BUSINESS STRATEGY OF BHARTI AIRTEL LIMITED AND IT’S PERFORMANCE IN THE YEARS 2007, 2008 AND 2009

A BRIEF OVERVIEW OF BHARTI AIRTEL LIMITED
Bharti Airtel is one of Asia's leading providers of telecommunication services with presence in all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Sri Lanka. The Company served an aggregate of 96.6 million customers as of March 31, 2009; of whom 93.9 million subscribe to GSM services and 2.7 million use Telemedia Services either for voice and/or broadband access delivered through DSL. The Company also offers an integrated suite of telecom solutions to enterprise customers, in addition to providing long distance connectivity both nationally and internationally. The Company also deploys, owns and manages passive infrastructure pertaining to telecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of Indus Towers Limited. Bharti Infratel and Indus Towers are the two top providers of passive infrastructure services in India.

SERVICES OF BHARTI AIRTEL
The Company Bharti Airtel is in India the biggest integrated and also the 1st telephone service provider in the private sector. Bharti Airtel Limited has been since its very beginning using the latest technology and thus the company has paved the way for the telecom sector in India with its world-class services and products. This has helped Bharti

Airtel Company to grow for the number of its customers has increased very rapidly over the years. The Company Bharti Airtel is divided into 3 business units that are:
• • •

Broadband & Telephone (B&T) services Enterprise services Mobile services

Among the various services that the Bharti Airtel Limited Company provides to its customers, the services of broadband and telephone (B&T) are 1 of them. The company provides broadband Internet services of high speed for it has the best network in India. The company Bharti Airtel also provides telephone services in around 94 cities of the country and this helps the people to stay connected with one another. The company plans to expand its broadband and telephone services by providing IPTV services and DTH operations. Further Bharti Airtel provides enterprise services to its customers. The services of enterprise provide telecom endto-end solutions to customers who belong to the corporate sector and also long distance services to international and national carriers. The company Bharti Airtel has more than 35,016 kilometers of optic fiber, a submarine landing station, and is also a member of South East Asia- Middle East- Western Europe- 4. All this has helped the company to provide the best enterprise services to its customers. The company Bharti Airtel Limited plans to expand its enterprise services so that it can achieve the status of a global carrier within a period of 2- 3 years. The company Bharti Airtel Limited provides mobile services to its customers. The company provides fixed and mobile wireless services in around 23 telecom circles by using the GSM technology. Bharti Airtel Company has

become the biggest mobile service provider in India on the basis of the number of customers. The company in the future plans to expand its network in order to establish its presence in more than 500,000 villages all across the country by 2010. Bharti Airtel has become a leading company in the telecom sector in India due to the fact that it has provided the best quality of services to its customers. And this has been possible for the company has a wide telecom network that is of the latest technology. The Company Bharti Airtel Limited in the future also should continue to upgrade its facilities for this will ensure that high grade of services are provided to its customers.

VISION OF BHARTI AIRTEL LIMITED
By 2010 Airtel will be the most admired brand in India: • Loved by more customers • Targeted by top talent • Benchmarked by more business. SWOT Analysis Bharti Airtel Strengths 1. Bharti Airtel has more than 65 million customers (July 2008). It is the largest cellular provider in India, and also supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers. 2. Other stakeholders in Bharti Airtel include SonyEricsson, Nokia - and Sing Tel, with whom they hold a strategic alliance. This means that the business has

access to knowledge and technology from other parts of the telecommunications world. 3.The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base. Weaknesses 1.An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field. 2.Until recently Airtel did not own its own towers, which was a particular strength of some of its competitors such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally. 3.The fact that the Airtel has not pulled off a deal with South Africa's MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature. Opportunities 1.The company possesses a customized version of the Google search engine which will enhance broadband services to customers. The tie-up with Google can only enhance the Airtel brand, and also

provides advertising opportunities in Indian for Google. 2.Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions. 3.Despite being forced to outsource much of its technical operations in the early days, this allowed Airtel to work from its own blank sheet of paper, and to question industry approaches and practices - for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns. 4.The company is investing in its operation in 120,000 to 160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable - using its 'Matchbox' strategy. 5.Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers. This new business will control more than 60% of India's network towers. IPTV is another potential new service that could underpin the company's long-term strategy.

Threats 1.Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead invested in its rival Hutchison Essar. Knowledge and technology previously available to Airtel now moves into the hands of one of its competitors. 2.The quickly changing pace of the global telecommunications industry could tempt Airtel to go along the acquisition trail which may make it vulnerable if the world goes into recession. Perhaps this was an impact upon the decision not to proceed with talks about the potential purchase of South Africa's MTN in May 2008. This opened the door for talks between Reliance Communication's Anil Ambani and MTN, allowing a competing Inidan industrialist to invest in the new emerging African telecommunications market. Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian

BUSINESS MODEL ESTABLISHED BY BHARTI AIRTEL LIMITED AND IBM INDIA PRIVATE LIMITED
While Bharti is a leader in telecom services, IBM is the global leader in the IT market.

Innovation highlights
• The agreement was the largest ever IT deal in India and at the time of signing, was estimated to be of an order of US$ 750 million in value. • MIS Asia has awarded this Innovative Business Model three pan-Asia awards in the last two years including the MIS Asia IT Excellence Award for Best Change Management in 2005, the MIS Asia IT Excellence Award for Best Bottom Line IT in 2006 and the MIS Asia IT Excellence Award for Best Knowledge Management in 2006.

The innovation
IBM assumed responsibility for all of Bharti’s IT systems,applications, infrastructure, operations and people with the agreement coming into force. The agreement entailed Bharti paying IBM a percentage of its revenues, which directly linked IT cost to business performance. The agreement construct was innovative not only from the perspective of the remuneration model for IBM, but also in terms of the scope of the delivery, which was comprehensive and included practically all of IT—current and future. It made innovation all pervasive as IBM introduced changes in the area of processes, people and systems to usher in business transformation, improve operational excellence and efficiency and optimize performance. Customer Speak “The agreement demonstrates our strategic intent to create a globally admired telecom company. With predictable IT spend, improved cash flow, and optimized use of technology resources, the agreement with IBM will enhance Bharti-Televentures’ share value.” --Sunil Bharti Mittal, Chairman And Managing Director, Bharti Enterprises

A BRIEF REVIEW OF THE PERFORMANCE OF BHARTI AIRTEL LIMITED IN THE YEARS 2007, 2008 AND 2009

Results for the fourth quarter and full year ended March 31, 2008

Highlights for Full Year ended March 31, 2008 *Overall customer base crosses 6.4 crore *Highest ever-net addition of 2.5 crore customers in a year *Market leader with a market share of all India wireless subscribers at 23.8%(22.4% last year) *Total Revenues of Rs. 27,025 crore (up 46% Y-o-Y) *EBITDA of Rs. 11,372 crore (up 53% Y-o-Y) *Cash Profit of Rs. 11,137 crore (up 52% Y-o-Y) *Net Income of Rs. 6,701 crore (up 57% Y-o-Y) Highlights for Fourth Quarter ended March 31, 2008 *Highest ever-net addition of 69.27 lakh customers in a single quarter

*Total Revenues of Rs. 7,819 crore (up 45% Y-o-Y) *EBITDA of Rs. 3,252 crore (up 45% Y-o-Y) *Cash Profit of Rs. 3,036 crore (up 38% Y-o-Y) *Net Income of Rs. 1,853 crore (up 37% Y-o-Y)

Commenting on the results and performance, Mr. Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel Limited, said, “This has been another year of record growth for the telecom industry and Bharti Airtel. The Indian telecom story is now entering the second wave of growth, which will come from rural India. As an industry leader we are committed to be at the forefront of this growth and take our services deeper into rural areas and provide affordable world-class services to customers. The coming year will be an exciting one for the company as we launch our services in new segments such as DTH and go live with our operations in Sri Lanka. Going forward, we see another year of strong demand in all business segments and we will continue to build on our organisational strengths.”

Highlights for Full Year ended March 31, 2009

During the financial year 2008-09, the Company achieved various accomplishments and became the largest integrated telecom company in India based on total telecom subscribers. Some of the key highlights include the following: * First operator in India to cross the total customer base of 96 million.

* Highest net addition of 31.93 million of total customers in a year. * Full year consolidated gross revenue of Rs 374 billion and consolidated EBITDA of Rs 153 billion. * Full year consolidated net profit of Rs 79 billion. * Year on Year (Y-o-Y) growth of total customer base by 50% resulted in 38% increase in revenues and 23% increase in net profit. * Mobile Network is present in 5060 census towns and 414,906 non-census towns and villages in India, thus covering approximately 81% of the country's population. * Focus on rural penetration and customer affordability has led to mobile tariffs of 1.2 cents/minute, one of the lowest in the world. * Expanded its international footprint by launching mobile operations in Sri Lanka on a state-of-the-art 3.5G network * Made its television debut by launching Airtel Digital TV, its Direct-toHome (DTH) satellite TV service. * Debuted Triple Play service with Airtel digital TV interactive - its Internet Protocol Television Service in NCR under a unified brand 'Airtel'

KEY STRATEGIES FOR THE YEAR
In the year gone by, Bharti Airtel has focused on making telecom services affordable through a dedicated effort of rationalizing and simplifying tariffs. The Company will continue to pursue this strategy of affordability, availability and simplicity. The customer has been at the centre of their strategy and going forward their full focus will be, and

remain on customer service. The Company believes that infrastructure sharing will provide a boost to managing efficient operations, resulting in significant cost savings. They will explore the extent of active infrastructure sharing based on guidelines issued by TRAI. They recognize the potential offered by the rural Indian market. Significant expansion, both of network and distribution, is being planned. In the coming year, the Company expects more than half of its new business to come from rural customers. In addition to rural expansion, Bharti Airtel has also expanded abroad through the launch of its operations in Sri Lanka where it has successfully replicated its unique business model. The coming year will see a stronger emphasis on nonmobile business with Direct -to- home (DTH) services and IPTV services. The Company will increase investments in the area of broadband to enhance penetration and usage of broadband services. The Company will focus on non-voice business by developing customized solutions in the B2B space.

Highlights for the year 2009
Bharti Airtel Ltd reported a 21 per cent increase in its net profit to Rs 2,239 crore for the fourth quarter ended March 31, 2009 compared with Rs 1,853 crore for the previous quarter last year. It saw the highest ever net additions in a single quarter with 83.79 lakh new subscribers during the Jan-March period. Total revenues increased 26 per cent to Rs 9,825 crore from Rs 7,819 crore. The company declared its maiden dividend of 20 per cent of face value for the year. Further, the company has proposed sub-

division of existing equity shares of Rs 10 each into two equity shares of Rs 5 each. The average revenue per user (ARPU) for its mobile services declined 15 per cent from Rs 324 a month in March 2008 to Rs 305 in March 2009. Its ARPU is, however, higher than the industry average of Rs 220 a month. Minutes of usage have increased from 89,058 million in March 2008 to 1,30,669 million by March 2009. Total subscriber base has grown from 64.2 million to 96.6 million. The company said it plans to invest $3 billion during 2009-10. Its share price increased 3.25 per cent to close at Rs 749.30 on the BSE.

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