarY- of Bharti Airtel,, _

under the laws of India; to build, operate and maintain a cable landing station for the fibre optic

• submarine cable system linking India and Singapore. On September 29, 2001, Bharti Airtel transferred its equity holdings in BAQL in favor of Bharti Telesonic Limited. Through an agreement

• dated January 16, 2001, Singapore i2i Private Limited agreed to hold 49% equity interest in BAQL, and on December 26, 2001, Singapore i2i Private Limited subscribed to these shares incorporating a

• 51:49 joint venture. Singapore i2i Private Limited had substantivepartidpative rights in the operation and management of BAQL till August 31, 2007 when Bharti Airtel acquired the balance 49% stake in BAQL. The appliCation of ASC 810-10-25 (EITF 96-16 "Investor's Accounting for an

• Investee when the Investor has a majority of the Voting Interest but the Minority Shareholder or

• Shareholders have Certain Approval or Veto Rights'') (,ASC 810-10-25'), had therefore precluded the col1solldatlon of BAQL by Bharti Airtel and as such, the investment in BAQL had been accounted for

• using the equity method till that date. In September 2007, the Group acquired the balance 49%

stake from Singapore i2i Private Limited and has consolidated BAQL since then.

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(Amounts in li1ot.Jsands, except share and per sha~ data and as stated otherwise)

Further, pursuant to Scheme of amalgamation of Bharti Aquanet Limited (BAQL) with Bharti Airtel, as approved by the Honourable High Court of Delhi as on September 17, 2008 which became effective on January 1, 2009 on receipt of Certificate of Registration of order of court from Registrar of Companies, Ncr of Delhi, all assets and liabilities and reserves of erstwhile BAQL were transferred to and vested in the books of Bharti Airtel at book value with effect from the effective date ..

. iii) Hexacom provides CMTS in the circles of Rajasthan and North East. The Group entered into a Share Purchase Agreement with Shyam Telecom Group ('Shyam') to acquire and assume its 67.5% jOint venture interest in Hexecom on May 7, 2004, additional 1% and 0.39% equity lntereston October 7, 2004 and September 14, 2006, respectively and a further 1.11% equity Interest on February 19, 2009 thereby increaSing its stake to 70% by March 31,2009. The Group obtained full operational and management control on September 10, 2004 and has consolidated Hexacom since

then. .

iv) Network i2i Limited provides the operation and provision of telecommunication facilities and services utilizing a network of submarine cable systems and associated terrestrial capaCity. The Group entered into a Share Purchase Agreement with Singapore Telecommunications Limited and Bharti Venturetech Limited to acquire the 50% stake held by each on September 28, 2007 and has consolidated the operations from that day onwards.

v)BIL and its 100% subsidiary BIVL provide passive infrastructure services. Pursuant to the Scheme of Arrangement ("the Scheme") between Bhartl Alltel and BIL for transfer of telecom infrastructure ('the Undertaking') from Bharti Airtel to Bll, as approved by the Honourable High Court of Delhi vide order dated November 26, 2007 , the telecom infrastructure were transferred to

and vested In sn.on January 31,2008, the Effective Date. _.

Pursuant to the terms of the Scheme, the Telecom Infrastructure, compriSing of wireless and broadcast towers, all rights, titles, deposits, Interest over the land on which such towers have been or are proposed to be constructed or erected or installed, all current assets and current liabilities (including contingent liabilities) relating to the towers and related telecom assets/liabilities, whether movable. Immovable or Incorporeal and all plant and equipment as forming part of passive infrastructure including electrical power connections has been transferred to BIL.

Leading international Investors have invested an amount of USD 1.35 billion in aggregate, towards 4,050 Equity Shares of Rs 10 each (of which 3,825 and 225 shares were issued as on March 31, 2008 and March 31, 2009. respectively) and 3,203,550 fully and compulsory convertible, noncumulative, unsecured and interest free Debentures of Rs 10,000 each (of which 3,025,575 and 177,975 Debentures issued as on March 31, 2008 and March 31, 2009, respectively), in BIL.

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On October 28, 2009, the Group converted 118,650 non interest bearing fully Convertible

Debentures into 11182,270 equity shares of Rs. 10 each at a premium of Rs. 993.58 per share. The

• remaining 3,084,900 Debentures are convertible Into equity shares of Sharti Infratel at September

, • 30, 2010 or earlier, at a valuation determined on the basis of Bharti [nfratel's net equity valuation as

of March 31, 2010. On March 26, 2010, remaining 3,084,900 Debentures have been converted into

• 39,120,640 equity shares of Rs. 10 each at a premium of Rs. 778.56 per share.

vi) BASPL was Incorporated on April 3, 2007, with Principal business of providing voice

• Interconnection, Prepaid International Calling Services, International Private Leased Circuits and

• VSAT Trading. BASPL was granted the Facilities Based Operator (FBO) license by the lnfocom Development Authority of Singapore (IDA) on July 6,2007.

• vii) On October 1, 2007, Bhartl Airtel Holdings (Singapore) Pte Ltd was incorporated as a wholly

• owned subSidiary of the Company for the purpose of making investments in other operating

subsidiaries incorporated outside India.

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viii) On March 4, 20081 Bharti Infratel Lanka (Pvt) Limitedl a wholly owned subsldlarv of Bharti Airtel Lanka (Pvt) Limited (a wholly owned subsidiary of Bhalti Airtel Limited) was incorporated to provide passive infrastructure facilities in Sri Lanka.

ix) During the quarter ended December 31, 2008, Bhalti Telemedia Limited, a subsldiary of Bharti Ailtel Limited launched the commercial operations of Airtel Digital TV (Direct to home Satellite TV service).

On October 23, 2009, Bharti Airtel acquired additional 55% equity stake in Sharti Telemedia Limited for a consideration of Rs. 73,800. Consequent upon the acquisition, the total equity interest of the Company in Bharti Telemedia stands at 95%.

x) Warid Telecom Intematlonel Limited ("Warid'') is a leading celiulClr mobile services provider in Bangladesh. Pursuant to an agreement dated January 12, 20101 Bharti Airtel Singapore (Holdings) Pte. lfrnited, a wholly owned subsidiary of Bharti Airtel Limited, acquired 45% stake in Warid Telecom International Limited, Bangladesh (Warid Telecom) from Dhabi Group for a total conSideration of USD 100. In addition Singapore wholly owned subsidiary has also subscribed 208,285,214 equity shares ofTK 10Q each ofWarid Telecom, towards additional 25% stake through fresh capital infUSion, for CI total consideration of USD 300,000. Accordingly Warld Telecom has become the subsidiary of Bharti Airtel with effect from Feb~uary 25, 2010.

xi) On March 18, 20101 5hartl International (Singapore) pte. Ltd. has been' incorporated in which, Bhatti Airtel Holdings (Singapore) pte. (a wholly owned subsidiary of Bharti Airtel,ltd.) holds 98.52% stake and balance 1.48% is held by Bharti Airtel Limited, for the purpose of other Investment.

xii) On March 19, 2010, Bhart! Airtel International (Netherland) B.V. has been incorporated in Which Sharti International (Singapore) Pte. Ltd. (a wholly owned subsidiary of Bhalti Airtel Ltd.) holds 98.90% stake and balance 1.10% is held by Bharti Airtel limited for the purpose of other Investment.

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ill ~2~._· __ ~S~U~M~M~A~R~Y~O~F~S~I~G~N~I~FI~C~A~N~TLA~C~C~O~U~N~l1~N~G~PO~U~C~IE~S~ _

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(Amounts in thousand~ except share and per share data and as stated otherwise)

a) Basis of preparation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ('US GAAP'). The significant accounting policies adopted by the Group, in respect of these consolidated financial statements, are set out below.

These consolidated financial statements have been prepared in thousands of Indian Rupees, the national currency of India. The consolidated financial statements were authorized for issue on April 28,2010 by the Board of Directors of the Company.

b) Convenience translation

The Group's reporting currency is Indian National. Rupees ('Rupee(s)' or 'Rs.' or 'INR')

The translation of Rupee amounts into United States Dollars is unaudited and is included solely for readers outside of India and has been calculated using the rate of USD (US$) 1 = Rs.45.14, the RBI reference rate as announced by the Reserve Bank Of India (RBI) on March 31, 2010. Such translations should not be construed as representations that the Rupee amounts represent, or have been or could be converted into, United States Dollars at that or any other rate.

• c) Use of estimates

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The preparation of financial statements in conformity with US GAAP requires the use of estimates and aSsumptions by management that affects the amounts reported. These estimates are based on historical experience and information that is available to management about current events and actions that the Group may take in the future. SignifICant items subject to estimates and assumptions include the useful lives (other than for goodwill) and the evaluation of impairment of property and equipment and identifiable intangible assets and goodwill, the income tax and valuation reserves, stock based compensation, the valuation of the assets and liabilities acquired in business combinations, fair value estimates, contingencies and legal reserves, asset retirement obligations and the allowance for doubtful accounts receivable and advances. Actual results could differ from these estimates.

d)

principles of consolidation

The consolidated financial statements of the Group include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. Operating - results of companies acquired are included from the dates of acquisition.

The Group includes in its consolidated financial statements the accounts of the variable interest entities ('VIEs') in which the Group is the primary benefiCiary pursuant to the ASC 810-10-05 (Financial Accounting Standards Board (,FASB,) Interpretation No. 46(R) "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51") ('ASe 810-10-05'). The Group consolidates entities not determined to be VIEs when it holds a majority of the entity's outstanding voting shares and control rests with the Group. Where the Group has a majoriW voting interest in an entity but the minority shareholders have substantive partiCipating rights, the Group accounts for its investment in the entity using the equity method of accounting in accordance with ASC 810-10-25 (EITF 96-16). The Group accounts for investments in entities that are not VIEs where the' Group owns a voting or economic interest of 20% to 50% and/or for which it has significant influence over operating and financing decisions using the equity method of accounting.

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e) Joint ventures

The Group's interest in joint ventures in which the Group has a majority Interest, but does not control due to the significant partidpatory rights of the minority shareholders are accounted for under the equity method of accounting and is initially recognized at cost, Under this method, the Group's share of the past-acquisition profits or lasses of the Joint venture is recognized in the consolidated statements of income and its share of post-acquisition movements in equity is recognized in equity. The cumulative post-acquisition movements are adjusted against the cost of the investment. Unrealized gains on transactions between the Group and its joint venture are eliminated to the extent of the Group's interest in the joint venture; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group's investment in joint venture Includes goodwill Identified on acquisition.

The Group's interest in jointly controlled entities is accounted for by the equity method of accounting and Is Initially recognIzed at cost.

f) Restricted cash

Restricted cash consists of deposits pledged with various government authorities and deposits restricted as to usage under lien to banks for guarantees, unclaimed dividend and letters of credit given by the Group.

The restricted cash is primarily invested in time deposits with banks. The classification of restricted cash into current and non-current is determined based on the maturity date of the deposits.

g) Cash and cash equivalents

cash includes cash. in hand, cash with banks and cash equivalents, which represent highly liquid deposits with an original maturity of three months or less. Government securities, treasury bills and fixed deposits with an odginal maturity of more than three months and mutual funds are classified as trading investments (refer Note 2 (i)) and are accordingly included in short term investments in the consolidated balance sheets (refer Note 7).

h) Allowance for uncollectible accounts receivable

The allowance for uncollectible accounts receivable reflects management's best estimate of probable losses inherent in the accounts receivable balance. Management primarily determines the allowance based. on the aging of accounts receivable balances and historical write-off experience, net of recoveries. The Group provides for amounts outstalnding for more than 90 days in case of active subscribers and for all amounts outstanding from customers who have been deactivated as reduced by security deposits or in specific cases where management Is of the view thatthe amounts are not recoverable. The Group provides for receivables outstanding for more than 105 days for site sharing debtors for passive infrastructure. For receivables due from the other operators on account of their NLD and ILD traffic, IUC-and roaming charges, the Group provides for amounts outstanding for more than 120 days from the date of billing net of any amounts payable to the operators pertaining to the same period or in specific cases where management is of the view that the amounts are not reroverable. Amounts due from debtors that have been outstanding, though fully provided, are evaluated on a regular basis by the management and are written off, if as a result of such evaluation, it is determined that these amounts will not be collected.

The Group's prOViSion for uncollectible receivables is included in sellingl general and administrative expenses in the consolidated statements of income.

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Bharti Airtel Umited



i)

Investments

All of the Group's marketable securities are acquired principally for the purpose of generating a profit from short-term fluctuation in prices and are accordingly classified as trading investments. All purchases and sales of such investments are recognized on the trade date. Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Changes In the fair values of trading investments are recognized in the consolidated statements of income. Interest and dividend income are recognized when earned.

j)

Inventories

Inventories primarily comprise VSAT equIpment, handsets and SIM cards. Inventories are valued at the lower of cost on a first in first- out ('FIFO') basis and estimated net realizable value. Inventory costs include purchase price, freight inwards and transit insurance charges.

k) Property and equipment

Property and equipment are stated at historical cost, net of accumulated depreciation and amortization. All direct costs relating to the acquisition and Installation of property and equipment are capitalized.

Depredation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets as follows:

Vears

BUildings

NetwQrk equlpm.mt Computer eqUIpment

Office furniture end @qulpment Vahk:fes

. Cu.sl:omer p<<imIHS 41qulpments Le .. S<I ho ld Imp.""ementa

20

3 - 20 3 Z!:I S

over estlm~ted subscriber life RemainIng pef'lod ~f the lease or 10 V"a~ whlcllevEIr IS less

Assets individually costing Rs. 5 or less are fully depreciated over a period of 12 months from the date placed in service.

Land is not depreciated. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses arising from retirement or disposal of property and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolldatedsteternents of income on the date of retirement and disposal.

~ ~.

Costs of additions and substantial improvements to property and etruipment are capitalized. The costs of maintenance and repairs of property and equipment are charged to operating expenses.

I)

Asset retirement obligations

Asset retirement obligations associated with the Group's wireless and wireline services cell sites, switch sites, retail and administrative location operating leases are subject to the provisions of flSC 410-20 (SFAS No. 143 "Accounting for Asset Retirement Obligations" and FASB interpretation no. 47 "Accounting for Conditional Asset Retirement Obligation'~. The lease agreements entered into. by the Group may contain clauses requiring restoration of the leased site at the end of the lease term and therefore create asset retirement obligations. The Group records the fair value of a liability for an asset retirement obligation in the period in which it is incurred and capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the estimated usefu~I .... li1i __

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. (Amounts in thoUsands, except share and per share data and as stated othelWlse)

of the related asset. Up-on settlement of the liabilitY-, the Group- either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

m) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of net identifiable assets of the acquired subsidiary or jointly controlled entity at the date of acquisition. Goodwill on acquisition of subsidiaries is disclosed separately. Goodwill arising on aCCDunting for jointly controlled entities or entities In which the Group exercises significant influence is included in the investments in the related associates/jointly controlled entities,

The Group adopted ASC 350-10 (SFAS No. 142, "Goodwill and Other Intangible Assets" (,SFAS 142')) which sets forth the accounting for goodwill and intangible assets subsequent to their acquisition. ASC 350-10 (SFAS 142) requires that goodwill and indefinite-lived intangible assets be allocated to the reporting unit level, which the Group defines as each circle. ASC 350-10 (SFAS 142) also prohibits .the amortization of goodwill and indefinite-lived intangible assets, but requires that they be tested for impairment at least annually, or more frequently as warranted, at the reporting unit level. Goodwill of a reporting unit is tested· for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

The goodwill impairment test under ASC 350-10 (SFAS 142) is performed in two phases. The first step of the impairment test, used to identify potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, goodwill of the reporting unit is considered impaired, and step two of the impairment test must be performed. The second step of the impairment test quantifies the amount of the impairment loss by comparing the carrying amount of goodwill to the implied fair value. An impairment loss is recorded to the extent the carrying amount of goodwill exceeds its implied fair value.

n)

other intangible assets

Other intangible assets comprising enterprise resource planning software, bandwidth capacities, brands, customer relationships, distribution networks, licenses and non compete clauses, are capitalized at the Group's share of respective fair values on the date of an acquisition. The methodologies used for valuation of these intangibles assets are as follows:

- Software is capitalized at the amounts paid to acquire the respective license for use and is amortized over ttle period of the license, not exceeding three years. Software upto Rs. 500 is

written off in the year placed in service. .

- Bandwidth capacities are capitalized at the amounts paid to acquire the capacities end are amortized over the period of the agreement subject to a maximum of 18 years.

- Brands are valued using the royalty relief approach, which calculates the fair value of the brand based on. the hypothetical future royalties expected to be earned on leasing the brand. The approach assumes that if the brands had to be licensed from a third party there would be a royalty charge based on the revenues net of marketing expense, which would be levied for the privilege of using the brands, Brands are amortized on a straight-line basis over the period of their expected benefits, not exceeding the life of the licenses and are written off in their entirety when

no longer in use. .

- Customer relationships reflect the estimated fair value of the customer accounts acquired from which the Group can expect to derive future benefits over the estimated life of such relationships. The customer relationships are amortized on a circle by circle basis over the estimated useful life of 40 to 52 months for VSAT customers.

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- Distribution networks reflect the fair value of the estimated benefit which the Group can exp-=.ect=::=to=--- _

accrue from the customers to be acquired using the acquisition date distribution network over the

next three years from the acquisition date. The distribution networks intangible assets are

amortized over an estimated useful life of three years.

- The fair values of licenses are valued using the market value approach, which detennines the velue of the assets by comparing the value to publicly traded comparables in similar lines of business. The approach assumes that the conditions and prospects of comparables in Similar lines of business depend on universal factors affecting market conditions.· The entry fee for the new operators is considered as an indicator of the market value of the license. The licenses are amortized over the remaining license period.

- Non compete clauses included in the agreements for the purchases of acquired entities are fair valued based on the actual and projected business plans. Under the agreements, the sellers and their affiliates shall not be in the business of the same operations, directly or Indirectly for the period specified in the agreements. These are amortized on a straight-line bests over the remaining period of license.

Amortization of intangible assets is induded in cost of services and selling, general and administrative expenses In the consolidated statements of Income.

0)

Foreign currency transactions

Monetary assets and liabilities denominated in foreign currencies are expressed in the functional currency which is the Indian Rupee at the rates of exchange In effect at the balance sheet - date. Transactions in foreign currencies are recorded at rates ruling on the transaction dates. Gains or losses resulting from foreign currency transactions are included in the consolidated statements of income.

The balance sheets and statements of operations of the Group's foreign operations are measured USing the local currency as the functional currency. Assets and liabilities of these foreign operations are translated to Rupees at period end exchange rate and revenue and expense amounts are translated to Rupees at the average rates of exchange prevailing during the period. The resulting foreign currency translation adjustments are accumulated as a component of other comprehensive income.

p)

Operating leases

Lease rentals under operating leases are recognized as an expense or income on a straight-line

basis over the lease term. .

..

q)

Capital leases

(i) Lessee accounting .

Assets acquired under capital leases are capitalized as assets by the Group at the lower of the fair . value of the leased property or the present value of the related lease payments or where applicable, the estimated fair value of such assets. Amortization of leased assets is computed on a straight line basis over the shorter of useful life of the assets or remaining lease period. Amortization charge for capital leases is included in depredatlon expense.

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Bhatti Airtel Limited



(ii) Lessor accounting

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Assets leased to others under capital leases are recognized as receivables at an amount equal to the net investment in the leased assets. TIle finance income is recognized based on the periodic rate of return on the net investment of the lessor outstanding in respect of the capital lease.

r)

Impairment of long - lived assets and intangible assets

The Group reviews its long-lived assets, including identinable intangible assets with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Such circumstances indude, though are not limited to, signincant or sustained declines in revenues or earnings and material adverse changes in the economic climate. For assets that the Group intends to hold for use, if the total of the expected future undiscounted cash flows produced by the assets or asset Group is less than the carlYing amount of the assets, a loss is recognized for the difference between the fair value and carrying

, value of the assets. For assets the Group intends to dispose of by sale, a loss is recogriized for the amount by which the estimated fair value less cost to sell is less than the carrying value of the assets. Fair value is determined based on quoted market prices, if available, or other valuation techniques including discounted future net cash flows,

5)

Revenue recognition

(i) Service revenues

Service revenues include amounts invoiced for usage charges, fixed monthly subscription charges and VSAT/ internet usage charges, roaiTIing charges, activation fees, processing fees and fees for value added services (,VAS,), Service revenues also include revenues associated with access and interconnection for usage of the telephone network of other operators for local, domestic long distance and international calls.

Service revenues are recognized as the services are rendered and are stated net of discounts and taxes. Revenues from pre-paid cards are recogniz:edbased on actual usage. Activation revenue and related activation costs, not exceeding the activation revenue, are deferred and amortized over theTr estimated useful life, which is consistent with the estimated churn of the related customers at the business segment level. The excess of activation costs over activation revenue, jf any, are expensed as incurred. Subscriber' acquisition costs are expensed as incurred. On introduction of new prepaid products, processing fees on recharge coupons is being recognized over the estimated customer relationship period or coupon validity period, whichever is lower.

I

Service revenues from the internet and VSAT business comprise revenues from registration, installation and provision of internet and satellite· services, Registration fee and installation charges are deferred and amortized over their expected customer relationship period of 12 months. ServiCe revenue is recognized from the date of satisfactory installation of equipment and software at the customer site and provisioning of internet and satellite services. Revenue from prepaid dialup packs is recognized on an actual usage basis and is net of sales returns and discounts,

Revenues from national and international long distance operations comprise revenue from provision of voice services which are recognized on completion of services while revenue from provision of bandwidth services is recognized over the period of use. Revenue is stated net of discounts and waivers.

Unbilled receivables represent revenues recognized from the bill cycle date to the end of each month. These are billed in subsequent periods based on the terms of the billing plans.

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. Notes to Consolidated Financial statements

(Amounts in thousand~ except share and per share data and as stEted otherwise)

Unearned income includes-amounts received in advance on pre-paid cards and advance monthly

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rentals on post-paid. The related services are-expected to be performed within the next operating cycle.

(ii) Equipmentsales

Equipment· sales consist primarily of revenues from sale of VSAT and Internet equipment (hardware) and related accessories to subscribers. Equipment sales are treated as activation revenue and are deferred and amortized over the customer relatonshlp period.

(iii) Multiple element arrangements

The Group has entered into certain multiple-element revenue - arrangements where it recognizes revenue in accordance with the SEC Staff Accounting Bulletin No. 104 "Revenue Recognition". These arrangements involve the delivery or performance of multiple products, services or rights to use assets including VSAT and internet equipment, Internet and satellite services, set top boxes and subscription fees on DTH, indefeasible right to use and hardware and equipment maintenance. The Group evaluates all deliverablesin an arrangement to determine whether they represent separate units of accounting at the inception of the arrangement in accordance withASC 605-25 (EITF 00-21 "Revenue Arrangements with Multiple Deliverables"). -

- Objective and reliable evidence of fair value is determined using the price of a deliverable when it is regular1y sold separately. Where the Group has determined that objective and reliable evidence of fair value does not exist for undelivered items in arrangements involving the bundling of sales of VSAT and internet equipment with provision of internet and satellite services or for other arrangements with multiple deliverables, equipment sales for these arrangements are deferred and amortized over the term of the arrangement as highlighted in Note 2 (s) (ii) above. The arrangement consideration allocated to delivered items that do not qualify as separate units of accounting are combined with the other applicable undelivered items within the arrangement. The Group then recognizes revenue for those combined dellverables as a single unit of accounting over the term of the arrangement.

t)

Indefeasible right to use ('IRU1

Fibre and duct are sold as part of the operations of the Group's Enterprise Services business. The Group has determined these as integral equipment, Under the agreements, title is not transferred to the lessee. The transactions are therefore - recorded as operating lease agreements. Direct expendibJres incurred in connection with agreements are capitalized and expensed over the term of

. ~the agreement. The contracted sales price is primarily paid In advance and Is recognized as revenue during the period of the agreement. IRU sales not recognized in the consolidated statements of income, net of the amount recognizable within one year, is recorded as unearned Income In noncurrent liabilities and the amount recognizable within one year as unearned income in current liabilities. Cashless swap of IRU where either the fair value of the equipment relinquished can not be reasonably determined or the group has continuing involvement with the equipment transferred are

accounted for at cost. -

u)

License fees

(i) Licenses signed prior to NTP-99

Annual license fees incurred by the Group under the old license fee regime until the date of migration to NTP - 99, i.e. July 31, 1999 and revenue-share fees from the date of migration to NTP - 99 were expensed as incurred. However, the Group's share of licenses acquired under business combinations

during the old license regime, prior to July 31, 1999, were accounted for at their respective fair val ~ - c~ ~!J"3'

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IJJ INDIA G)

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(Amounts In thousands, except share and per share data and 85 stated omewse)

as at the date of acquisition and were amOltized on a straight-line basis over the remaining_p-=erc.:..:iod,,-=-,o=f _

the license from the date of acquisition of respective circles. Upon the migration to NTP - 99, the remaining unamortized cost of such licenses acquired had been carried over to form a part of the new

cost basis for the licenses signed under NTP - 99. Amortization of licenses is recorded as a component

of depreciation and amortization.

<") Licenses signed under NTP • 99

The license agreements signed/awarded under NTP - 99 stipulated the payments of: 1) a one time fee termed as 'license entry fee' to obtain the right to operate services; and 2) annl.lal usage charges on the basis of the percentage of revenues i.e. 'revenue share'. The one time entry fee was not required for licenses obtained under the old license fee regime which were migrated to NTP -99 licenses as noted in Note 2 u (i) above ..

License entry fees were recognized as an intangible asset and measured initially at cost. After initial recognition, license entry fees are measured at cost less accumulated amortization and any impairment losses that have been recognized. License entry fees are amortized on a straight-line basis over the period of the license from the date of rommencement of commercial operations in the respective circles. The Group's share of licenses acquired under business combinations arising after the 'applicability' of NTP - 99 were accounted for at their respective fair values as at the date of acquisition and are amortized on a straight line basis over the remaining period of the license. Amortization of license entry fees is recorded as a component of depreciation and amortization. The revenue-share fee is computed on the basis of the AGR and is expensed as incurred.

(iii) UASL and license fees

The Group during the year ended March 31, 2005 migrated Its cellular mobile licenses in 15 circles toUASL after obtaining the necessary approvals from the DoT. Upon the migration of the NTP-99 licenses to UASL, the remaining unamortized cost of the NTP-99 licenses was carried over to form the carrying value of the UASL.

. UASL entry fees were recognized as an intangible asset and measured initially at cost. After initial recognition, license entry fees are measured at cost less accumulated amortization and any impairment losses that have been recognized. License entry fees are amortized on a straight-line basis over the period of the license from the date of commencement of commercial operations in the respective· circles.

v) Borrowing costs

..

..

capitalized interest

,.

The Interest cost Incurred for funding a qualifying asset during the construction period is capitalized based on actual investment in the asset at the average interest rate. The capitalized interest is included in the cost of the relevant asset and is depreciated over the estimated useful life of the asset.

Debt issue costs

The Group amortizes debt issue costs over the term of the related borrowing base using the effective interest method.

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Bhalti Airtel Limited


(Amounts In tnoussnas: except share and per share data and as stated othelWise)

w) Stock based compensation

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The Group uses a fair value based method of accounting for stock-based compensation provided to Its employees In accordance with ASC 718-10 (SFAS No. 123(R), "Share-Based Payment" (,SFAS 123(R)') ("ASC 718-10"). ASC 718-10 (SFAS 123(R)) requires all share-based payments to employees to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. The fair value of stock options is determined using a Black Scholes and Lattice option-pricing model and is recognized as an expense over the period In which the options vest using the graded vesting method. The expected volatility and forfeiture assumptions are based on historical Information.

Finance Act 2007 under Indian regulations required determination of Fringe Benefit Tax ('FaT') on the differencebetween the market value of the under1ying shares and the exercise price on the date of vesting. The payment for the FB! was due when the options were exercised. Accordingly, the Company recorded an expense and a corresponding obligation for the FBT on the date of exercise .

. The Company recovered the FBT from its employees. The amount recovered was recorded as additional exercise price for the respective shares.

The Finance Bill 2009 as enacted by the Parliament of India abolished the FBT with retrospective effect from April 01, 2009. The abolishment of the FBT resulted in all stock options being modfied (see note 13).

x) Employee benefits (i) Gratuity Plan

In accordance with Indian law, the Group provides for gratuity obligations through a defined benefit retirement plan (the 'GratUity Pian') covering all employees. Under the Gratuity Plan, a lump sum payment to vested employees is made at retirement or termination of employment based on the respective employee's salary and the number of years of employment with the Group. The Group records a liability based on actuarial valuations. The Group makes annual contributions to the Ufe Insurance Corporation of IAdia ('LIC') for the gratuity plan in respect of employees a~ certain circles.

(ii) Superannuation Plan

Some employees of the Group are entitled to superannuation, a defined contribution plan (the 'Superannuation Pian') which is administered through an insurance scheme. Superannuation benefits are recorded as an expense aslncurred,

.~

(iii) Provident Fund and ~ployees' state insurance schemes

In accordance with Indian law, ali employees of the Group are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employees and the employer make monthly contributions to the plan at a predetermined rate (presently 12.0%) of the employees' basic salary. These contributions are made to the fund administered and managed by the Gal. In addition, some employees of the Group are covered under the employees' state insurance schemes. which are also defined contribution schemes recognized by the Indian Revenue Authorities and are administered through the Gol.

..

The Group's contributions to these schemes are expensed as illaJrred. The Group has no further obllgatlons under these plans beyond its monthly contributions.

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-II1 ~(i~vL)~c=o~m~p~e=n=s=at=e=d~a=bs~e~n~oe=s~------------ ___

• The employees of the Group are entitled to compensated absences based on the unavailed leave balance and the last drawn salary of the respective employees. The Group has provided for the

• liability on account of compensated absences in accordance with ASC 710-10-25 (SFAS No. 43,

"Accounting for Compensated Absences"). The Group records a liability based on actuarial

• valuations.

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Bhart! Airtel Limited


(Amounts In thousands- except share and per share data and as stated otherwise)

y) Advertising costs

. AdvertiSing costs are expensed as incurred and are included In selling, general and administrative expenses. Advertising cost was Rs. 6,013,592, Rs. 7,152,100, Rs. 1,394,152 and Rs. 6,387,632 for the years ended March 31, 2008, 2009 and the three months period and year ended March 31,

2010, respectively. '

z) Income taxes

In accordance with the provisions of ASC 740-10 (SFAS 109, "Accounting for Income Taxes"), income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabJlltles and their respective tax bases and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the veers in which those temporervdffereoces are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income in the period in which the change is enacted. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which it is more likely than not that some portion or all of such. benefits will ncitbe realized. .

aa) Preoperating costs

Preoperating costs represent certain marketing and administrative expenses incurred prior to the commencement of commercial operations of the new circles. These costs are expensed as incurred.

bb) Derivative financial instruments

The Group enters into derivative instruments, includin~ interest rate swaps and foreign currency forward contracts, to manage interest rate movements of its debt obligations and foreign currency exposures related to the import of ,equipment· used in operations and its foreign' curren~ denominated debt instruments •

ASC 815-10 (SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (,SFAS 133')), requires that all derivative instruments be recorded on the balance sheet at their fair value. .. Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive Income, depending on whether a derivative is designated as part of a hedging relationship and, if it iSI depending on the type of hedging relationship.

None of the Group's derivative contracts qualified for hedge accounting pursuant to ASC 815-10 (SFAS 133). As such, these contracts are accounted for by adjusting the carrying amount of the contracts to market at each period end and recogniiing any gain or loss in earnings. Market value of the Group's Interest rate and foreign currency derivative instruments are determined based on quoted market prices, traded exchange market prices or broker quotes and represent the estimated amounts that the Group would payor receive to terminate the contracts.

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The Group occasionally enters into contracts that do not In their entirety meet the definition of a

~----------~d~e7riv~a~ti~ve~jn~s~tr~u~m~e~n~t~th~a~t=m~ay~c~o~nt~a~in~~e~m~b~ed~ded~"~d~~iv~&~iv~e~in~s~tr~um~e~n~~-~lm~pl~ic~it=o~r~ex~p~li~ci~t-------

terms that affect some or all of the cash flow or the value of other exchanges required by the

• contract in a manner similar to a derivative Instrument. The Group assesses whether the economic

• characteristics and risks of the embedded derivative are clearly and closely related to the economic characteristics and risks of the remaining component of the host contract and whether a separate, non-embedded instrument ·with the same terms as the embedded instrument would meet the

• definition of a derivative instrument. When it is determined that (1) the embedded derivative possesses economic characteristics and risks that are not clearly and closely related to the economic

. • charaderisticsand risks of the host contract and (2) a separate, stand-alone instrument with the

• same terms would qualify as a derivative instrument, the embedded derivative Is separated from the

host contract, carried at fair value as a trading or non-hedging derivative instrument.

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Notes to ConSOlidated Financial statements

(Amounts in thoUSiJnds_ except share and per share data and as stated otherwise)

ee) Earnings per share

Basic earning per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period induding Foreign Currency Convertible Bonds ("FCCBs''), and stock options (using the treasury stock method for options), except where the result would be antl-dllutlve.

dd) Concentration of credit risk

The Group has no concentration of credit risk as the customer base is widely distributed both economically and geographically. Derivative counterparties and cash transactions are limited to high credit worthy financial institutions.

The Group has .no concentration of credit risk In regards to short term investments as these investments are widely distributed.

Credit riskis the risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract, When the fair value of a derivative contract is positive, the counterpartv owes the Group, which creates a repayment risk for the Group. When the fair value of a derivative contract is negative, the Group owes the couoterparty and, therefore, does not assume any repayment risk. The Group minimizes its. credit (or repayment) risk in derivative instruments by entering into transactions with hlgh-quallty financial institutions, limiting the amount of its exposure to each counterparty and by monitoring the financial condition of i~ counterparties.

e~)

Foreign currency risk

The Group has obtained foreign currency loans and has imported equipment and is therefore, exposed to foreign exchange risk arising from various currency exposures primarily with respect to United States dollar and Japanese yen. The entities in the Group use forward contracts to manage

their exposure to foreign currency risk. .

ff). Interest rate risk

The Group has a mix of fixed rate and floating rate loans, and uses interest rate swaps which have the economic effect of converting borrowings from fixed rates to floating rates. The Group has also entered into composite contracts which include both interest rate swaps as well as forward contracts. The interest rate swaps allow the Group to raise long-term borrowings at fixed rates and swap them into floating rates that are lower than those available if the Group had borrowed at floating rates directly. Under the interest rate swaps, the ~roup agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between the fixed contract rate

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(Amounts in thousands, except share and per share data and as stated othelWise)

interest amounts and the floating rate interest amounts calculated bY reference to the ag.:....::re=e=d _

notional prindpal amounts.

gg) Market Risk

Market risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates and currency exchange rates. The Group manages the market risk. associated with interest rate and foreign-exchange contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

. .

hh) Vendor Risk

The Group depends upon key suppliers and vendors to provide equipment and services that It needs to build and upgrade its network. While the Group believes that Its vendors are internationally reputed, the results of operations could be adversely affected if it is unable to obtain adequate supplies of equipment in a timely manner, The Group manages to minimize the poSSibility of such risk by having long-term contracts with the vendors and also having more than one vendor for supply of equipment and services.

Ii) Issuance of stock by Subsidiaries

At the time a subsidiary sells its stock to unrelated parties at a price less than or in excess of its book value, the Company's investment in that subsidiary'S net assets decreases/increases. The Company's policy is to record such changes in its Consolidated Statement of stockholders' Equity.

jj) . Recent accounting pronouncements .

In June 2009, the Financial Accounting Standards Board C'FASB'~ issued Accounting Standards Update .No. 2009-01, "Generally Accepted Accounting Principles" (ASC Topic 105) which establishes the FASB Accounting Standards Codification ("the Codification" or "ASC") as the official single source of authoritative U.S. generally accepted accounting principles. All existing accounting standards are superseded. All other accounting guidance not Included In the Codification will be considered nonauthoritative. The Codification also includes all relevant Securities and Exchange Commission

, guidance organized using the same topical structure in separate sections within the Codification ..

Following the Codification, the FASB will not Issue new standards in the form of statemeots, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (\\ASU") which will serve to update the Codification. provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. The

. \

CodifiGation is not intended to change GAAP, but it will chanqe-the way GAAP is organized and

presented. The Codification. is effective for the Group's second quarter financial statements and the principal· impact on the financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification, In order to ease the transition to the Codif.tation, the Company is providing the Codification cross-reference alongside the references to-the standards Issued and adopted prior to the adoption of the Codification.

In September 2006, the FASB Issued ASC 820-10 (SFAS No. 157, "Fair Value Measurements" ("SFAS 157"», ASC 820-10 (SFAS 157) defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. In February 2008, the FASB issued ASC 820-10-15 (FASB Staff Position ("FSP") 157 .. 1), ASC 820-10 ("Application of FASB Statement No. 157") removes certain leaSing transactions from its scope. ASC 820-10-55 (FSP 157-2) delays the effective date of ASC 820-10 (SFAS 157) for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value In the financial statements on a recurring basis (at least annually), until the beginning of the first quarter of. fiscal 2010. The adoption of ASC 820-10 (SFAS

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material impact on it's results of operations or financial position.

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In December 2007, the .FASB issued ASC 810·10 (SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statement-Amendments of ARB No. 51"). The standard changes the accounting for noncontrolling (minority) interests in consolidated financial statements Including the requirements to classify noncontrolling interests as a component of consolidated stockholders' equity, and the elimination of "minority interest" accounting in results of operations with earnings attributable to noncontrolling interests reported as part of consolidated earnings. Additionally, ASC 810-10 (SFAS 160) revises the accounting for both increases and decreases In a parent's controlling ownership interest. The Group adopted ASC 810·10 (SFAS 160) effective April 1, 2009.

In April 2008, the FASB issued ASC 350-30 (FSP FAS 142-3, "Determination of the Useful Life of Intangible Assets"). ASC 350-30 (FSP No. FAS 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Asc 350·10 (SFAS No. 142 "Goodwill and Other Intangible Assets") ("ASe 350:-10"). ASC 350·30 (FSP No. FAS 142-3) became effective for the Group with its fiscal year beginning Aprill, 2.009 and did not have a significant impact on the Group's consolidated financial statements.

In August 2009, the Financial Accounting Standards soerd C'FASB") issued Accounting Standards Update C'ASU") No. 2009-05, "Measuring Liabilities at Fair Value" ("ASU 2009·05"). The amendments in this ASU. apply to ali entities that measure liabilities at fair value and provides clarification that in circumstances in which a quoted price in an active market for the identical

. liability is not available,an entity Is required to measure fair value USing one or more techniques laid out in this ASU. The guidance providec in this ASU is effective for the first reporting period (including reporting periods) beginning after issuance. The Company does not expect the adoption of thisASU to have a material Impact on its consolidated financial statements.

.3.

Business Combinations

(I) The Group entered into a Share Purchase Agreement with Singapore Telecommunications Limited and Bharti Venturetech Limited to acquire the 50% stake held by each in Network i2i Limited on September 28, 2007 for Rs. 5,313,916. This acquisition provided a strategic fit to the Group's existing International Long Distance business and also its Enterprise Services Corporate business. The acquiSition was..accounted for using the purchased method of accounting and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed on the basis' of their respective fair values. In connedion with the a'lIocation of the purchase price, goodwill of Rs. 3,427,020 was retarded. The Group has consolidated Network i2i Limited from the date of acquisition onwards.

(ii) BAQL was incorporated on October 3, 2000, as a wholly owned subsidiary of Bharti Airtelr under the laws of India, to build, operate and maintain a cable landing station for the fibre optic submarine cable system linking ]ndia and Singapore. On September 29, 2001, Bharti Airtel transferred its equity holdings in BAQL in favor of Bharti Telesonic Limited. Through an agreement dated January IS, 2001, Singapore i2i Private Limited agreed to hold 49% equity interest in BAQL, and on December 26, 2001, Singapore i2i Private Limited subscribed to these shares Incorporating a 51:49 joint venture. Singapore i2i Private Limited had substantive participative rights in the operation and management of BAQL till August 31, 2007 when Sharti Airtel acquired Singapore i2i .

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(Amounts In thousands- except share and per share data and as stated otherwise)

Private Limited's 49% stake in BAQL for Rs. 159,549. The application of ASC 810-10-25 (,...EIT......_._E_9"'6c....-l .... 6.__ _

"Investors. Accounting for an Investee when the Investor Has a majority of the Voting Interest but

the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights") (\lASe 810-10-

25'~, had therefore precluded the consolidation of BAQL by Sharti Airtel and as such, the investment

in BAQL had been accounted for using the equity method until August 31, 2007 from which point

onwards, the Group has consolidated BAQL. The acquisition was accounted for using the purchased

method of accounting and, Clccordingly, the purchase price was allocated to the tangible assets

acquired and the liabilities assumed on the basis of their respective fair values. In connection with

the allocation of the purchase price, no goodwill was recorded.

(iii) On June 5,2007, BASL, a wholly owned subsidiary of.Bharti Airtel, sold its entire shareholding in Sharti Telemedia. Limited, of which 60% was sold to Bhartl Enterprise Limited for Rs. 61/098 and the balance 40% to Sharti Ailtel for Rs. 40,732.

On October 23, 2009, the Group acquired 55% stake from Bharti Enterprises limIted, increasing Its total ownership interest to 95% for a conSideration of Rs. 73,795. The purchase was accounted for in accordance with ASC 810-10-45-23 (ARB 51).

(lv) The Group has entered into a share purchase agreement with Warid Telecom· international LLC to acquire and assume 70% equity Interest In Wand telecom international limited ('Warid') as on February 25, 2010 for Rs. 13,912,175. With this acquiSition the Group has made an additional step towards its objective to expand globally and has consolidated its position in the south Asian market.

The acquisition was accounted for in the books, using the purchase method and accordingly, all the assets and liabilities were measured at their preliminary fair values as on the acquisition date and the purchase consideration has been allocated to the net assets. In connection with this allocation the group has recorded goodwill of Rs. 9,793,041 as at ~he acquiSition date. The goodwill accounted consist largely of the synergies and, economies of scale expected from the combined operation of the Group and Wand telecom international Ltd.

None of the goodwill reCognized is expected to be deductable for Incometax purposes.

The following table sum.marizes the preliminary fair value of the consideration pald, the amount at which assets acquired and the liabilities assumed are recognized and the fair value of tHe non controlling interest in Warid as at the-February 25,2010.

-26-

•
•
•
•
-II
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• ~
•
•
•
•
•
•
•
•
•
0 Bharti Airtel Umited


(Amounts in thousands; except share and per share data and as stated otheIWise)

As an Februarv

' ~ ~-----------2~~DL--------------

Purchas:Cit consldaratlon Cash

INR :1.3,,",:1.2,175

Ac:qule.tlcn rela1:mc:::l c:o::at (In.;luded .n 5&J1'I~n9~Ggenel'"el and §l;dnllnla1:ratlve expenses In tt-.II:II group Income statarnent fbI"" 'the period ending Marc:h 31,2010

R.l!!lcog ..... s:gd 'arno ...... t .~ :rderrt::lflahl@ assets ..mc:::qulred and IIa.blllt.as .as ...... n"IIed

Assets ~c:::ql..lI .. ed L ...... d a Building Pl.&llnt a.. f!:~l''''prnents l"tar-glbles

Currant Ases'tB

INR Oe,"<l3
8,85<1,0522
3,507,8::>e
:L1 .. 0:ii:~ ... :;2e
INR. (a,375,1053)
(a,::>~e,3:oi:L)
10 .. 130.-97:2
6.0",-",-.83B
INR. 9~793.0":L " Liabilities

Non Cu'rrent Ilabllltlaa Current Ilab1111:l~8

Gaod"NIll

The Goodwill recognized may change because of certaln changes in non-controlling interest-holders equity in Warid as well as changes in fair value of assets and liabilities acquired during the measurement period. In which ease, the company would retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as on acquisition date. Preliminary fair value of the non controlling

interest is valued at Rs: 6,011,838. "

The amount of Warid's revenue and eamings included in the group's consolidated incOme statement for the period ended March 31, 2010 is:

Feb 28,2010 to March 31.2010

RBYBnlJB Earnlngs{(Loss)

INR INR

406,873" (C:Sl,a:;j'l)

The unaudited revenue and earnings of the combined entity, had the acquisition date been April!, 2008 and Aprill/ 2009 are:

Vear'Ended "",arch aa, 2IJiJ9

Vearended March3l." 2010

Revenue Earnings

INR 372:,.l;59,478 JNR, 400.072,664 INR 78,210,12.9 lNR 87,!HO.394

The financial year of Warid is July to June, the above data is prorated from audited financials of Warjd.

-27-

•

• • •

~----~--~--~~~~~----------------------~------------

,

• • • • • • • • • • • • • • • • • • • • • • • • • • • • •



(Amounts in thousands except share and per share data and as stated otherwise)

4. Cash and cash equivalents
A&of
March 31, 2009 March 31, 2DI0 Mardi 31,2010
(Unaudited)
(USO OOO·s)
calhfn hand Rs. 24,293 Rs. 50,885 USO 1,127
~-in-hand ~ In IJiIIlSlt 535,468 285,197 6,319
Bank balances
Cunent accounts 2,476,6:36 9,753,913 216,079
Deposit att:OU'lts 8,109,362 3,812,833 84,467
Ri. 11,144,7'16 Rs. 13,902,718 UaD 307,991

5. Restricted cash March 31, 2009 Marth 31.2010 Mard1 31, 2010
(Unaudited)
(USDQOO's)
O\Irrent
DepOSIts pledged by thB G'cI4l with ",arIous IJOIIQI'rmmt authorities Rs. 77,009 Rs. .98,502 1JSO 1,961
Deposits ~trl~ted as to usage Lnder len to banks for lJUaranteas 6,289 9,8:515 218
and letters Of (radit . ..,-,d atm authdJ1t1as iJVen bv tt-e Group
U"Jl:liImed dMdend 7:39 16
Totslrurtent restrkted [a~h Rs. 84.288 Rs. li!!i!,!:!97 UaD 2,195
N[Jn - (urrent
Deposlts Pedged by the G'~ with va1Jus govetrment auttult~5 Rs. 9,325 Rs. 646 USD 1<1
Deposits restricted as to usage LD'lc:&r.lllln to binks for ~ar..,tees 2,488 291,003 6,466
and letters of credt Qlvan by the Grol,.l:l
Total non • current resirlcted [11m Rs. 11,813 Rs. ~92,.509 UBD 6,480

rotal restricted cash Its. 96,101 Rs· 391,60ti USD B,615

6, Accounts receivable, net
As of
Marchal, 2009 March 31, 2010 March 31" 2010
(Unaudltetll
(USD DlJD'~)
Aa:ol6lts ra:elvable ~s. 28,207,503 Rs. 26,041,943 USD 577,049
Less; AIIowcn:e for bat! and doubt1U debt<; [9,94:;),0;149) (12,2QO,772) (272,28i)
Total RB. 18,261,554 Rs. 13,157.171 UBI) 304.767 'the following table sets forth the movement in the allowance.for doubtful debts:

.A:sI of
Match 31. 20051 Man::h 31. 201D """,",h ",1. 2010
(Una ... dtad)
EIaIaneoo, ~ oft'" !"Miele! (U8DODI;rD]
Ro. 7,114,365 Ro. g,g4aQ4<o lJSD ~.336
Ar:idt:tr:Int •
Prc.Tv1su:n tbr 'the perl:X!l 3J~47~:!I5O 3J07OJ02E!I 68.011
""llIIcation,- (e1::5 .. 90~n
WI1~ Qff .gfb&d ~t'!I ~ Qff ..-~) (725,<'CI5) (16,066)
a.lanca. and of the JlIerllod: Roo. 9;g45.9"~ R.o. 121'2Qn.77~ USD ~72.291 Concentration of credit risk with respect to.accounts receivables is limited due to the Group's large number of customers.

-28- .

• • • • •

• • • • • • • • • •

• ••

• •

• • •

• • • • • •• • • • • • •


Notes to Consolidated Finandal statements

(Amounts in thOllsands; except share and per share data and as stated otherwise)

7. Short term investments
As of
M.r~h 31. 2009 March 31., 20J.O MarCh 31. 2010
(UnaudltCId)
(USDOOO's)
Tr adlnc Invastmenl$ Rs. 23,260,021 Rs. 51,930,951 USD 1,148,224
DeposIts With banks 14,655,32"1 Rs. 11,3IXl,124 250,3:35
Tenal Rs. 37.92S,345 Rs. 63,130,975 usn I,39B,559 Trading investments consist of investment in mutuel funds and Inter rorporate deposits and indude Rs. 550,266 as of March 31, 2010 (March 31, 2009 - Rs. 82,124) of net unreallsed gains.

The market values of investments were assessed on the basis of the quoted prIces as of the balance sheet date.

8.

Prepaid expenses and other current assets

Prepaid expanses l:fTlPoyaa receivables Ad ... a~ ... to ouppIIB.S others

As er
Mard131,2001l· Man:h 31, 2010
Rs. 5,647,743 Rs. 4,659,014
lEoO,051 162,999
2,816,494 2.,956,057
21,893,"-16 14,07S,20e
(551,162) ~,B7:3)
Rs. 29,9!i6,57;2 Rs. 21.3211,303 USD

March 31. 2.010 (UnAU"~d) (US!) DUD' .. )

103,213 3,f009 65,<185 311..878

(11..072)

Tot..1

!,ISO

472,514

"others" include:

. (1) Advance tax (net of provision for current tax) of Rs. 2,170,518 and Rs. 3,128,608 as of March 31, 2010 and March 31, 2009, respectively.

(2) other taxes and duties recoverable (net of provision) of Rs. 10,333,949 and Rs. 12,556,541 as of March 31, 2010 and March 31, 2009, respectively.

(3) Advance rentals of Rs. 913,785 and Rs. 670,297 as of March 31, 2010 and March 31, 2009, respectively.

Employee receivables principally consist of advances given for business purposes.

AlJowance for doubtful collectibles represents management's estirriates of amounts where

recoverability is uncertaIn. ~

9. Invesbnent In joint ventures I associates

Investment in joint ventures I associates comprises of the following as of March 31, 2009 and Mardi 31,2010:

As of March 31, 2009:

Inve!Otmen't: In Joint: ven~...,. I ,,~

Number ofShares (OOO's)

Und .... lyln1;j ecuJltv In net. assets

Percentaoe of Canyfng " .. rue

OWJlel'5hlp of In~nt

Bridge M<>blle Pte ur:roi::eii Forum I AV;at;()(l Pvt. Ltd. Ind ..... Tow •• !: Ln>lted Bha<t:l Toel<>parts Um~ 'e d

2 .• 200 4.550 SO 1 .• 470

10.00% 14;28% 42.00%. "19.00%

14,700

]..q,,700

To" .. 1

-29-

Rs. :127.727 ~

• • • • •



(Amounts in thousands, except share and per share data and as stated otherwIse)

• •

• •

• ..

• • • • • • • • • • • • 11

• • • • • • • • • •

As of March 31, 2010:

lnve&tment In Joint venture .. I """Dclates

Number of Percentage of C_r)'lng value Undet'lying

Shares (OOO's) OwnershIP of Inyestment aqultv In net

aS5:et:s

Bridge Mobile pte Limited Forum I Aviation Pvt. Ltr:L Indui Tower. LImited Bhartl TalejX)r15 Limited

Alcatsl·Lu.:ant Network ManaClernent Services India Ltd.

Tot .. 1

10.00"/" 14.28'lf" 42.00% 49.00"10 26.00"k

56,494 58,921

12,241 44176

2,200 4,550 50 1."170 .... 000

56.494 58,921

12,241 44 171>

Rs. 171.B::I:<:

Rs. 171.B32

The Group entered into a joint venture agreement dated November 3, 2004 with 6 other overseas mobile operators to. form a regional alliance called the Bridge Mobile Alliance incorporated in Singapore as Bridge Mobile Pte Limited (BMPL) with the fnitial equity to be equally held amongst the seven operators/shareholders. On March 31, 2005, the Group invested in one million ordinary shares of USD 1 each in Bridge Mobile Pte Limited amounting to Rs. 43,763. A new partner joined the Alliance in April 2005 bringing the number of equal partners to 8. During the year ended March 31, 2008, Bharti Airtel acquired 1,200 thousand shares of Bridge Mobile Pte Limited for an aggregate consideration of USD 1,200 or Rs. 48,474. Group's share In the Joint Venture reduced from 12.5% to 10.000k due to the introduction of new shareholders. For the three months period and year ended March 31, 2010, the Group's shares of BMPl's losses were Rs. 205 and Rs. 7,457, respectively.

The Group entered into a joint venture agreement dated July 8, 2005 with 5 other parties to form an aircraft chartering company called the Forum I Aviation Ltd. incorporated in India with the initial equity to be equally held amongst the six members. Duririg the fiscal year ended March 31, 2006, the Group invested Rs. 34,950 in ordinary shares of Forum I Aviation Ltd. During the year ended March 31, 2007, a new partner joined the joint venture, bringing the number of equal partners to 7. The Group had invested in the ordinary shares of Rs. 10 each amounting to Rs. 10,000 and Rs. 5,500 during the year ended March 31, 2008 and March 31, 2009, respectively, along with other partners, retaining an ownership interest of 14.28%·.a5 at March 31 2010. For the three months period and year ended March 31, 2010, the Group's share of Forum 1 Aviation's profits were Rs. 969 and Rs. 9,845 respectively .

The investments in Bridge Mobile pte Limited and Forum I Aviation Ltd. have been accounted for under the equity method due to the joint venture structure giving the Group the ability to exerdse significant influence in their operations even though the Group has a stak.e of less than 20% in their respective share capitals.

BIL entered into a joint venture agreement on December 8, 2007 with Vodafone Essar Limited and Idea Cellular Limited' to rorm, an independent tower company r'Indus Towers' Limited'g providing passive infrastructure services in 16 drdes of India. BIL and Vodafone Essar Limited will hold approximately 42% each in the' Indus Towers Limited and the balance 16% will be held' by Idea Cellular Limited. For this purpose BIVL has been incorporated as a wholly owned subsidiary of Bll wherein· the relevant assets are to be transferred for ultimate merger in the Indus Towers limited. Pursuant to the aforesaid agreement, BIL has acqulred 50,000 equity shares of Rs. 10/- each on December 17, 2007 for an aggregate value of Rs. 500. Pursuant to the joint venture agreement, BIL is obligated to funcl its share of losses in excess of its investment in Indus Towers Limited. For the three months period and year ended March 31, 2010, the Group's share of Indus Tow~rs limited's share of profits I (losses) were Rs. 34,104 and Rs. 338,160 and cumulative losses in excess of its investments as of March 31, 2010 was Rs. 374,705 and has been recorded as a reduction from Due from related parties on the Consolidated Balance Sheet.

Bharti Teleports -Limited was incorporated with principal business of providing operating unlinking hubs (Teleport) including any other mode of unlinking and down linking facility with the accompanying amplification, modulation, encryption and related processes, unlinking TV Signals, teleport services

-30- .

•

• •

• and to provide end-to-end solutions to communication needs. On March 4, 2009, Bharti Airtel acquired 1,470,000 equity shares (49°/Q stake) in aharti Teleports Limited for an aggregate consideration of Rs. -------1:4;-700;-Forthethree montfi perioo ana year ended March 31, 2010, the Group's share of Bharti Teleports losses was Rs. 2,459 and Rs. 2,459 respectively.

'.

I

• • • • • • • • • • • • • • • • • • • • • • • • • • • •

Notes to Consolidated Finandal Statements

(Amounts in thousands, except sbsre ena per share data and as stated otherwise)

Alcatel-Lucent Network Management Services India limited (ALNMSIL) was incorporated with the principal business of developing an efficient and cost effective platform and vehicle to provide managed services to the Group. On July 28, 2009, the Company subscribed to 9,000,004 equity shares in ALNMSIL for an aggregate consideration of Rs 90,000 towards 26% stake. For the three months period and year ended March 31, 2010, the Group's share of ALNMSIL's losses were Rs. 29,798 and Rs. 45,823 respectively.

10. Property and equipment, net

Property and equipment consist of the following:

M"n:h 31, 2009

As Dr Mar.h :31, 2010

l.nc:t Ro. 1,062,1'15 R s, l,631,~e"
BulIdi"lQS 3,6'17,9r;; 5,103,917
NBtwork~ 482,~5,975 576,<1315,_
corncutEIr eqt.bnsnt 21,192,991 20,065,993
Office furribKe and eQ.JPment 3,024,013 4,273,SSl
VehICles 210,953 32:;'(;45
Leasehmi iTllIOIIeITI8nH ?,~,221 3.~~,97"
Assets under constrlJ!:~ :35,1:38,170 22,?,41,S7B
To'" 540,910,274- 6'10,.563,'U7
Less; Acc.mAated deD'eclatIOn ard amJrt1zat1Dn (140,674,502) (196,7=S,'140)
NBt Rs. 409,135,672 Rs. 443,B07,!177 March 31 .. 2010
(unaudlted)
(usoooas)
USO 40,573
119,715
12,7(;9,970
577,891
94,67'1
7,214
76,761
50:3.795
14,190,593
('1.356,781)
lJSD 9,931..812 Depreciation and amortization expense. for property and equipment was Rs. 34,231,664; Rs. 45,458,655, Rs. 15,219,044 and Rs. 57,622,114 for the years ended March 31, 2008, 2009 and for the three months period and Year ended March 31, 2010, respectively. Depreciation of Rs. 129,241 and Rs. 453,425 for the three months period and Year ended March 31, 2010 (for the years ended March 31, 2009 - Rs. 678,432 and March 31, 2008 - Rs. 126,378) and Rs. 15,089,803 and Rs. 57,168,689 for the three months period and year ended March 31, 2010 (for the years ended March 31, 2009 - Rs. 44,780,223 and March 31, 2008 - Rs. 34,105,286) was included in selling, general and administration expenses and cost of services, respectively, in the consolidated statements of Income.

Vehicles included written down value of vehicles acquired under capital leases amounting to Rs. 150 and Rs. 80,432 as of March 31, 2009 and March 31, 2010, reSpectively (net of accumulated depreciation of Rs. 3,679, and Rs. 92,356 as of March 31, 2009 and March 31, 2010 respectively),

During the year ended March 31, 2005, the Group entered into a composite IT outsourcing agreement, whereby the vendor supplies property and equipment; software and IT related services. The agreement is initially for a period of ten ·years-subject to both parties agreeing to the terms of the renewal. The property and equipment received are accounted for as a capital lease. Accordingly, the asset and liability are recorded at the fair value of the assets and depreciated over their useful lives. A termination charge is payable by the Group if the agreement is not renewed at the end of the tenyear term or is terminated during the ten-year term. The amount of the termination payable will vary depending on when the termination ·occurs and may increase if any additional investment in assets over and above the projected volumes is required. The minimum payment commitments of the Group subsequent to March 31, 2010 are set out in Note 27(i)(a).

Computer equipment includes assets acquired under the above contractual arrangements amounting to Rs. 11,680,415 and Rs. 17,423,888 as of March 31, 2009 and March 31, 20 ectively ~'O & r.

-31-

•

• • •

-II: ~(a=__c;:c..:;ui_i_m:=:u;;rac_:te:;;;:dTd=.;e~p;irec~ia=ti_=on::=_:_:::0i:n~th:i.e~s:..::a:.:..:m:.:..:e:....:b::...:e:..:..:in..:...g!...-Rs---'-'- • ...:...7-'-"O:....:6....::1!.C:,.5....::1-=-9....::a:....:ndc:c:....:...Rs=-.::....cl=-=O:.L, 5=.c8=-:0:.L'9:.,.:8:.._4'-'a=s'-'o:..:_f_;_M_:_:a::.;_rc=h.:,_3=..;1=,-=2=0..::_09"-- _

. and March 31,2010, respectively).

• • • • • • • • • • • • • • • • • • • • • • •

•

•

•

• • •



(Amounts in thouSilnds, except share and per share data and as stated otherwise)

All property and equipment of the Group have been pledged as collateral for certain borrowings. Refer to Note 19 for details.

The ~roup re-estimated its site restoration cost based on the independent quotes received, The reduced asset retirement obligation resulted in reduced depreciation and finance charge expense by Rs. 5,678 and Rs. 9,791 and Rs. 121,433 and Rs. 12,902 ,respectively for the three months period and year ended March 31, 2010.

11. Goodwill
March 31, 2009 March 31. 2010 March 31 •. 2010
(Unaudited)
(USD OOO's)
Balance. beginning of the period Rs. 27,043,223 Rs. 27,054,057 USD 599.337
Additbns 10,834 9,793,041 216.948
Translational Adjustment {70,:;j25) ~1,695)
Balance. end of the period Rs. n,g54,057 Rs. 36,770,573 USO 814,590. During the year ended March 31, 2008, the Group acquired 100% stake in Network i2i Limited and recognized goodwill of Rs. 3,427,020.

During the year ended March 31, 2009, the Group acquired 1.1% eldditional stake in Bharti Hexacom Limited and recognized goodwill of Rs. 10,834.

During the year ended March 31, 2010, the group acqulred 70% stake in Warid Telecom International Ltd and recognized goodwill of Rs.9,793,041.

As of March 31.2009 and March 31, 2010 the segment goadwili balances were: .

Marm 31, 2009 March 31, 2010 March 31, 2010
(Unaudited)
(USDOOO'~)
Mobile Ser' .. kes Rs, 23,5~8,456 Rs. 33,264,973 USD 736,929
Enterprise Services ~,505j601 3,505,600 77,661
Total Rs. 27,054.057 Rs. 36,770,573 USD 914,590 -32-

• • • • •



(Amounts in thousands, except share and per share data and as stated othelW/se)

12. Acquired Intangible assets

• •

'. •

• • • • • • • • • • • • •

• • • • • • ••

• • • • •

There are no indefinite-life intangible assets. Finite-life intangible assets, including license fees and
other Intangible assets, comprise the following:
As of
M .. ch 31.2009 M<lrch 31. ~10 March :31.2010
(Unalldlt.od)
(USD 000'$)
software Rs. :1.00,"':59 R. •• 625.077 USC 13,s51
Bandwidth 3,363,064 3,577.-'151 79,253
~Ic:en:es 6,359.402 7J'101;556 170.615
Llc:enE;S entry fe~ 10,897,940 12,,"96,3B~ 276.e:36
8ta">do 110,51-'1 1151,395 3.:57:5
Dlsttbutlon ... twaks i..1a~,508 'I."~,65B 3l..694
customer ... iatl::lrllhPs 728,840 728.840 16,146
oth~ Intangbles ::L5..:1J659 1.54,1559- 3".-=lZO
Total R ... 22.849,:3B5 Rs. 26,976,627 USD 595,406
Lass: Accumulamd Amortisation
softw.ara Ro. 88,659 R. •• 151,2:25 VSD 3,:350
Bardwldth 307.2&1 567,974 12.,SQO
UCEal"'ICBS :3,427,900 3,878;527 85,5122
LIcence entry fses 3,697.713 4,326,.270 95,941
8iands 94,5190 102,051 2,261
Dlotrllutbn networks 1.,l.::3 .... ,"'Ii84 1,1"12..885 25,31'!l
C us tc""". r<ilation<i;p<; 728,004 72a,G40 16,1415
other tntongbiEls 150,874 74,514 i,651
T~I A~um~lated .a.mu:rtls8tlon 9 • .539,885 1'3,972,186 USO 243,070

N& Rs. 13,309,51XI Rs. 1.5,904.441 USO 35:2,336 Ucenses reflected the fair values of the licenses acquired under business combinations while license entry fees represent the one time entry fees paid for licenses granted to the Group. Licenses and license entry fees are amortized over the license period varying from 11 to 20 years on a straight line

basis. .

Amortization expense for intangible assets was Rs. 2,690,061 and Rs, 1,225,136, Rs. 379,949 and 1,443,618 for the years ended March 31, 2008,2009 and for the three months period and year ended March 31, 2010 respectively. Included in selling, general and administration expenses and cost of services in the consolidated statements of income for the three months period and year ended March 31; 2010 was amortization of Rs. 11,828 and Rs. 22,958 (March 31, 2009 - Rs. 18,302 and March 31, 2008 - Rs, 23,927) and Rs. 368,122 and Rs, 1,420,660 (March 31, 2009 - Rs. 1,206,834 and March 31,2008 - Rs. 2,666,134), respectively.

The estimated aggregate amortization expense, for next 5 years is as follows:

~ ~

Year enaing ~ch31r 2011 Yeilf erKiiil{lMarch 31,2012 Year endlnO 1VI:atc'h 31. 2013 Year endln9 March 31, 2014 Vear ending M"aTdi31, 2015 Ve<If endu1g'March 31, 2G16

As of Marctt .:3,1, 2010 .

(UnaUdited) (USDOOo's)

Rs.. 1.673.,102 USD 37,065

Rs.. 1,628,029 USD 36,066

Rs. 1,512,263 USD 33,50.2

Rs. 1,3171727 ·USD .29,192

Rs. 1,32.4,882 USD .29.351

Rs. 933,816 USD 20,687

13.

Stock Based compensation

On April I, 2006, the Group adopted ASC 718-10 (SFAS 123(R)) using the modified prospective application method, Upon the adoption of ASC 718-10 (SFAS 123(R»), the Group started applying an estimated folfeiture rate to the unvested awards and grants made after Aprif 1, 2006 in computing

. -33-

• • • • •




the Stock. compensation expense, which was earlier recorded as incurred under ASC 718-10 (SFAS

• • •

• • • • •

• • • • • •

• • • • • • •

• • • • II.

n n (]

123). The related benefits of tax ·deductions in excess of recognized compensation expense are reported as a financing cash flow item.

(i) 2001 Employee stock Option Scheme ("Scheme I"l

In 2001 the Group announced an employee stock ownership plan (ESOP') that covered eligible employees and formed a Bharti Tele-Ventures Employees' Welfare Trust (the 'Trust') for the implementation of the ESOP scheme. The Group has allotted 31,680,000 shares to the Trust to give effect to the ESOP.

The Trust's accounts are consolidated with the Group's financial statements as the Group controls the Trust. Accordingly, the loan advanced to the Trust is eliminated and the shares allotted to the Trust (available for grant) are recorded as treasury stock and are carried at cost. The grant date fair value of the options as determined by the Black Scholes model Is being amortized over the vesting period.

The Scheme I Is broken up into the different plans as follows:-

a. 2001 Employee Stock Option Plan (the '2001 Pian')

ine Group granted 22,767,488 common stock options under Scheme I, net of forfeitures through March 31, 2010. Tne Trust allocates the shares at an exercise price of Rs. 11.25 per share representing a 50% discount to the price at which the shares were issued in the Indian initial public offering in February 2002.

The options vest on a graded basis from the grant date as follows:

Foroptions with a vesting period of 36 months:

On completion of 1 year 20%

On completion of 2 years 30%


For options with a vesting period of 42 months:

On completion of 1 year 15%

On completion of 1 year and 6 months 15%

On completion of 2 years and 6 months 30%

On completion of 3 years and 6 months 40%

. For options with iI vesting period of 48 months:

On completion of1year ·On completion of 2 years . On completion of 3 years On completion of 4 years

..

10% 20% 30% 40%

The contractual life of the options granted under the 2001 Plan is 7 years from the grant date.

Net compensation expense for the 2001 Plan for the three months period and Year ended March 31, 2010 was Rs. Nil (for the years ended March 31/ 2009 - Rs. Nil and March 31, 2008 - (1,250)).

. I

b. 2004 Employee Stock Option Plan (the '2004 Pian')

The Group granted 3,39Q,OOO common stock optIons, net of forfeitures through March 31,·2010.

-34-

•

•

• •

I-I. __ --------'-T.!..!:he"'--""op-tions carried an exercise price of Rs. 35.00 per share which was lower than.the.merket.value. _

The weighted average fair values per option of Rs. 29.65 and Rs. 42.41 for the options granted In

• 2004 based on the Black Scholes model are being amortized over the vesting period of 48 months based on the graded vesting schedule, provided that the holders of the option continue to be an

• employee on the vesting date. The contractual life of the options granted under the 2004 Plan Is 7

years from the grant date.

• • • • •

• • • • • • • • • • • • • a

u D [J

o o []

[J CJ



(Amounts in thousand~ except share and per share data and as stated othelWise)

On completion of 1 year On completion of 2 years On completion of 3 years On completion of 4 years

10% 20% 30% 40%

Net compensation expense for the 20(H Plan for the three months period and year ended March 31, 2010 was Rs. Nil (for the Yeilrs ended March 31,. 2009 - Rs. Nil and March 31, 2008 - Rs. 10,648).

c. Superpot Employee Stock Option Plan (the 'Superpot Pian')

The Group granted 121/423 common stock options, net of forfeitures through March 31,2010.

The options carried an exercise price of Rs. Nil per equity share. The weighted average fair value per option of Rs.69.70 for options granted on July 1/ 2004 based on the Black Scholes model is being amortized over the vesting period of 36 months based on the vesting schedule below, provided that the holders of the options wouk:l continue to be an employee on the vesting date. The contractual life of the options granted under the Superpot Plan is 7 years from the grant date.

On completion of 1 Year 30%



Net compensation expense for the Superpot Plan for the three months period and year ended March 31,2010 was Rs. Nil (for the years ended March 31, 2009 - Rs. Nil and March 31, 2008 - Rs. 192).

d. 2006 Emplovee Stock Option Plan (the '2006 Pian')

The Group granted 2,805,796 common stock options, net of forfeitures through March 31, 2010. The options earned an exercise price of Rs. 5 per share. The weighted average fair value per option of Rs. 251.46 for options granted based on the Black Scholes / Lattice valuation model is being amortized· over the vesting period of 48 months based on the vesting schedule below, provided that the holders of the options would continue to be an employee' on the vesting date. The contractual life of the

options granted under the 2006 Plan Ii 7 years from the grant date. ~



Net compensation expense for the 2006 Plan for [he three months period and year ended March 31, 2010 was Rs. 34,602 and Rs. 185,997 (for the years ended March 31, 2009 - Rs. 134/445 and March

31,2008 - Rs. 156,476). .

(ii)(a) 2005 Employee Stock Option Scheme C' 2005 SCheme")

The Group granted 8,023,000 common stock options, net of forfeitures through March 31, 2010.

The options carried an exercise price per option of Rs. 110.50/ Rs. 156.50, Rs. 178.50, Rs. 183, Rs. 195, Rs. 206, Rs. 298.50, Rs. 385.50, Rs. 421.50, Rs.430, Rs. 459.50, Rs. 461 and Rs. 5 for 4,768,000 stock options/ 407,000 stock options, ;304,000 stock options, 163/500 stock options, 1/180/500 stock options/ 349,500 stock options, 414,000 stock options, 496,500 stock options, 1,417,500 stock options, 688/500 stock optlons, 520,000 stock options, 522,500 stock options and

-35-

•
•
•
•
•
•
•
.-
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•• ~
•
0
0
0
0
fJ
0
[)
[)
0 Bharti Airtel Limited



1 __ 1----- ..... 1,,.3.23.,000 stock options, respecthlely-, per equJty_shar.e....Ihe_w.eigbtecLav..er:age.JaiLvlllues_per-optiot1 _

of Rs. 100.60, Rs. 81.76, Rs. 88.94, Rs. 94.40, Rs. 78.59, Rs. 102.16, Rs. 158.21, Rs. 170.39, Rs.

210.16, Rs. 215.33, Rs. 229.04, Rs. 181.29 and Rs. 404.58 for 4,768,000 stock options, 407,000 stock

options, 304,000 stock options, 163,500 stock ·options, 1,180,500 stock options, 349,500 stock

options, 414,000 stock options, 496,500 stock options, 1,417,500 stock options, 688,500 stock

options, 520,000 stock options, 522,500 stock options and 1,323,000 stock options, respeci:ively,

based on the Black Scholes I Lattice valuation model are being amortized over the vesting period of

48 months as per the graded vesting schedule, provided that the holders of the options would

continue to be employees on the vesting date. The ccntractual life of the options granted under the

2005 Scheme is 7 years from the grant date.

The options vest on a graded basis from the grant date as follows:

On completion of 1 year On completion of 2 years . On completion of 3 years On completion of 4 years

10% 20% 30% 40%

Net ccmpensetlon expense for the 2005 Scheme for the three months period and year ended Mardi 31, 2010 was Rs. 64,834 and Rs. 234,356 (for the years ended March 31, 2009 - Rs. 210,521 and March 31, 200S - Rs. 172,957).

(ii)(b) 2005 Scheme - 2008 EmplOyee Stock Option Scheme· C'2008 Sdleme'1 and Annual Grant Plan.

The Group granted 7,032,330 common stock options, net of forfeitures through March 31, 2010.

The options carried a weighted average exercise price per option of Rs 336.50, Rs 295 and Rs 402.50, respectively, for stock options 5,425,7321 790,700 and 2,566,332 respectively, per equity share. The weighted average fair value per option based on Lattice valuation model was Rs 176.50. The fair value Is being amortized over the vesting period of 36 months on a graded vesting basis, The contractual life of the options granted is 7 years from the date of grant. The options vest on a graded basis from the grant date as follows:

2008 Scheme Annual Grant plan

On completion of 1 year 25% 33%

On completion of 2 years . 35% ~ 33%

On completion of 3 years . 40% . . 33%

Net compensation expense for the 2008 Scheme and Annual Grant Plan for the three months period and year ended March 31, 2010 was Rs, 122,097 and Rs. 517,638 (for the year ended March 31, 2009 - Rs. 305,683)

(iii) Jnfratel Qptlons .

BIL granted 2,871,890 common stock options, net of forfeitures through March 31, 2010. The options carried a weighted average exercise price per option of Rs 340 per equity share. The weighted average fair value per option based on Lattice valuation model was Rs. 482.73. The fair value is being amortized over the vesting period of 36, 4S and 60 months, respectively on a graded vesting basis. The contractual life of the options granted is 7 years from the date of grant. The options vest on a graded basis from the grant date as follows:

-36-

• Notes to Consolidated Financial statements
(Amounts In thousands, except share and per share data and as stated othelWise)
•

• 48 Months 60 Months
Gn-€Elmpletien-el'-l-year- 15% 213
• On completion of 2 years 20% 20%
• On completion of 3 years 20% 20%
On completion of 4 years 35% 20%
• On completion of 5 years 20%
• Net compensation expense for the options granted under the Scheme for the three months period and
• year ended March 31, 2010 was Rs, 107,851 and Rs, 454,292 (for tlie year ended March 31, 2009 ~
Rs, 246,559) Information concerning the stock options issued to directors, officerS and employees is
• ·presented below:
As: of Marrll ~:tt. A. of Mordl31, Ao of MIIr<h 31,
(GIla .... '" Tho",..,,,,) 21109 201)!) 2010
• Number or weighted .", ..... go Numb.ror WBighted ... erage Nu_of welght.od ........ 1J1I
-'* opt""'" eK8Ub ... lte seeek option. ............. prbl .todc optlaRS exen:IsB IK'Ia!
• . (R~J (Rs.) (Re.)
2001 PI.n
• NI6rta of sharBs Lnder IlIltl:ln:
o...tstord'lg et beghnhg of peOO;I 262 lis. 11.25 n ·110. 1l.25 36 lis. U.l:j
Gr_
El!BIdoed 99 11.25 23 1L.:15 4 11.25
• ~or~ 100 14 16
Dut5~ ot period end 73 11.~ se 11.2:> 16 11.25
8<ercl_ ot end of penxr rs 11.25 36 11.25 16 11.25
• WsIghtad __ gr...,t di\Q F,* v ..... _
option far cpllDn:s ~.,too<I <t.ri"ly Ito. .
period at ... thorl marla v_
• 2004 plan
i'UI'bet of _l.-DlI cpIlCn:
• Outst..-dlg at.iJeQI'n"Q ofporlcd 1..- 35.m gss 35.00 S76 :31;.00
Gr.IrGd
. EIIercI<e<I -414 ·35.00 379 3:1.00 4Q; 35.W
~ar~ 1'ID
• Out<t.rd"Ig ot paIocI and !IS5 S5.OD 576 35.m 170 :31;.00
_ at end of PAb"I 1155 35.00 S76 35.00 170 :31;.00
rJ ~ ..... _ ",..,1 dahof* ........ per
optIOI'Ilbr optIJns 1lI"- d.n1g the
pertxI at less than ma<ket v .....
0 SUporpot PIon
f'UTberol shares t.nder 0X>IIcn:
rntrunIIr'Q at I:IecIrri">a of pgrIod 51 12 12
(] Gr_
~ 35
~orexprad 4
Outstnro .;at psrtxi end 12 lOi 12
n ~·.t ..... of PQrIcd 12 12 12
WlIIItl- aYSllage g;nt dote fal" v ..... per
0 cptlm fOr optbn!; Cl"lI'\tad <i.JrInQ _
period at less than morI<et ._
;!Wti Plan
0 I'Unbo1r of __ ..... ""tbn:
Q.ltstord'lg '" ~ ofpert>d 2,501 :1.00 0i,7ll5 !;i.OO 2,Ql0 !;i.00
Grll'\ted eaJ 5.00 261 5.00 ~54 5.00
0 ExQ<d5ad 34 36 5.00 &ID 5.00
c.v.:eIad tY "'l'tad 282 600 1213
Outst~ et peIkJd <>nO:! 2,7115 5.00 2..~1O 5.00 2,096 ~.OO
__ at anc:I of peOO;I 011 5.00 ~ 5.00
0 WtlI!tltad __ want datro fat ._ per 1500 322.51 :161 ~.25 454 2!)!1.'i!3
option for IJIltIon; oranted dI.mg the
perIad et _ thon InII"ket v_
I] SO:heme 2DOS
(] I>lJtWer of>hille>..-der opttt1:
OlMtlll"d"ll;l at~ ofl:Jellacl 6,040 143.83 7.45112 =.<0 5.9>19 237.<0
Gi.m.d 3,726 4~.'4 1..323 s.oo
_rcI!>od ~97 12-4.75 ~~ 13'1.08 920 1213.37
(] concolod or ~ 1/587 l,<lIJ6 ID'I
OJIstondhg ot PiI1CId ana 7,fif12 237.30 5.998 237.:30 5,797 1112.53
EXercIsable> at and of pert>d S79 2~.3Il 1.~76 :!T.I.30 2.576 1!12.~
(] WtIIo;titad ..... _ 17000t .rota fa'" ..... _ ~,= Its. 172.89 R>. 1,323 lis. "101.10
optbn b IlPtIO'lS Ill" anted I1rtIg Ih9
pertod it less than market VolUe
0
0 t ~37~
()
(] • • • • •




Scheme 2000 8 Annual (]rant Plan

• •

• • • • • • • •

• • • •

• • •

• D

o n [J

u u [J

IJ n o o

tumer of shares tnIer optIOn; OJtstml:I at bqDIg of pMM <lrawd

ExercIsad

CancGIad Cl expi'ed outsta"llillJ at PBIb:I sn:I Exerds.!I:S at em of peIDd

w~ aVerage grant date fM' y.!lJe per 0PtI00 for Q)ttos gr<ntad cttmg the perlXi it lass than marIo:et vaI..B

5,794 331.22
6,216 330.:36 2,560 ~02.50
1
422 1,328
5,794 331.22 7,031 352,05
1,262 352.05
6,216 as 154,4<1 2,5CiO R~. lO9.45 Infratel o)ltllins .

N..I1bif of. shares U"d9r.C4lIItn: . ruslaldlg at ~. Of period e-a1ted

Exat:Isad

Cim3Ied 01 &i,i-ad (MsWd1g at perlXi End EXercisabie at en:j of patoj

Wutttted alB'a;JII grant date f. yoU! JW 0jItI:n for qltb'ls '1'a"ltad dLrI"g the oenxI at lass than m.rtet yaUl!

Rs,

2,4:11 340,00
2,450 34:1.00 gg:; 340.00
450
2,450 341.00 2,995 3<10.00
471 340.00
2,450 Rs, 374.B1 gg:; Rs. 4'18.01 The following table summarizes information about stock options vested during the year ended March 31,2010 (shares in thousands):

2001 Plan 2004 Plan Suuemot Plan 2006. Plan Stheme2005 5clieme20DB Infratel Ol!tlons
r.Lmberof~ '1,057 2,22-i 1,292 481
w8!tlied avera!}! B)IId;e ~ 5.00 192.53 402.50 340.00
~ iitrllsk: ~<lJS (l1 Rs.) 223,446 S6,538 29,34B 163,400
WBIjIted avaage rernai"i'IJ
ClIltractuai tam .(tJ )18N5) 3.17 to 6.77 2.+1106,34 . 5.25 to 6.25 5.12106.76 The following table summarizes information about fully vested stock options currently exercisable as

at March 31, 2010 (shares in thOusands): .

2001Plan 2lID<f8i11 SUD!!!!!! Plan 2006 Plan SdJI!III82!l05 Sdtemo2l108 Infratel (Jpti1l1$
MJJter.of~ 8l8Id5.tlB .14 '.~ 12 349 2,~ l,2Il1 481
.wEtjrtedaver~ ex!!id5e me 11.25 .35.00 S.OJ 192.53 35?.!E 340!g
A019gate hIIlIst,VaU3 Cil its,) 1,1154 J;¢ 883 00,033 ~,296 .;,),476 163,400
w~ted ~~ .. IEmrtg
cmirac.tuaI tEfr1).(tJ years) 0.00 to 2,25 0;76 to 1.25 1.25 J,17 to 6,77 2.44 to 6.34 S;2S to.6,25 5.42 to 6.76 The folloWing table summarizes information about non-vested awards 'at March~31, 2010:

2[]D1P1ari

SlJperpDt Plail 2D[]6 Plan SdIeme 2D0.5 S4:f1ei11e2(IJBlnfmel Opticlns

IlaIitx:li I.Iiall:lttI!.e cps! towards the Ll'lvastedopflals (In R<i.)

weigIltaj il'erage PEriJd' it¥' the ~ticn Qf lNl'IOI'tIsed cost

• (nyeXs)

181,578 4W,742 395,485 664,413

0.00 to 3.11 0.00 to 3.J41.2s to 225 1.7610 3,]6

The following table summarizes information about the total intrinsic value of stock options exercised and the total fair value of stock options vested during the year ended March 31,2010:

2001 Plan2IXH Plan . . S1JpernDt Plan 2006 Plan· Scheme 200S Scheme 2IJ08 Infr.tel Options

IIltrilsi:: vetil of qJtkJls Slt8Itised ckmg the.peOO:I (n Rs,)

TotaifI vib of lJIJUn:wsted d.ihg tt'e perDd{n Rs.)

119,301

40,315

11

29

261,961

175,roJ

-38-



(Amounts in thousands.. except share and per share data and as stated otherwise)

The fair value of options granted was estimated on the date of grant using the Black-Scholes J Lattice valuation model with the following assumptions:

The volatility of the options is based on the historical volatility of the share price since the Group's equity shares became publicly traded, which may be shorter than the term of the options.

Risk free interest rates Expe!:tedllfe

Volatility

Dividend yield

Year ended March 31, 2[]08 6.45% to 8,25%

48 to 56 months

40,09% to 41,33% 0.00%

Year ended March 31. 2009 4.45% to 9.71JO.iO ···.48 to 72 months 3523% to 49.26% 0.00%

Year ,Ended March 31,2010 5.35% to 7.86%

48 to 72 months 36.13% to 52,69% 0% to 0,31%

During the quarter ended September 30, 2009 the abolishment of the FBT was enacted by Finance Act 2009. Such abolishment decreases the exercise price of options and resulted in the options being modified. The modltlcatlon resulted In additional compensation cost of Rs. 140,494.

14. Income taxes

The Group accounts for the deferred tax assets and liabilities for the temporary differences, unabsorbed depreciation and loss carry forwards, to the extent that the benefit would be more likely than not-to be realized in the future,

Unabsorbed depreciation represents depreciation in excess of the currently deductible amounts that could be carried forward and utilized as tax deductions in future periods.

In Juiy 2006, the FASB issued ASC 740-10-25 (FASB Interpretation' No. 48, "Accounting for Uncertainty in Income Taxes"). ·ASC 740-10-25 (FIN 48) 'prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be' taken in a tax return. The Interpretation also provides guidance on derecognition, classifiCation, Interest and penalties (which the Company classifies in the conSOlidated . financial statements as income tax expense), accounting in interim periods, disclosure, and transition. ASC 740-10-25 (FIN 48j was effective for the Company beginning April 1, 2.007. The provisions of ASC 740-10-25 (FIf'J 48) are to be applied to all tax pOSitions upon initial adoption, with the cum.ulative effect adjustment reported as an.adjustment to the opening balance of retained eamings.

The cumulative effect adjustment of adopting ASC 740-10-25 (FIN 48) resulted in a liability for income taxes associated with uncertain tax positions at April 1, 2007 of Rs. 1,126,401. Consistent with the provisions of ASC 740-10-25 (FIN 48), such income tax liabilities were recorded in other liabilities in the consolidated balance sheet because payment 'of cash, is not'anticipated within one year of the balance sheet date. The Group does not currently expect that the total amount of unrecognized tax benefits for any uncertain tax position at March 31, 2010 will Significantly increase or decrease within the next 12 months. The liability for income taxes essodated with uncertain tax positions at March 31,

2010 is Rs. 1,126,401. .

-39-

• • • •



(AmountS in thousands, except share and per share data and as stated otherwise)

The

onents of the income tax ex nse were:

•
•
•
•
•
•
•
•
•
•
•
•
~, , .-
• .. -1-'.' .
• ..
•
•
•
•
••
•
•
•
•
•
•
•
•
•
• . lea' elided Year e_ Three Mllnth pl!l1Dd Year ErId.d Malth rear Ended I'18Kh

Mard1 ~1. 200B Marm 31. 2DIHI ondIng _ 31. 31.2010 31.2010

:mID

o.1antta.._

1Je~ tax~J (l:e'elt) InClJl1l:ll-ux, BXpIII1~

Ro. e,~l3,!154 115.

!35.811)

!Is. U79.11O Ro.

1l),4lD,~ 115. (32!!5422l 6Ji14M2 Ro.

1,~16 Rs. 1l418192l 3451324 R e,

22,141,552 USC [9.11f!.4l7! 13.1159.115 IISD

19:1,575 1191.357) 300.218

For the three month period and year ended March 31, 2010 valuation allowance of Rs Nil (March 31, 2009 - Rs. NIL and March 31, 2008 - Rs. 67/346) created on prior acquisitions, for which tax benefits were subsequently recognized, reduced goodwill or other non-current Intangible assets, .

The recondliation between the provisions for Income tax to the amount computed by applying the statutory income tax rate to the income before provision for income tax is summarized below:

_ ended. '!eor ended 1hreo rnmth p .... d Year End.d Mard1 'Ioor Ended Marth

MordJ31,2008 MardI 31; 2l1li9 endhQ _iii 31. 31,21110 31,2010

2010

IS. 76,537,1)43 as. !lJ,012,956 II$.

(Unoudlted) _000'.)

24.585.515 R.. ]J)I,<m,CRl USO 2,369,916

Ro. 16,537,D44 1Iii.1l'I,Il12,!156 I".

3:1._ 3:1..99000/0

<6,EJl~,!I'I1 31,~4\111

14,585,515 Ro; 33._ 9,356,617

106,Q77.geg U8D. 2.1I511.g16

.:ll._ 33._

36,351,,8111 _.:i3'I

Blactsdta<,.lmI'1Jrda

Cof!>JtEd ""'.......,... ~/Cle!lucl:lons)ln.taxBJ on acwr.rnl of:

Less,~'of~'I'1~/):Int IOI<Itr.res

[lffimlt~ ~~9 (lfo1h!r ro.rrtIy ~rrtm.n.t.>tl-'"

=:1i=

~h~~OIr:Jw""'"

312 a!107

~~~.

<!I,0]4 2!:IJ,143

(;179.424)

242,401 2i,8B2 1O,~ (2,a11,9B3)

(11)151) (65)171) ",92D,009 (?,138.=)

113,941

(115,152) (213,!lI51) 22,00,913 (ll,i47,'37)

(205M) (4,?4D) . oUIO,:)oM (246,953)

"d~~:" tarr DI

TII:b;I.. ••. '" '!""f'"J Iirt1;I Idlor IB

=~~~~~~~'_ssd

e.neetclirtno;d'.l'ikr'til!~~oflldan_ Tax

Act·····c ••

Ookmr:itar< iabai,..·miotadI. rimrm) mNPrafbod«""'" ..... t.. ""'" "".~tinorit·of"'-"" ~trrrId byBAL

raM pO,.trIo aJl>Ide riioi.\ In'<rcrdtion to tax pojo;rb!o rnIor _.W

::.......,;t·~ . 351.a::l!1. . 252.184 294.013 574,205

Incanl tare I~rroportad Ro. 8,1178,110.' Ro •. G,G14Ji32 II.. 3AU321 Ro. 13.9:18,115 . USD

The primary components that gave rise to deferred tax assets and liabilities were 6S follows:

1,IB7,2W (45';1,tl!I5)

'10,100 (lO,17ll)

1~1l64· (25.835,~I·

. (2SIi,m) ci4.w3.53l1

12,721 m218

I'ro¥IstInmr'

~~.,'

~.~ ,

ucero:e fies · .....

.... aua:I~

Ll'laamed ntdmit·

~~~

IlIirIoJativii ~.~ & ExdlaniJe.fuctuatlr:n

Olhr::rs" .. .;

IirOsStlefeIT8dw 8iS8ts Less: Vabattrn.~ Total defamid.UlKaosBts

Deferred t<lxuilblJtiea-:

Fl'CG8rtyt. ~.

=fIoarrSU. debt ~tb1 costs othrarl'Ll'l'Ml:~

others. .

Total deferradl&ltllalJllllles

Net deferrild t8x assBtI (Ui.bUltlMl

ASDf
Mai-ch ~1. lOO!I MardI 31, 20111 Marth ai, 211111
(Uilaudll\ldl
4,438,786 Rs. (USO'OOO)
,As. S,1l66,179 iso 112,233
1,$4,491 3,421.702 75,002
954,:351) 1,0I62,1I7;i 23,52Il.
~1,~ B9Il,993 ,j,'P3S ..
1,1»5;ro:J. 1,~4;1913 23,132
SIl'I,m 33<J'~ 7,417
·115,934 2118, •. 4,616
lI,!B3,1?9 14,23D,~ . 315,25'l
1,7'i,03Z ·2;7fl).3815 61,,152
4,550,627 l~mi166 392111
. ' &i,3J7 1,193,6«; . 26;448
18,5l1!i,OY6 3l;.Q86,101 7OEI,5!J6
·11,584,491) . rn,'I21,702) m!i902J
!!s. 17,000,60.5 Rs. 2a.~!H,3?9 UI:lJ) 632'194
Rs. (12,D35,1137) lis. (1".712.915) lID (925;I)j[))
(95'M43) (919,1XIJ) (21),3:'13)
(19,439) (1.3:15,001) (28,9W)
(2,259.115:2) (5B4,4Jl) (12,947)
'''75~ Rs. [~WJJG72~ !35i~
R& (15!746~= !19j.22.ClI9: IJSI) 1423
RB. 1",2:;4,1118 Rs. 1I~.Z~Cl -40-

• • • • •


N~ to Consolidated Financial Statements


The movements in valuation allowance were as follows:

• • • • • • • • • • • • •

• • • • • • • • • • • • • • • •

Yea' mtled i'1anh Yea' mded MaKh l1tree mDllti1 penD~

31,2l1li8 31,2000 endJng March 31,

21110

Rs,

1:li,993 Rs. 405,1J6 Rs.

m14~ 1.179,355

3,421Jpl IIlD .

7!i.B!Jl

Rs,

1,584,491 Ill, 713,841

2,2gS,3R· Rs,

Ye.1I Ended March 31,2010

llnuOIIlh period entIrG Mal'lhJl,20m (IOOdlted) (lm'lml >5.liJl 10.700

1,58<M91 USO 1,937,210

AS of March 31, 2010, the Group has net operating losses of Rs.l1,494,883 realization of which would be dependent on the Group generating sufficient taxable income prior to their expiration. A portion of the net operating losses will expire through 2027 and a portion of such losses do not have any expiration period.

The Group has benefited and will continue to benefit from certain tax incentives provided to the telecornmunlcetlon industry under Indian tax laws. These.lncentlvesprovide a deduction from taxable income of an amount equal to (a) 100% of profits derived from telecommunication business for the first 5 assessment years commendngat any time during the Benefit Period as deftned below (hereinafter referred to as ''Tax Holiday") and (b) 30% of the profits for a further 5 assessment years. The deduction may be claimed, at the option of the Group, for any 10 consecutive assessment years out of the 15 years beginning from the year in which a circle commenced providing telecommunication services (,'Benefit Period"). The Benefit Period is assessable separately for each cirde •. The benefit of this deduction would start to expire from the year ending ~arch 31, 2010 through the year ending March 31, 2021.

Net deferred tax liabilities were as follows:

March 31, 2009

Q.lrrel'lt19sset;:.

cu.t~rit~labllitllil!j

Gi'()$!.>.C.~rant aS$9U

Less: VakJ~on aDowanee N8tCurnmtasseb·N~entassets

NdI'i'cU:l'l3I"1t .habl!ltI9S ·QfP~!IIi'rKlnccurr!mtassetl(lIablhtY) Lsss,. : .V~iO"l aWnwance

NBt, o"ori;.';:;urrent lIabdltles r'IBb;';:'(B·i':~d tal,c asset/(ilabllltv)

11,.338,"100 Rs, 2,327;981

Rs.

8,8.10,319.

As Of March 31. 2[)10

11,231,863 .USD 1.77'8,154

9,453,709

""'_rch 31, 2010 . (Unaudited) (U8D '000) 248,823 39,392

209,431

.7,246,798 13.219A28

460,139 . 384,598

(5,971.tlaO) (:l,584j41.h)·

(7.556;121)··

209.179

Rs. . 1.254,199,> Rs •.

..

15.

~ther assets

. MBrdl 31, 21109

$lIo;~(lty:deposits oebtalglnMlon tests . ~~tIrCt~<lSS9ts Ottiers.' '.

;:total

Rs.S,ssa,~ Rs. 805,:399 5;722,~61

609.

9,453,709: "OBO:

20,7.70,690 17,360,:319

3,"l1O.37? . (3,421,701·) .

(11.329)

V,442.3E10 USD

Allot Man:h 31, 2010

5/103,571 $00#,7 8,049,17~ 329

12,116;978 . (1;!I8o,9~)

14,oi9,741 (3,SI06,Ul3)

10,113,551;1

209.431

7:;;,551 (75,802)

. (251)

Marl:h 31, 2010 . (Uoaudl~ (lJSD OOO's)

USD 119,707

12,554 178,316 7

tiw. 224,049

Security deposits primarily include security deposits given towards rented premises, cell sites, interconnect ports and telephone connections,

-41-

• • • • •

• • • • • • • •

• • • • • • • • • • • • • • • • • • D

o o


Notes to ConSOlidated Financial statements

(Amounts in thousands, except Share and per share data and as stated otherwfse)

Restricted assets Include amongst others, the amounts paid under protest to v~rious Government

authorities (refer Note 27(ii)(b».

16. Short term borroWings and current portion of long term debt

March 31, 2009

Alaf March 31, 2010

Man:h 31, 2010 {lkiaudlted) (USD DOO's)

150,'251 ~,026

lJnseo.l'ed

Current !lartlan of long terin debt TotEll

9,639,676 55,168,118.

6,782,352 10,393,372

lED

3BO;271

Rs. 64,B!l7,7Q4 Rs_

17.U)5,724

Included within unsecured borrowings are short term unsecured bank loans, cash credit accounts and bank overdrafts.

The Group's weighted average interest rate on the short term borrowings was 5.13% and 0.67% for the year ended March 31, 2009 and year ended March 31, 2010 respectively. The calculation of Group's weighted average interest rate on the short term borrowings excludes the bank overdraft.

The Group prepaid Rs. Nil during the three month period and year ended March 31, 2010.

The details of unused lines of credit are as follows:

Man:h 31, 2DD9

As of

Marl:h 31. 2010 Man::h.31,2010

(Unaudited) (UBD '000)

secured

Cash Credit

unsecured

Rs. 100,000 Rs.
Rs. 5,837,693 Rs.
Rs.. 5,937,693 Rs_ 120,920

100,000 USD 2,215

5,358,366 use

Cash Credit

Total Unused lines o.f credit

118,705

5,458,366 USO

17. Other QJrrent liabilities

D.Jllto~s

CQiitrlbt.Jtkln to QrTpioyee benefit UDS .

·~~knces ..

O~la)(eS payabl!l •.

~t accltlSd but not due

rot ...

AS of

Match 3:1,. 20D9 . March31,.201O. MaKh ar, 2.010

(Unaudited) (UOOOOO'Ii)

Rs. 2..807,248 1lS. 3.!57Q,405 US[) 79,096

380,957 460;159· , 10,194

179,on . ~ ?4.',s:t7. ·5,483

4,007;671· ",~jB95. . 101; 1m

772.930 2ll!3,773 6,397

Rs. 8,1.47,823 Rs. 9;]jo~75iJ . USC 202.275

18,

Employee Benefits

a) Gratuity plan:

The measUrement dates for the Group's Gratuity Plan were March 31, 2009 and March 31, 2010~ The following table sets forth the changes in the projected benefit obligation and plan assets and amounts recognized in the consolidated balance sheet as of the respective measurement dates:

-42-

• • • •




As of

~ __ ---~------------------Mar€h-3-1,..-'>!BBg--Mareh-3-1-;-201:0---Marc:h-9':1:;-20:101---(unaUdited)

(USD 'ooD)

• • • • • • • • • • • • • • • • • • • •

• • • • • • 13

U U

Crn.nQe In proJected baneftt obligation Accumulated benellt obll~lon

Projected benefit. obligation at beginning of

lJerlOd .

Current servlc:e cost

Interest cost

Beneflts paid

Acquisition i1djustment

Actuarial loss

projertad.benetlt obligation:at and of period . . ..

590,921 Rs.
499,490
210,202
37,462
(92,005)
.113959
,7fi,9,017 Rs.
70,502 Rs.
10,635
81,137 Rs.
(697,880) Rs.
(OB7iB80) Rs. 679,632

RS".

USD 15,056

769,017 17,036
227,151 5,032
57,676 1,278
(259,509) (5,7<19)
62,794
124010 2747
981,139 USD 20,344·
91,137 US[) 1,797 Rs.

Change In plan assets.:

Rs.

(900,002) USO

(18.547)

Net funded status

Net amount n:I£Ognlzad

(900.002) U90

(18.547)

RS.

The components of the net gratuity cost were as follows:

Year ended Mard131, 2008

Year eridecl Marth Three month period Yellr Ended

. 31, 2009 ending M8Kh :31, Marm3!, 21l!O

2010 .

Year Ended Marm31,2010 . (Unautllred)

(USO'DOO)

USIJ 5,032

1,278 (l.3s) 2,EB2

OJrrent sl'ictl cost !\S. 115,1135 !\S. 210,202 Rs. 85,6B8 Rs. 227,151
Interest cost 27,940 37,462 14,419 57,676
E:o:pe:ted rebEn rn Pan· assets (4,8)3) (5,288) (1,521) (5,O!l5)
RecoP:edactuariai (gail) I b;s 83,(00 119,246 16.677 l3l,1J9!j
Net gratgtv cost Rs. 251,412 Rs. 361,622 Rs. 115,263 Ri. 408,837 USD

9,1)57

The net gratuity liability is as follows:

March 3;1.,2009

March 31, 20m (Unaudited) (USD 'otlb)

(18,5<\7)

March 31, 20m

A!;CI'ued bene1itUablllty Net gr~ltv h~bllity

(697,879)

(900,002) .~ .

<18,547)

(607 ,B?9) RS.

(900,002) U5D

The weighted average assumptions used to determine the benefit obligations were as follows:

Discount rate

Rate of COl'flPensatlonhc:rease -FIrst three years

-Thereafter

Year enc!ed March 31,2009 7.500/0

Y~ Ended M.srth 31,2010 7.50%

15.000Al 7.00%

8,00% 8.00%

The weighted average assumptions used to determine the net periodic benefit cost were as follows:

•

• Bharti AirtelLimited

• • •


(Amounts in thousands- except shilre and per share data and as stated othelWlse)

Year ended

Year Ended Marrh

• • • • • • • • • • • • • • • • • • • • • • • • • • [J

[)

1-'

Discount rate

Rate of compensation increase ~First three years -Thereafter

Rate of return on plan assets

March 31, 2009 7.50%

31,2010 7.50%

15.00% 7.00% 7.50%

8.00% 8.III% 7.5)Oko

The expected rate of return on the plan assets was based on the average long-tenn rate of return expected to prevail over the next 15 to 20 years on the investments made by uc. This is based on the historical returns suitably adjusted for the movements in lonq-term government bond interest rates. The discount rate is based on the average yield on government bonds of 20 years.

Actuarial gains and losses are recognized as and when incurred. The Group made annual contributions· to UC, where the amount would be advised by UC under the Group Gratuity Scheme. The Group was not Informed by. LlC of the Investments made by LIe or the break-down of plan assets by investment type. The annuity plan is self funded.

The estimated amounts of gratuity benefits expected to be paid in next 5 years ending March 31, 2011 and each of the next four years and in the aggregate for 5 years thereafter, are as follows:

March 31, 20~O

Man:h 31, 2010· (Unaudited)

(USO·ODD) 3,373 4,485 4,977 5,716 6,076

31,040

Yearer:II:1lng March 31,2011 Yearendiria March 31,.2012 Yearehclif1g Man:h 31, 2013 Ye .. renCilJigMarch 31, 2014 Ye<lre!'ll=lIt:l!J March 31, 2015

, •.. J yeGir.i;·~ha March 31, 2016 - 20

.. ... Total

Rs.

152,274. 202,4!,;6 224,1570 ::iSS,OlO 274274

1140:(132

2.512.816

USD 55.667

Rs_

The Group expects to contribute Rs. 131,269 under the gratuity plan during the year ended March. 31,

• 2011

b) Provident Fund

The Group's contribution towards the PrOVident Fund amounted to. Rs. 526,152, Rs.610,173, Rs. . 165,771 and Rs. 671,114 for the years ended March 31, 2008, 2009 and for the three month period and year ended March 31, 2010, respectively.

c) Superannuation Plan

The Group's contribution expense towards the Superannuation Plan maintained by llC amounted to Rs, 1,173, Rs 2,162, Rs. 100 and Rs.l00 for the years ended March 31, 2008,2009 and for the three month period and year' ended March 31,2010, respectively.

-44-

• • • •

Bharti Airtel limited


(Amounts in thousands- except share and per share data and as stated otherwIse)

19.

Long term debt

• • • • • • •

• • • • • • • • • •

.' .0

• • • • • • • II

[J

n

Long term debt comprises:

March 31,2009

As of March 31,2010

March 31,2010 (Unaudited) (uSO OOO's)

sewred Term loan.

NOn ccnvertlb1e debiffrtwe5 ('NC:0s0) others

Rio

0,000,000 as, 500,000 17.304

Total

6..517.304 135,415

1'l.171,f08. USO

;JJ5,I.;lJO

l~51,!iiI3l . . 2.,649

14.666;239 . 324,905

~l44;~('r 69,662

11.521;699 _UB_D 2_5S_,;2_43_

313,949

8.307

Less: CUrrent po1tIDn (payable v.1tl1rll year) ·Totalserured loans, nat-of current portion

unsecured TermlQam

c:oovertlble. dsbenllni£ rcos") fCa!'s

. iotsl

Less: Current portion (payalJlso wlthrn ll,lear)

Tot •. 1 unsecUred ·ID.mi net of current portlO!1 Tatar long tenn loans, nmt of currant pOJ1ion

Rs.

6,391,889 Rs.

7O,5El3,353
32,035,500
24,467
102,643;320
55,032,703
Ri. 47,610,617 R$.
Rs. 53,9!l2,506 Rs. gsfj,J51

43,169;672 956,351

7,23:8j~ •• 160,364

.35,930JHO. . lISD 795,907

47,452i53g -'lI'=SO=-· ----:1-;o:::5':-'1,23=O~

The Group's weighted average Interest rate was 2.69% and 1.89% for the year ended March si, 2009 and year ended March 31, 2010, respectively.

The secured loans in Bharti Airtel Umlted are collaterized by:

.. first ranking pari passu charge on all present and future tangible movable and freehold immovable properties Including plant and machinery, office eqUipment, furniture and fixtures fittings, spares tools and accessories, vehlcles:

. • all rights, titles, interests in the accounts, and monies deposited and investments made there from and In· project documents, book debts and insurance policiesi

• the hypothecation. of all current assets both present and future, including book debts, monies, receivables; claim bills and contracts excluding:

a) investments in subSidiaries of Bharti Airtel Limited

b) Intellectual properties 'of Sharti Airtel Limited

c) Licences issued by DoT to proVide variOUS telecom services

The secured loans in Sharti Infratel Limited are colla~rized by:

.. first 'ranking pari passu charge on all present and future movable and immovable fixed assets (excluding land) of Bharti Infratel Limited, inclucUng plant and madlinery, office equIpment, furniture and fixtures fittings, spares tools and accessories, vehicles;

The scheduled repayments of the long term debts during the next 5 years and beyond are as follows:

March 31. zoac: (unauan:eaJ

(USO 'OO(]i). 230,026 404,577· 227,981 124,276 117,224 177,173

2011 .2012 2013 2014 2015

Later YE!ar5 Total

10,383;372 USD 18,262,616 10,29~,056

5~!509,810 5291472 7;997:585

.Rs.

57,B35.911 USD

1.291.257

-45-

•

• •

•

~ ~ ~T~h~e~d=e~ffi=iI~s~o~f~th~e~n~o=n=OD=n~v=e~rt~ib=le~d=ebe~n=t=ur=e=s~w=e~re~a~s~ro=I~=w~s.~· _

• • • • • • • • • • • • • •

• • • • • •

• •

•

•

•

•

• [J

I]



(Amounts in thousands, except share and per share data and as st3tedothelWise)

11.70"10, 5 redeemable non'~vertb1e debentures fbr Rs, Rs.l0.000 aach r~~bIEI In 4 equated half yea-Iy hstalments beglrnlrlg December 2009

As of
Mar<:h 31, 2009 Mardi 31, 2010 Mardi 31, 2010
(Unaudtted)
[USD "COO)
50,000 R5, 37,500 USD 8:31
450,000 Rs, 337,500 7,477
-500.goo Rs. 375.000 USC S.3Il8 11,700/0, .. S redeemable non·convert~le debentures for 1Is.1O,OOO each repayable In .. equated half yearlY Installments bear"nlng December 2QOQ

Totel

Rs.

. The detal5 of the corwertlble debentt.res arS as follows:

Mar£h 31, 2009

Mar£h 31. 2010

March 311, 2010 (Unaudited) WOO 'DOD)

Interest Free, fully and C·D!Tl~crl" convertible, rummulatlve. ~M debentures. for·Rs 10,000 each

Non ns,

32,035, SOO Rs,

usc

IU. 32,035,500 IU.

USD

Others include vehicle loans taken from banks whi(:h were secured by the hypothecation of the vehicles Rs, 17,304 and Rs. 119,580 as of March 31, 2009 and March 31, 2010, respectIVely. The amounts payable for the capital lease obligations, exduding interest expense is R s. 45,746 Rs. 71,904 and Rs, 1,930 for the years ended March 31, 2011, 2012 and 2013 respectively.

In March 2008, the Group issued unsecured non interest bearing fully Convertible Debentures for Rs .. 30,255,750 in relation to dilution of its hok:ling in Bharti Infratel Limited (BIl). The debentures were convertible into equity shares of BIL in September 2009 or earlier. During the year ended March 31, 2009, the .Group. further issued unsecured non interest bearing fully Convertible Debentures for Rs. 1,77.9,750; aggregating the convertible debentures to Rs. 32,035,500.

On October 28, 2009, the Group converted 118,650 non interest bearing fully Convertible Debentures into 1,182,270 equity shares of Rs. 10 each at a premium of Rs. 993.58 per share. On March 26, 20iD, remaining 3,084,900 Debentures have been .converted into 39,120,640 equity shares of Rs. 10 each at a premium of Rs. 778.56 per share. The details of FCCB's and unsecured term loans were as follows:

..

. -46-

•

• • •

March 31, 2009 Mer£h 31, 2010 M«ch 31, 2010

-II -'--- ------(Iunaudlted)I------

lOOD'O(]O)

Bharti Airtel Uinited

Notes to Consolidated Financiai Statements

(Amounts in Uiousands, except share and per share data ancf as stated otherwise)

Zero 00UpWl unverttJe boods of USO 115,(0) C~ Into 81J.1ty shares Rs. 2'1,387 R>.

or elie, ra~., May, :lQ)g.

• • • •

Floathc Interest rate foreign nxrsni:y run 00 pY 11,191,000 repayable In 2 5,79'0,595

half ye<riy nst.lB!nerm ba~ AI.o.ISt 2009

Floatrig InlGrOst rate foreign ctm:flCY Ioa1 of lPV 5,517,500 repayable In 3 hal' ye~ nstillnents ~1'1;1 OBcsmbel 2010

Floating Interest rate foreiIJI ~ ioJan at FY 5,752,::1]0 repayabi81n 3 halfyearty Inrtatnents beoJlIYi'lg Dscentler 2010

RoatiiQ nterest rate ml!lncurrency Iodn of py 9,!JQ7,992 rapAyabie bEq1rWig)Jt,r.2OO7

FIoatrQnterast rate fur. cl.neI'lCy Ic4n 00 PV 2,056,591 repayable beQhr*lg octooer 200!1

floating lntere5trate beQ-i OJII'En:Y b.ln of JPY 5,842,500 rEipayable h ~ :1011

FIoath;j rnterest rate fDreUi· wrency 10M! of lPY 5,B85,WJ repayab19 In

. October 2011 .

RoatrQ lnt9rest rate furer~ OJrreF1CV loan of EI.ro :30,000 ~Abl9 In May aJD9

Floatrig Intelest rate forargn tt.l'ret'IC't'loan fur IJSO ::JO,OOl repay<ble In 10 half yearlY hStalm9rtts beQmlnCl .).iy 2WJ

FIoatirg Interest raJ;e ~ tI.fI6flCy loan fur USO 85,826 rapayabIB In 20 half

I'9<lrl'( hst.ltnents ~ December 2002 .

Roath:! Interest rate fDraQ1 OJ'ten:)' Ioilll fly usn 37,004 repayable" 20 half yearly hst:llments ~.Aygl!t 2003

!'bating Interest rate fo'eIgncuranqo ban. fur US!) 370,010 repayable In 20 half yearty InStBtnents be~ Febuary ~

Fbathg Intere~t rate ·foreVo~·1o!in of USO <16,003 repayable h20 half year!)' hsta~~l.J1e2004

., Ficatha ntetast rate 1bretJn tlIrrentv Ioarrof U5I) 5,000 reipayaljen 20 half yea1y nst:llrnerfu ~ 5epten'Iber 2Q05

Fmthg htel'est rate (oo!t;Jl·CUIlSt\Cyloan of U50 4,645 r~~e In 20 half ,e<lriJ hlliIIknsntl ~ Ma-t;h 2OD6

FIoathg merest rate foreb;!.CUT."qo Ioanm 00:> 27,229 repayableh 20 half yu1y nstallments i:IagfrrIDJ~2O);

FIoiitInQ hterest ratelirelJn.~ loan 01 USO 11,7111rapayable In 20 half yearly hstallments~N~·2006

~JoatI-iQ hterest rate ioral7lnrr~ !tl.¥I of uso 15,006 repayable h 2D half ~rIY hst<6nents~iil Ma'ch2007

Floathg Intero~t rate fcreiOO'l:IirenCv ioan of USD 12,635 repayable In 20 half yearly JnstaIrneIltsbatlB'lTlQ ~ •.. 2007 ..

FioJath;j intelest r~fura.JgnW¥~r~gf usD23,574 repayatls h 20 half

yeadV hStaiment'> begIrri'"o~~~ . .

Aoatna Interest rate fQrei!tl~ ~ ofl,.lSO 18,Q96 repayal:le In 20. hliIf

yearly hStaIIrnents b!ltJIniil'"G M;IY. ~5' . .

FloalMl!! hterest rate ~~ ~ .. Of 1I5D 43;035 repayal:le '" 20 half ye¥Iy jllstabin\s.~ ~2OIl'5

FIoati'lg nterastrate fa"elgr-I. ~ioanof.uso 36,922. repayalje In 20 hliIf yearly I'iStahents ~.1itI.~

FIoath;j Interest. rata furiiVl ~ lOan of U50 52,125 rspayatm n 2D MI'

)l9arly lnstalments_ ~rig~ ~ .

. - ',:'

• • • • • • • • • •

• • • •

• IJ

11 (]

[J []

Ffoati1g Interest rate ·b"eIi7l·ctiiteifyban. lif U5D 49,310 1'9P<IY.tKi1n 20 MlF yearly Il'"6ta11merns b~ SeptenIbet.2r06

n (]

(] o [J

2,961,927

672,915

3,030,505

3,052,629

1,121,350

1,53D,207

754.254

949,~93

1,083,019

152,850

153,931

971,137

450,1e2

574,547

.1,025,260

Sl3Oi7ll5

1.315,579

1,8511,049

1,722,994

U5D

2,572,677

2,7515,511

311,973

2,B3D,107

2,850,694

63,152

270,940 6,000
%8,365 21,453
501,193 11.103
584,615 12i951
767.615 17,1;JJ5
li2,850 2,500
115,322 2,555
737,'162 16,338
345,667 7,ffil;I
441,159 9,773
399,241 ~,6'I'S
801,482 17,]55
428,7:39 .9,499.
971,299 21,517
914,157 20,252
1,411,762 31,275
1,3011,441 2S,gS6 -47-

•

• • •

------ye,

• • • • •

• • • • • • • • •

• • •

• • • • • • •

.'

•

•

•

•



(Amounts in thousands, except share and per share data and as stated ot/JefWise)

Fbatlng Interest rate fureign rurrency Io¥l of USO 49,661 repayable n 20 half 2,024,196 1,569,199 34,763
arly'i1s~bet;i1nirg'May:2001
FIoatiJ:! Interest r~te foreign rurency loan of lS) 5,051 repayable n 20 heM 192,992 148,187 3,283
-,early nst.lknents begtmg Jaruary 2007
FloatIng Interest rate fcreI,;n a.rral:'11o<n for USO W,OOJ repayable h 13 hat 203,800 112,850 2,500
'vearIv Instairnel'1~ ~ :me 2005
Fbatlng Interest rate forelon a.rrsncy ban of USC 57,328 repa'f.ile n 2Q half 2,4B2,736 1,940,&13 42,996
yYly nstat"ne"rt~ IH(:tIrt1IJ O!:tober 2007
F~ ~t r~te ftfeilJl a.nen::y loan of U50 85,~ repay.lble n :!O half 3,702,791 2,994,603 61,125
yearIYlistilments ~ Fellruary am
Roath;! IntereSt rate foreigI OJrren::~ loan of U50 152,172 repayatm In 20 half 7,168,508 5,664,154 125,480
YeiIIIY tlstaIments ,bet81nl1g me 2008 '
fIoath;J II'lterest rats frrei:n ruren::V' Joon of P'f 11,500,000 rlIPiYabie In 3 5,965,050 5,570,600 123,407
h~lf ~ nstalments I:e;Jmh;I Morch 2012
FIoa\flg interest rate forelg1 rurency loin ct JPY 1,017,275 repayable WI 3 527,661 1:38,199 3,062
Instcinents b~ OCt 2009
F.Ioatt-g irJte1eSt rats ftreO'l 0Jr1erQ loan fa USJ) 12,000 repayaile h ;13 half 244,SED 135,420 3,000
~ ln$Iiments beQ"rmg ).m 2005
FIoa!a-g hterest rate ftJej;jn anency loan fa USD 2O,6~1 rapayaile n 19 half 477,417 328,957 l,W
yearly Jns:tatrents bei;tnhg l.ne 2001 '
~hg Intere5t rate fu-ei;Jl wTeru:y loan of Ff S76,D~ repayfilln 4 298,789 ,218,310 4,836
rntaher!ts begirt"g l'bYei,iBbeI 2009
FIoati1IJ Intelest rate furei;!n OJrrency loan of FY l,143,173l"l11Ji11'i1J!ain 592,9154 229,352 5,!EI
Febrtiay20l0 nI July 2010
Fbatng ~t rate fcrsI;jn a.rrerq loan ofFY 5,400,000 rspayibl!! 5tarth;J 2,aoa,98Il
from ftpr11201/. . .
FIoatrg Interest rate furelgn currency ~' of JPY 3,796,000 repayable n )une 1,966,9135
2009.
fbatn;j interest rate foreign currency I:!a'1 of JPV 4,365,855 repayable In 2,26'1,569
AiJpt2oo9.
Fbati1g interest· rate foreigJ currency Io.;n of Py 673,005 repayable In :N9,129
JJeceIrber ;;mg.
Fbathg merest rate foreJgn currerct loan of U50 5,000 repayable t1 20 ~ 254,750 203,133 4,500
nslalments startng frcrn May 2OJ9,
!'biting Interest rite .foreig1 et.mII'ICy km ofUSO 21,757 repayabla h2(} 1,108,538 sa:3,915 .i9,~
elJ,J.3i II1St.3ilments SI<r1inJ from :kJre 20)9, .
FIoathg nterest rate fDI'eI!1i curren::y ban of JPY 866,402 r~aIlIa n 449,403
larJ.Jay 2010. . ~ . ..
FIoatTg interest rateli:Jrel;!n curreO:ykm of Py 792,641 repayable' in 411,143
JnJcry. 2010.
FIoatt-lIniterest rate fCreI,;n Cllref)Cy loan of USD 14,756 ~ n 2(} 752,302 sg9,E63 13,289.
equallnstalrnents st~ M Jure 2009,
FIoathJ ilteres! rate faeIQrJ 0Jrnin:y ban of l.6D 13,]'I9repayalle ., lnIaY 700,~4
2010.
FIxed Interest rate fuiaign o.rrency.~ of JPY 1,322,718 repaya:.e.h
Fl3tnsy20lO. .. 6EI6,1B4
Total Rs. 70,607mO Rs. 43,169,672 USD ·956~1 -48-

•



•

• (Amounts in tnoosenas. except share and per share data and as stated otherwise)

•
•
•
•
•
I.
•
•
•
•
•
•
•
•
•
•
•
•
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•
•
•
•
•
•
•
•
•
• * On Ma 12 2004 Bharti Airtel issued 5 ear USD 115 million Zero CouRQn Convertible Bonds due 2009 (the 'FCCBs'). The FCCBs were convertible into .equity shares of Bharti Airtel at any time on or after June 12, 2004 upto April 12, 20Q9 through maturity at the option of the holders at an agreed upon conversion price of Rs. 233.17 per share, subject to adjustment upon the occurrence. of certain specified events, with a fixed rate of exchange.on conversion of Rs. 43.56: U5D1.00. The FCCBs were redeemable at the option of Bhartl Airtel at any time on or after May 12, 2007 through maturity, subject to an early redemption penalty, though in no event Bharti Alrtel could exercise the early redemption unless the market price of Bharti Alrtel shares was at least 120% of the agreed conversion price. Any outstanding bonds at maturity date would be redeemed by Bhartl Alrtel at 111.840/0 of face vallie. Out of the total of USD1l5 million FCCSs, USD 94,756, USD 10,114, USD9,230,USD SOD and lJ5D 350 worth of FCCBs were converted into 35,403,934, 3,778,906, 3,448/628, 186,816 and 130,770 equity shares of Rs. 5 each during the period August 2005 to March 2006, during the year ended March 31, 2007, March 31, 200B, March 31,2009 and year ending March 31, 2010, respectively, at a conversion price of Rs, 116.59. The interest expenses recognized against FCCBs for three months period and year ended March 31, 2010 were Rs. Nil and Rs. 2,084 respectIvely.

During the year ended March 31/ 2010 the Company allotted 130,770 equity shares upon conversion of USD 350 Zero Coupon Convertible Bonds (FCCBs) and redeemed outstanding FeCBs worth 50 USD. As of March 31, 2010 outstanding Zero Coupon Convertible Bonds (FCCBs) was Nil.

The total interest expenses Incurred were Rs. 3,978,821, Rs. 4,349,794, Rs. 648,836 and Rs. 3,470,182 for the years ended March 31, 200B, 2009.and for three months period and year ended March 31, 2010, respectively. No interest cost was capitalized during year ended March 31, 2008, 2009 and the three months perIod and year ended March 31,2010.

The actual interest paid on and recorded in respect of the Group's debt obligations might differ from the stated amount due to the Interest rate swap contracts entered into by the Group to manage its exposure to interest rate risk and its strategy to reduce finance costs, The net losses arising on settlement of or due to changes in fair value of the swap contracts were recognized as part of interest expense while net gains arising on settlement of or due to changes in fair value of the swap contracts were recognized as part ofinterestincome.

Under the various loan agreements, the Group would require the consent of the lenders ttl' undertake certain defined actions including, among other things, entering into new licenses or new circles and . acquiring riew businesses,

The loan agreements contained clauses where triggering of certain specified events of default could result in accelerated payments to be made by the Group.

..

Under the loan agreements, the Group must maintain/ among other things, certain specified finanCial ratiOS, with which the Group was in compliance as of March 31, 2010..

20. Asset retirement obligations

A .reconciliation of the beginning and ending aggregate carrying amounts of asset retirement obligations ('ARO') is presented below:

Opening b"lenc ..

lIebilltles recoClnlzod on·consoHdatkm LI"bllltl e , Incur .... d

Inter .. St

CIU51ng balance

As of
"" .. nh 31. 2009 Mal'o::h.31,2010 Mar':h 31,2010
(Unaudited)
(U5DOOO'.)
2,372:,661 Rs. 2,936,661 U5D 65~1l62
13,972 310
380,0+4 (1,552,255) (:5<1,::186)
183976 216365 '1793
·R,. 2,936,681 Rs. 1,61'!,963 U!iD 35,777· -49-

• • • •



(Amounts in thol/S8nds, except share and per share data and as stated otherwise)

21. Other liabilities

~. • • • • • • • • • • • •

• • • • • • • • • • • • • • • a

SeClllt.,. deposit>

Mof

March 31, 2009 Mardt 31, 2010 March 31, 2010

(Unaudted) (usn OOO's)

Rs. 2,342,736 Rs. 1,963,228 USD 41,277

Employee benefits 1,015,107 1,185,057 26,275

Asset rel;lrerrent obtgatbrn 2,936,881 1,614,963 "35,777

other 939,343 939,343 20,810

Total Rs. 7,234,067 Rs. 5,603,591 USD 124,139

Non-interest bearing security deposits were received from customers and dealers to be refunded on

. the termination of the respective selVice. or sales agreement.

22. Foreign exchange loss/(gain), net

Interest income, net in the consolidated statements of income includes. net foreign exchange gains / (loss) of Rs. 21,465, Rs. 4,065,817 and Rs.13,115,777, respectively for the year ended March 31, 2008, three months period and year ended March 31, 2010 and interest expense, net includes a net foreign exchange loss of Rs. 23,083,673 for the year ended March 31, 2009.

23. other income

Vearended

VMr I!I'Id!!d 1IYee month period Ended

Yearendod

Marth 31.2OOB

March 31. 21101) March n, 21110 March U, 2010

Mardi 31, 2111i1

Rentals Its. l,I~,618 Its. 311J,!I91 Its. lS3,lB-t R<. 476,256
~h:CI1III 1,547;1161 1,211,1m 303,0;2 7IJB,421
lb. 2,740,479 RG. 1,522,019 Re. ~,23E;Rs. 1,2741>71
24. Gain on .sale of investments, net (ItIludIted} (IJ!lI)OOD's)

10,551 . 17P11

IJBD 29,238

Interest income in the consolidated statements of income includes net realized gains on sale of investments of Rs. 580,928, Rs 2,592,369, Rs. 979,341 and Rs. 1,879,763 for the years ended March 31,2008,2009,3 months period and year ended March 31, 2010, respectively.

25. Related party transactions

The Group has entered into transactions with the following related parties during the period ended

March 31, 2010: .

Key management personnel:

Sunil Bharti Mittal Manoj Kohli

Sanjay Kapoor (w.e.f March 1st, 2010) Akhil Gupta

..

Independent Directors

Pulak Prasad

N. Kumar Bashir Curimjee Ajay Lal

Kurt Hellstrom (upto April 29, 2009) Arun Bharat Ram

-50-

•

• • •

Mauro Sentinelli

~:----~----~NJ~"ke~sIh~A~ro~r~a==----------------------------------------~------~------------

• Craig Ehrlich (appointed w.e.f. April 29, 2009)

• • • • • • •

• • • • • • • • • • • •

• • • • • • •

•

e




Entities having significant influence over the Group

Bharti Telecom Limited

Singapore Telecommunications Limited Pastel Limited

Other related parties (entities which are controlled or significantly Influenced by the key management personnel and their close relatives)

Bharti Enterprises Limited

Beetel Teletech Umlted (formerly Bhatti Teletech Limited, name changed w.e.f 29-12-2009) Comviva Technologies Limited (formerly Bharti Telesoft Limited)

BhartiAxa Life Insurance Company Ltd.

Bharti Wal-Mart Private Limited

Bharti Retail Limited (Formerly Bharti Retail Private Limited) Guernsey Airtel Limited

Bharti RemH Holdings Limited

Jen;ey Airtel limited

Bharti Realty LImited (status changed from Bharti Realty Private Limited w.e.f. 21.05.2009)

Bharti Airtel Employees Welfare Trust (name changed w.e.t 09-02-2010, formerly Bharti Tele-Ventures Employees Welfare Trust

Bharti Axa Investment Managers Private Limited

Jataayu Software Limited (Merged with Sharti Telesoft" w.e.f 03.03.2010) Telecom (Seychelles) Limited

Sharti Realty Holdings Limited (formerly Tamarind Projects Limited name changed w.e.f 15-01-2010) Bhatti Axa General Insurance Company limited

Fieldfresh Foods Private Limited (formerly Bham Del Monte India Private Limited, name changed w.e.f. 21.05.2009)

Centum Learning Lfmited(formerly Bharti Learning Systems Limited) Satya Electoral Trust . ~

Bhatti Foundation

Bharti Electoral Trust

Joint Venture I Associate Entities Bridge Mobile Pte" Limited

Forum I Aviation Limited

Indus Towers Limited

Sharti Teleports Limited

Alcatel-lucent Network Management Services India Limited

-51-

• • • •

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26. Segment Information

For management reporting purposes, the Group's business segment results are reported In five reportable business segments: mobile services, telemedia services (formerly broadband and telephone services), enterprise services (including VSAT and internet services and network solutions), passive infrastructure services and other operations. These business divisions are based on the nature of the products and services provided and provide the basis on which the Group reports its primary segment information:

• Mobile Services - These services cover telecom services provided through cellular mobile technology wherein a subscriber is connected to the network through wireless equqmeot, The subscriber can freely roam around anywhere and stay connected wherever the wireless network coverage is ~vailable.

• • • • • • • • • • • • • • • • • • • • • • • U

• Telemedia Services (formerly Broadband and Telephone Services) - These services are provided through wire-line rnnnectivity to the subscriber. The end-user equipment is connected through cables from main network equipment (i.e. switch) to subscriber's premises.

• Enterprise Services -These services include domestiC, international long distance services provided to the service providers of cellular or fixed line services, internet services, broadband services, providing bandwidth and other network solutions to rnrporate customers.

Beginning with the period ended September 3D, 2009 the Company has combined these businesses because the management now operates and evaluates the performance of these businesses . collectively. All prior period segment disclosures have been restated to give effect to this change.

.. Passive Infrastructure Services - These services include setting up, operating and maintaining wireless cornmunlcetlon towers. Pursuant to the Scheme as discussed in note 1, the telecom infrastructure undertaking was transferred effective January 31, 2008 from Bharti Airtel to BIL. Segment disclosure reflects activities for the three month period and year ended March 31, 2010. The summary of business segmental information as of and for the year ended March 31, 2007 has not been provided as it is not practical.

• Other operations - These comprise the unallocated revenues, profits / (losses), assets and liabilities of the Group none of which constitutes a separately reportable segment. The corporate headquarters' expenses are not dlarged to individual segments. During the three month period and year ended March 31, 2010, debt and related interest expense previously reported under the mobile segment are now reported under other operations because the Management now manag~ all debt funding centrally at corporate headquarter. All prior periods segment disclosures have been restated

to give effect to this change. . .

operating revenues and expenses related to both third party and inter-segment transactions are included in determining the operating earnings of each respective segment. Segment result is computed as operating income less non-operating expenses. Interest income earned and Interest expense incurred by each segment is included in the respective segments. The provision for income taxes comprise of corporate income tax and other tax surcharges. Income tax expenses are allocated to the respective segment based on the results of operations of each segment.

Inter segment revenue are accounted for on terms established by the management on arm's length basts. Inter segment pricing and terms are reviewed and changed by the management to reflect changes in market conditions and changes to such terms are reflected in the period the change occurs. Segment information prior to the change in terms is not restated. These transactions have been eliminated on consolidation.

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(Amounts in thousands of Indian Rupees, except share and per share data and as stated otherwise)

A summary of information prepared on the basis of the geographical location of customers for the

years ended March 31 2008 2009 and for the three mo period and ~L.ended..J~tlarchJ1J-2010,----

is as follows:

Year !llUfed Mardi . Vear i!ndM Three month period . Year in~ Narcll Year Ended March
:n,2008 MardI 31,200' ended Narch 31, 31,2010 31,2010
zom (I!naudlted)
(IISDOOO'S')
SegmBnt revenue from axblrnal wsmll1er5
Within IndIII R" 254.l'*A17 R5. 353,952.959 Rs. 97,598.~ Rs. 318,394,228 USO 8,382,681
othm 16,OS4,!1:31 151662,558 2,9591483 17?S6,OOl 393,354
Ri. 21O,2f!1~ Rs. 369,6l!",511 Ik. lDO,~l1 b. 3!l6!~:U!l lJSD 8!77~l5
canying amount of ~
Wltl1n India Rs. 465,251,665 ~. 595,463,320 Rs. S9O,6H,S~2 1\8, S90,&l7,522 !lSD 13,0&1,792
Others 7J91,!!OO 8,484,145 55.76(J,2l6 55,liO.226 1,2351273
Rs. 47:tfi43!<i6S Rs. GDl,947,'ICi.5 Rs. Ci4ti!4Dl,l48 Rs, 6'lIi1'107,748 !!SO 14,320,065
cost Inwrl'l!ll d~rtlg thAV~~to acqulre
segment assets"
Wlthirlrrullll lis. 148,56M51 Rs. Hl,10J,796 Rs. 18,765,533 Rs. 79,M8,)!] US[) 1.751,183
Others 2,83~1301 7,561C)22 7l94,582 IM66,J30 3'I~6JO
Its. 1$1..401,351 IU..l!!J.6c;4,818 Ri. 26,58!,US 11$. 9.,514,117 I!SD ~093!813
27. Commitments and contingencies Group companies have to observe the laws, government orders and regulations of the state in which they operate, A number of them are currently involved in administrative proceedings arising out of the normal conduct .of their bUSiness. In the opinion of Group management, however, the outcome of these. actions will not materially affect the Group's finanCial position, result of operations or cash

flows. . ,..

(i) Commitments

a. capital commitments

As of March 31, 2010, the Group had committed to spend approximately Rs. 35,202,908 under agreements to expand its mobile, fixed line and national long' distance services network. This amount was net of capital advaflces paid in respect of these capital commitments.

.:

Under IT outsourcing agreements, the Group has commitments to pay Rs. 9,024,808 as of March 31, 2010 comprising of finance lease and service charges· under revenue share based payment arrangements over the non·cancellable period of the agreements.

b.

Guarantees

;

The Group had outstanding financial! performance bank guarantees of Rs, 32,458,490 asof March 31, 2010 (March 31, 2009 .:. Rs, 24,262,373), issued to the DoT, banks and financial institutions. The bank guarantees were essentially provided to the Go!· for financial and performance roll out obligations as prescribed in respective license agreements.

Corporate Guarantees outstanding as at March 31, 2010 amounting to Rs 8,498,147 (March 31, 2009 Rs 1,576,542) have been given to banks and finandal institutions on behalf of Group Companies.

The Group has also leased out infrastructure to certain customers. In connection with these, leases, service level agreements have been put in place where any failure by the Group to meet the performance standards could trigger the operation of the indemnification clauses. These clauses relate to the provision of free usage based on the percentage downtime.

- 60·

• • • •



(Amounts in thousand~ except share end per share data and as stated othelWlse)

c. Operating leases

• • • • • • • • • • • • • • • • • • • • o

I]

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As of March 31, 2010, the Group was obliged under a number of operating leases for building premises and cell sites. Total rental expenses for the years ended March 31, 2008,2009 and for the three months period and year ended March 31, 2010 were Rs. 6,326,696, Rs. 14,477,526, Rs.· 7,534,967 and Rs. 28,144,196 respectively.

During the year ended March 31, 2010 the Group entered into an agreement to lease passive infrastructure to Indus Towers Limited.

Future minimum lease payments and receipts under operating leases are as follows:

Payments

Nst payments

(Unaudited) (U5DODO's)

Redepts

12 months period endng March 31,2011 Rs,

12 months period eMrlJ March 31, 2012

12 months. penoo endhg March" 31, 2013

12 monthspet1Cld ending MJch 31, 2014

12 months perfod anng March 31, 2015

Therafta "

56;818,295 14,211,865 14,159,417 13,708,705 14,276,615

195.81O,061

R.s, 5,699,591

5,839,763 5,977,194 6,112,987 6,228,293

25,223,911

ns, 51,119,704

8,37J;i02 " 8;182,223 7,595,718 9,048;322 170596,iso

USD

1,132,448 185,492 181,263 168,270 178,297

3,779,040

Total minimum leasepaymerit j reClepts Rs,

R!I. 253,904i219

308,9B4,958

Rs. 55.080,739

USD

5,624,816

d. Export Obligation

The Group has obtained licenses under the Export Promotion of capital Goods Credit Guarantee "(,EPCG') Scheme for importing capital goods at a concessioilal rate of customs duty against submission of bonds.

Under the terms of the respective schemes, the Group is required to export services equivalent to eight times of the duty saved on import of goods within a period of eight years from the import of capital goods.

Acoordingly, the Group Is now required to export goods of FOB value of at least Rs 1,002,766 (March 31, 2009 - Rs2,733,073), The Company believes that it will meet the export obligation within the stipulated period,

(ii) Contingencies

a, ". Bharti Mobinet Limited ('BfJlNL 1 litigation

Sharti Airtel is currently in litigation with DSS (0.34 per cent equity interest in erstwhife Bharti Cellular Limited (BCl) for an alleged claim under arbitration proceedings seeking direction for restoration of the cellular license and the "entire business associated with It Including all assets ot"BCljBMNl to DSS or in the alternatively, an award for damages, An interim stay has been granted by the Delhi High Court with respect to the commencement of arbitration proceedings. In respect of the same transaction, Crystal Technologies Private Limited ('Crystal'), an intermediary that was negotiating the sale of stake of DSS in BMNL to Bhart! Airtel, has initiated arbitration proceedings against the Group demanding Rs 194,843 included in Note 27(ii)(b) below regarding termination of its appoinbnent asa q:msultant to negotiate with DSSfor the sale of DSS stake In ersl;while BMNL.to Bharti Airtel, The lei. Arbitrator has partly allowed the award for a sum of Rs. 31,222, 9% interest from the period October 3, 2001 till the date of award (l.e; May 28, 2009) and a further 18% interest from the date of award to date of payment, Bharti Airtel is in the process of filing an "appeal against the said award. DSS has also filed a suit against a previous .shareholder of BMNL and Bhart! Airtel challenging the transfer of

shares by that shareholder to Bharti Airtel. T~:l:Uit was subsequently dismissed aStfriVOIOU~~C~~~_o

. 8&

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. ,.; <.::r, ,j

• • •

•

Bhar.ti Airtel Limited


. (Amounts in thouS8nd~ except shilre snd per shiiTe data and as stated otherwise)

has been appealed to in the Hon'ble Delhi High Court by DSS and subse uentl transferred to District

• • • • •

;.

• • •

• • • • • • • • • • o

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urt.

DSS has also initiated arbitration proceedings seeking direction for restoration of the cellular license and the entire business associated with it, including all assets of BCL/BMNl to DSS or alternatively, an

. award for damages. An interim stay has been granted by the Hon'ble Delhi High Court with respect to the commencement of arbitration proceedings. The stay has been made absolute. Further, against the above order of Single Judge making the stay in favour of Sharti absolute, DSS filed an appeal before the Division Bench of Hon'ble Delhi High Court. The matter has nOW been admitted without passing any order on the absolute stay granted by Single Judge In Bhartl's favour which is absolute and which still continues. The matter will now come up only in due course.

The liability, if any, of Bharti Airtel arising out of above litigations cannot be currently estimated. Since the amalgamation of Bel and erstwhile Bharti Infote! Limited with Bharti Airtel, DS5, a minority shareholder in Bel, has been issued 5,444,250 equity shares (after stock split) of Rs. 5 each bringing the share of DSS in BhartiAirteJ down to 0.14% as of March 31, 2010.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. Accordingly, no amounts have been accrued or paid in regard to this dispute.

b. Other claims

Arising from its normal course of operations, various daims were made against the Group. The Group has disclaimed liability and is disputing the claims. No liability that may arise in the event that the following claims are successful has been recognized by the Group:

AS of

Mardi 31, 2009 March 31. 2010

Man:h 31.2010 (Unaudltlld) (U50'000)

Taxes, Duties and Other dem __ nd$ (under adjudlCatbn ! appeal! dISpute)

-sales Tax and Servlt:e Tax (refer c~d d below)

-Income Tax (refer e below) . .

-Access Chargae ! Port Charges (refer f balow)

. -Customs Duty .

-En1ry lax (refer g below)

~S):amp D.Jty

-MU"llcr~1 TaKeS

-Othars(rafer h and i below)

Total .

Rs. 1,090,463 Rs. 2.005,445 2,210,023 . 2,280,442 1,556,435

594,I5B5 3,327 1,229.491

3,356,455 USO 5,7:;10,855 1,2133;097 2,447;080· 3,032,3~1

574,851 '1,734 1,31J1,751

74,578

127,533 28,425 54,211 67,176 12,ns

38 29,0:38

Rs. 10.~l7.9,313 Rs.

17,773.165 USO

Unless otherwise stated below, the management believes that, based on legal adVice, the outcome of these contingencies will be. favourable and that a foss is not probable.

c. Sales tax

The claims for sales tax as of March 31, 2010 comprised the cases relating to the appropriateness of the declarations made by the Company under the relevant sales tax legislations which was primarily procedural in nature. and the applicable sales tax on disposals of certain property and equipment items. For certain cases the Company has deposited amounts with statutory authorities pending final decision.

d. Service tax

The service tax demands as of March 31, 2010 relate to: i. roaming revenues charged from other operators; and ii. subscriber receivables written off.

-62- .

• • • • •

•

'. • • • • •

• •

• • • • • • • a

n o u o (_)

[J I]

n [J

[)

U IJ


Notes to Consolidated Financial Statements '

(Amounts in thousand~ except share and per share data and as stated othelWlse)

e. Income tax demand under appea,1

lncome tax demands comprise of the appeals filed by the Company before various Appellate Authorities against the disallowance of certain expenses being claimed under tax by Income Tax

Authorities. '

The management believes that, based on legal advice, It Is probable that its tax positions will be sustained and accordingly, recognition of a reserve for those tax positions will not be appropriate.

f.

Access I Port Charges

The Group has several claims from BSNL relating to transit charges, ai:cess charges (pre-rue period), port charges and Non-CU calls. These claims are under litig~tion at various' forum or at stages of mutual discussion for settlement. Pending settlement of these claims, the Group has disclosed the related amount as contingent liability.

The management believes that, the outcome of these contingencies would not result into any liability. Accordingly, no amounts have been accrued although some have been paid under protest.

g. Entry tax

In certain states an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra . vires the constitution. Classification issues have been raised whereby, in view of the Company. the materlet proposed to be taxed is not covered under the specific category. The amount under dtspute.as.or March 31, 2010 was Rs;3,032,331(Marc;h 31, 2009- Rs. l-i556,436} included-in Note· 27(ii)(b) above.

h, DoT Demands

i) The Group has received demands from DoT pertaining to Bharti Broadband Limited (now merged ~with BhC!rti Airtel Limited) amounting to Rs 50,563 against which an appeal has been filed before' Hon'ble TDSAT (Included in note 27(ii)(b) above). The erstwhile promoter of Bharti Broadband Limited 'has undertaken to reimburse the Company in the event of the claim being payable.

Ii) The Group has not been able to meet its roll out obligations fully due to certain non-controllable factors like Telecommunication Engineering Center testing, Standing Advisory Committee of Radio Frequency Allocations·clearance, non availability of spectrum, operational hazards, etc. The. Group has received show cause notices from DoT for 14,of its circles for non-fulfillment of its roll' out obligations. DOT has reviewed and revised ilie criteria now and the Company is expecting reduced amount of penalty on this account.

iii) DoT demands also include demands raised for contentious matters relating to computation of ucense fees.

i.

Others

Others mainly include disputed demands for consumption tax, disputes before consumer forum and with respect to labour cases and a potential claim for liquidated damages.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. No amounts have been paid or accrued towards these demands.

-63~

• • • •

Notes-to Con-so'idated Financial Statements


j. Custom Duty

• •

!.

• .-,

• •

• •

• • • • • • • • D

o o (] () (] 11 [J

u U [J

IJ

The custom authorities, in some states, demanded Rs. 2,269,442 as of March 31, 2010 (March 31, 2009 - Rs. 2,289,442) for the imports of special software on the ground that this would form part of the hardware along with whidl the same has been imported. The view of the Group is that such imports should not be subject to ariy custom duty as it would be operating software exempt from any custom duty. The management is of the vi.ew that the probability of the claims being successful is

remote. .

The custom authorities in Bangladesh, has demanded Rs 157,638 as of March 31,2010 for dispute in the valuation for levying the custom duty. The managementis of the view Iflat the probability of the

claims being-successful is remote. . -

28. Cable System

The GroiJp has participated in various consortiums towards supply, construction, maintenance and providing long term techniCal support with regards to following Cable Systems. The details of the same are as follows: -

Contribution CWIP WDV As at M"1'Ch
Project Stake (Roo'OOO) (Rs '000) 31,2010
(R.s 'ODD}
SMW-4 - 11.19% '2,514,100 1,917,00:1
AAf:ii, - ProJSC~ 7.08% 1,804.191 1,757,~
SASSY - ProJ<lJ:t ~,OO% 107,578 l.O7,578
. ElG - ProjeCt 7,09% 1_,387,395 ].387.385
IMEWe-. PrOject 12·79% 2,t:¥:f1,223 2_!S7;Z23 -
U1ity -~rojeCt - COmmon 8 Othml 10,00% 1.196,612 61.178 1. 134,Q03
U'litv - PrOtect - L.r~t UIl 13.91% 149.201 1-..;1.1;113 2.9. . Non controlling Interest ,

Non controlling interest as of March 31, 2010 is in respect of Hexacom - 30% (March 31, 2009 - 30%), Bhartl Telemedia Limited - 5% (March 31, 2009 -60%), Bharti Infratel limited - 13.91% (March 31, 2009 -7_49%) And Warid telecom International limited- 30% (March 31,2009 - Nil)

The, non controlling interest's share of profits was Rs. 583,615 and Rs. 1,993,777 for the three months period and year ended March 31,2010 (for the years ended March 31, 2009 - Rs. 1,759,201 and March 31, 2008- Rs. 1,150,746).

Leadingintemational investors have Invested an amount of USD J.35 billion in aggregate, towards 4,050 Equity Shares of Rs 10 each (of which 3,825 and 225 shares were issued as on March 31, 2()OS and March 31, 2009, respectively) and 3,203,550 fully arid compulsory convertjble, non-cumulative, unsecured and interest free Debentures of Rs 10,000 each Cot which 3,025,575 and In,975 Debentures issued as on March 31, 2008 and March 31, 2009, respectively), in BIL.

On October 28, 2009,' the Group converted 118,650 non interest bearing fully Convertible Debentures into 1,182,270 equity shares of Rs. 10 each at a prernlumof Rs. 993.58 per share. The remaining 3,OS4,900Debentures are convertible into equity shares of Sharti Infratel at September 30, 2010 or earl.ier, at a valuation determined on the basis of Bharti Infratel's net equity valuation as of March 31, 2010. On March 26,.2010, remaining 3,064,900 Debentures have been converted into 39,120,640 equity shares of Rs. 16 each at a premium of Rs. 778.56 per share.

The Corporate action for said conversion has been completed before March 31, 2010 whereby our existing security viz. CCD has been extinguished and new shares have been credited to individual shareholders account based on above conversion ratio.

The total equity capital of Bhart! Infratel Limited post allotment of new shares is 580,802,910 equity shares of INR 10 each.

-64-

• • •

•

BhartlAlrtel Limited



• • • • • • •

• •

• • • • •

• •

• D

o o o

Y!!ilI'ended Yurenrled
Mal'dlll,200B March 31,2009 MsKh 31, 2010 Marth 31, 2010 .Mardl 31, 2010
(lklaiKllttd)
(USt)0~1J's)
Net hroms attrbuliIE 10 IIlri AitlJ ~ 67,0lI,187 1«. 94,699,123 Rs, 2ll1~IS76 Its. 91j026.Q21 lID ;Q16,529
Tr.ma (M ihlllIIminItgm.est-
~ iI.O:n h ~~ rntatellJTb:l 140627,260 7'l!i,438 21,213,255 '22,14D,009 '1!Q,474
stiloe ~ i1I3ha11T*'nada L.1d .(13,7'35) (1,635)
.;
iei·Ir~m. rom'mhtJtaest H&ll.2!iIl ]',ti,4311 . 21,213,255 t.1)ii6,214. 499,839
Ctmoelitrti r&i Kon:e altrb.Ula 10 !biU Ai1aI Lid iRI lis. al,635,40 1«. 115,495,561 Rs. 41,763,a3l Rs. 1l3,1J92,0Ili 00) 2,5ffi,:IiII
Ir~fers frllIn~.htereSt 30. Earnings per share

The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:

(6hares:ln ThouslIOds)

'tear ended Year ended Three n'IOnth plll'iud Year Endw March

March 31, 2008 Man:1J 31, 2009 ehdl~Ma~31. 31,2010

. . .2010

WCiIo;t1Wr;1 .aver~ sha'ssootstarmg" BB: .

Efflict of):lllutive securitBs on accountDf l:CirIvB-.tiJIe bonds

~esop· . . .....

Welg",edavsrage share~outi;Wdng· diluted

3,789,713

3,791,831

.3,793,05'1 1;071

5,554

2,<152

3.795.267.

3.79'1.333

3,794,125

Income available to common stockholders of the Group used in the basic and diluted earnings per

share calculations were determined as follows: .

_ ended l'ear. ended Three .month pl!llDd Ye.ar Ended .Malth Y!!a' ""dell .... rdl

March 31. ms ..... 'd. :n, 2009 ending March 31,. . 31,2010 31,21110

20lQ

~ .avalable to ctorrm:n .~ ~ the. Group EtreC! ~.accourt ot'converiIJIe ~.mesoPa1 earnrwiOtihem..

Nlitb:9n:ie a¥aIabIe r.... cm1Ju1tlg.o:IIuted eao1'i"Jgs. psi ::ham

_·~arrjrg;peJ Share .

oo,IEid;E<t1'lntls r:*·SIwa

(UJ1audltlid) (UIlD '1100)

2,016,529 (12) 2,OlO,~17 0.532 0.531

R$,

20,550,~ R$,

.91.0026,091 US[) (S2a)

Rs. 67/XJS,lfi11 Ri. ·114,699,123
(4,SB:I)
. 67,000,604 &4;699,123
izes ·22,34
lis, 17.65 R~. 22.:32 Rs.

20,~,S76 5.42

5;42 jlS,.

91,025;563

. 2·too· 23.99. LOO

~ The number of shares used in computing basic EPSis~ the weighted average number of shares Qutstanding during the period. The weighted average number .of equity shares outstanding during the period are adjusted for events of share splits for all the periods presented. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti dilutive. .

[} 31. Financial instruments

(J o o o o [)

o

The carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, other current assets, short term borrowings, accounts payable and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these instruments.

The approximate fair values of long-term debts, as determined by using current interest rates were Rs. 109,160,624 and Rs. 57,835,911 as of March 31, 2009 and March 31, 2010, respectively, as compared to the carrying amounts of Rs, 109,160,624 and Rs. 57,835,911 as of March 31, 2009 and March 31, 2010, respectively.

-65-

• • • • •



(Amounts in thOUSi1nd~ except share and per share data and as stated otherwise)

• • • • • • •

• • •

• •

• • • II

o n (]

o n IJ (]

fJ []

o u [) (]

Effective April!, WOO, the Group partially adopted ASC820-l0 (SFAS 157) per ASC 820-10-55 (FSP FAS 157-2), Fair Value Measurements, for all ftnandel assets and financial liabilities that are accounted for at fair value on a recurring basis, ASC 820-10-55 (FASB Staff Position (FSP) FAS 157-2), "Effective Date of ASC 820~10 (FASB Statement No. 157)" ASC 820-10-55 (FSP FAS 157-2), delays the, effective date of ASC820-10 (SFAS No. 157) for non-financial assets and non-financial liabilities, except for items that are. recognized or disclosed at fair value In the Company's finanCial statements on a recurring basis (at least annually), until its flscalyesr beginning after November 15, 2008, including interim periods within that fiscal year (April I, 2009 for the Company).

ASC 820-11) (SFAS 157) establishes a new framework for measuring fair value and expands related disdosures, Broadly, the ASC 820-10 (SFAS 157) framework requires fair value to be determined based on the exchalJgeprice that would be received for an asset or paid to transfer a liability (an exit· price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820-10 (SFAS 157) establishes market or observable inputs as the preferred source of velues, followed by assumptions based on hypothetical transactions in the absence of market inputs. The primary impact to the Group upon its partial adoption of ASC 820-10 (SFAS No. 157) wasexpandlng its fair value measurement disclosures.

The valuation techniques required by ASC 820-10 (SFAS 157) are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs create the following fair value hierarchy:

Levell T11e fair value of an asset or liability is based on unadjusted quoted prices, in active markets for identical assets or liabilities, An example would be a marketable equity security that is actively traded on the National Stock Exchange.

Level.2 The fair value of an asset or liability is based on information derived from either an active .merketquoted price, which may require further adjustment based on the attributes of the financial asset or liability being measured, or an inactive market transaction: Examples of such instruments would include

(I) a quoted price for an actively traded equity investment that is adjusted for a contractual trading restriction, or

(ii) the fair value derived from a trade of an identical or similar security in an inactive.market Li!vel3 The fair value of an asset or liability is primarily based on inte~nally derived assumptions surro!Jllding the timing and amount of expected cash flows fQr. the financial instrument.. . Therefore, these assumptions are unobservable in either an active or inactive market,

The Group maintains policies and procedures to value finanCial assets or financial liabilities using the best and most relevant data available. In addition, the Group internally reviews valuation, inCluding independent price validation for certain instruments. Further, in other instances, the Group retains

. independent pricing vendors to assist in corroborate the valuation certain instruments. -

• • • •


Notes toConsolidiited Financial statements

(Amounts in thousands, except share and per share data and as stated othelW/se)

Investments in marketable securities

• • • • • • • • • • • • •

• • • o

o o o o o rJ o o o o u (J.

The Group uses unadjusted quoted market prices to determine the fair value! of investment securities, and they are included in Level 1. When quoted market pricesare unobservable, we use quotes from independent pricing· vendors based on recent trading activity and other relevant information including market interest rate curves, referenced credit spreads and estimated prepayment rates where applicable. Presently there are no investments where quoted market prices are unobservable.

Derivatives

The fair values of derivatives are estimated by using pricing models, where the inputs to those models are based on readily observable market parameters. The valuation models used by the Group reflect the contractual terms of the derivatives, including the period to maturity, and market-based parameters such as interest rates, foreign exchange rates, and volatility. These models do not contain a high level of subjectivity as the valuation techniques used do not . require significant judgment, and inputs thereto are readily observable from actively quoted markets.

Market practice in pricing derivatives initially assumes all counterparties have the same credit quality. Credit valuation adjustments are necessary when the market parameter (for example, a I:?enchmark curve) used to value derivatives is not indicative of the credit quality of the Group or its counterparties. The Group manages derivative counterparty credit risk by considering the current exposure, which is the replacement cost of contracts on the measurement date, as well as estimating

. the maximum potential value of the contracts over their remaining lives, considering such fa~rs as maturity date and the volatility of the underlying or reference index. The Group mitigates derivative credit risk by transacting with highly rated counterparties. Management has evaluated the credit and nonperformance risks associated with its derivative counterparties and believe them to be insignificant and not warranting a .credit adjustment.

Derivative assets and liabilities included in Level. 2 primarily represent interest rate swaps, crosscurrency swaps and foreign rurrellcy and commcx:lity forward and option contracts.

The fOllowing table presents our assets and liabilities measured at fair value on a recurring basis at

March 31, 2010: .

Level -3

• ',.c ••. "".c

J,"nvestme!ot ~!l :S'ecu,.~~g: . DerivatIVes::

51,830 .. 85.1

Tota'

.' ... ' ....

LJabllif;ieS.:

.. -

To~1

The follOWing table presents our assets and liabilities measured at fair value on a recurring basis at

March 31t 2009: . .

-67 ..

• • • •


Notes toConsolidaled Finandal Statements

(Amounts in thousands; except share and per share data and as stated otherwise)

• • • • • • • • • • • • •

.' • • D

[J

o o o [)

u u (]

o [J (]

o

level - 1.

level- 2.

leve;l- 3

Net Balance

II1v.est;ment to Securities D~i-lVatiWes .

23,260 .. 021 11,544,856

11.544,856

'.;..;_:-

.498,919

In March 2008, theFASB issued ASC 815-10 (SFAS 161) which requires companies with defivative instrumentS to disclose information that should enable financial statement users to understand how and why a company uses deriVative instruments, how derivative instruments and related hedged items are accounted for under ASC 815-10 (SFAS 133) and how derivative instrulJ1ents and related hedged items affect a company's financial position, financial perfOrmance and cash flows. We adopted ASC 815-10 (SFAS 161) on January I, 2009. Since ASC 815-10 (SFAS 161) only required additional disclosure, the adoption did not Impact our consolidated financial· position, results of operations or cash flows. The Group enters into derivative instruments, including interest rate swaps and foreign currency .forward contracts, to manage interest rate movements of its debt pbligations and foreign currency exposures related to the Import of equipment used in operations and its foreign currency

denominated debt instruments. .

The Group primarily transacts business in U.S. dollars with parties of other countries; some of the contracts are also denominated in Euro and Yen. The Group may use foreign exchange option contracts, swap contracts or forward contracts towards. operational exposures reSUlting from changes .inforeign rurrency exchange rates exposure. These foreign exchange contracts, tarried at fair value, , ·may have varying maturities varying depending upon the primary host contract requirement.

The Group also hedges net recognized foreign currency assets and liabilities with foreign exchange forward contracts and swep contracts to reduce the risk that its earnings and cash flow will be adversely affected by changes In exch(lnge rates. These derivative instruments hedge assets and liabilities that are denominated in foreign currencies ahd are carried at fair value. With changes in the fairvalue.

~ .

"

The Group occasionally enters into contrflctsthat do not in their entirety meet the definition of a; derivative instrument that may contain "embedded" derivative instruments -Impllcrt or explicit terms that affect some or all otthecasn flow or the Value of other exchanges required by the contraCt in a menner Similar to a derivative instrument. The Group assesses whether the economic characteristics and risks of the embedded derivative are clearly and closely related to the economic charactenstics and risks of the remaining component of the host contract and whether a separate, non-embedded instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is detennined that (1) the embedded derivative possesses economic characteristics and rtsks that are not clearly and closely related to the economic characteristiCs and risks of the host contract and (2) a separate, stand-alone instrument with the same terms' would qualify as a derivative instrument, the embedded derivative is separated from the host contract, carried atfair value as a trading or non-hedging derivative instrument.

The Group mitigates concentration of risk related to foreign currency exposure as well as Interest rate exposure: through a guiding frame work, pOliCies and procedure laid down in its treasury policy. The Group signs International Swaps and Derivatives Association Master Agreement (ISDA) to goY. ·')0'0

~8- yl .

• • • •

Bharti Airter limited


(Amounts In thousands, except share and per share data.anti as stated otherwise)

derivaWe'and foreign exchange trans~ctions. No ass~t has been osted as collateral and no c ~-----------'risl<S relateorea ures r ggere at the end of the reporting period. To mitigate the concentration of risk related to derivative risk; the Group deals with multiple counter parties. The bank counterparties in these contracts expose group to credit-related losses in the event of their nonperformance. However; to mitigate that risk, the Group contracts only with counterparties who meet the minimum threshold requirements under the counterparty risk assessment process. The Group monitors ratings, credit spreads and financial strength on at least a querterlv basis. Based on its on-going assessment

of counterparty risk, The Group adjusts its exposure to various' counterparties. .

The G!'9up'sactivities expose it to a variety of financial risks, incluc!ingthe effe~l..Qfchanges in foreigncurreney 'exchange rates and interest rates. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to manage its exposures to Interest rate and foreigh exchange fluctuations.

• • • • • • •

'. •

• • ••

••

.' • • D

o 11 o o [)

o [)

[] o [J

[J

n

None of the derivative financial instruments would qualify for hedge accounting In accordance with ASC 810-10-15 (FAS 133). Accordlngly,all changes in fair value of the derivative instruments were recognized in current period earnings and included in interest income (expense),· net In' the

. consotdated statements of income. The fair values of derivative ftnancial instruments were as follows:

,.': .. .:

3.478.150

'.'.

Q~IHilce Fair Value Balalieli F~lrVohle Balimc~ J!alrBt!iifnce,Filir Volue

',S(ieat She:~1Sheet Vl1lue.SII~et.

,toen:tlon LGtadpl. "L~~flf,n '<L~~tljjn .

. Prir'lcripaJ'.;' D.~r~tiVe QnlySWAI:h Financial. 'lhsttc:un9Iits >1> ...

Embedded DeriVative D~rivatlves Financi~1I

.. lnstrumsnts

2.550. Deri\F,ll~

. Fin~!1~ial . rOs:ti\fm~nts

1 fJfi1,682 Deri\taiwEj.·· Financial' .' Instrutnenls .

5,~ Derivm;"e

. FinEiriQ.ial

h,slruments

4.433.784 OeiWative Fin.i;lnCial Instruments

-69-

2.407.918 DenvatiYe7,105,3Be DeriVative

Finam;t~l ". Financial

Instrul]1E!i1ts Inslrilmenls

150! 199 D.eriv.aliVe .... fiitanciilf .

t~$~tD'Ji~r~8 .

--- ."

226,963

356,027 P.~nvli~Ne .' .,'.

Financiaf. ' '.. ..' InStri.li)'l~nt$

.:

156,(1130· Dilrivative .' FinancJal 111$irYhi~l'lf$

...... ,

271,936

6G2,30~ i ..

498,919

The Group recogriized net derivative gains (included in interest income) of Rs. 1,059,893 and Rs. 11,149,937 for the years ended MarCh. 31; 2008, March 31, .2009 respectively; and n~derivative losses I (gain) (included in interest expense) of Rs. 2,49,6,438 and Rs.8,230,0~4 for the threementh period and year ended March 31, 2010, respectively on account of the changes in the fair values of

its derivative financia I instruments. .

By using derivative financial instruments to hedge its exposures to changes in exchange rates and interest rates, the Group exposes itself to credit risk and market risk.

ASC810-10-25 (SFAS No. 159), The Fair Value Option for Financial Assets and Financial liabilitiesIncluding an Amendment of ASC 320-10 (SFAS 115)1 permits but does not require a company to measure financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. As the Group did not elect to fair value any of our financial instruments under the provisions of ASC B10-io-2S (SFAS No. 159), our adoption of this statement effective April!, 2008 did not have an impact on our financial statements.

'. • • •

1-II1- __ ~I.._~mL.Ulffil~_l.I[~I!E~a:_jn __ tt1E!_6~~I1_r.ile~itlr:l!~~I€llc;l-Qfl-:-d'!I~Uar-y--29~GIl9,-i1p!)roved,.-a-SCheme-of:---arrenqernent for the, demerger of its undertaking comprising passive telecom infrastructure in 12 Clrdesand merge thereof with Bharti Infrate! Ventures Limited (wholly owned subsidiary) through

Scheme of Arrangement andhasnlled requisite scheme ofarrallgement withflon'ble H!ghCOurt of

. Delhi on 7th July 2009. pending approval from the High Court, no effect of such scheme has been

given in these flnancials, ' .

•
•
•
•
• .,.- .... '~'.,.
•
\
•
•
•
•
••
iii
•
•
•
..
0
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D
0
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n
n
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J
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] Bharti Airtel Limited

Notes to Consolidated FinaooalStatements

(AmoUnts in thOllsand~ except share and per share data and as st1JtedotheIWlse)

33. The ,BQard of Directors recommended a final dividend of Re 1 perecruity share for the financ::lal year 2009·2010. The pclYmerit-issubjecttothe approval of the shareholders inthe.enslijngAnnLli:irG~niarar

Meeting of the company; .

34. On Marth JO,Z010, the Company has entered into a definiti"e agreement with ZalnGroup to acqui~e ZainAfrica BY ("Zaiil") based on an enterprtsevsluation ofU5$10.7 biliion.Underthe Ag~ment, through its overseas wholly owned subsidiary companies, Bharti Airtel will acquire lain's African mobile services operations in 15 countries with a total subscriber base of over 42· billion. The transaction cotOpleti9inis subject to certain cQndition precedent/whiCh both the tompan"y and the management of lain are working. for completion. At March 31 2010, ,since the control/legal oWllership of the equity shares have not been transferred to the company, no acquisition aCCOunting has been

~~ ..

35~ Certain items previQusly reported in specific captions on the cpnsolidated financial statements' have been reda.ssified· to contorrn to. the current period's presentation.

-70-

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