Indian Institute of Management Kozhikode

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

Bharti Airtel 2008*

Bharti Airtel Limited was one of the world's fastest growing telecom companies that carved for itself
a leadership position in the global telecommunications sector. In October 2007, it achieved the
distinction of becoming the fastest private telecom company in the world to reach the landmark of 50
million customers in a single country, within a short period of 143 months of start of operations1.

It was India’s leading private sector provider of telecommunications services, covering a wide
spectrum comprising mobile, fixed line, broadband and enterprise services. As of December 2007 it
was India's largest integrated private telecom service provider with 55.16 million mobile subscribers
constituting a market share of 24.09% of the entire mobile telephone industry (refer Exhibit 1a for the
subscriber base of all players in the industry)2. It was present across 4,855 towns covering 62% of the
Indian population3. Bharti Airtel was the first telecom company to have an All-India footprint by
covering all the 23 telecom circles of India4. It was one of the five largest companies in India in terms
of the market capitalization5, and the flagship organization of Bharti Enterprises, one of India’s
leading business groups with diverse interests such as telecom, agro products, insurance and retail. Its
brand 'Beetel' wass the country’s largest manufacturer and exporter of world class telecom terminals.
It was ranked amongst the best performing companies in the world in the Business Week IT 100 list
2007.

Bharti Airtel was a pioneering force in the telecom sector with many path-breaking initiatives to its
credit. It was instrumental in bringing the mobile communication to the masses by launching several
services at much lower price levels. It revolutionized the telecom industry by following ARPM model
(i.e. Average Revenue Per Minute) rather than the ARPU model (i.e. Average Revenue Per Minute)
which was the standard across the globe6. It adopted a unique business model through its strategic
partnerships with Ericsson, IBM, Nokia, and Siemens in IT and network realms which had set a trend
in the global cellular industry.

Indian Telecom industry

Indian economy witnessed robust growth levels fueled by favorable demographics and rising income
levels from nineties onwards. This era of rapid economic growth was accompanied by exponential
growth in the telecom sector. This growth began with the liberalization of the Indian Telecom Sector
in 1994 (refer to the Exhibit 2 for a summary of the reforms) and the mobile subscriber base in India
has since then been increasing manifold. Telephone services in India were provided by the
government through its Department of Telecommunications till 1985. In line with the reforms in the
government, Mahanagar Telecom Nigam Ltd (MTNL) in 1986 and Bharat Sanchar Nigam Ltd
(BSNL) in 2000 were created as public sector organizations out of DoT to offer services in Mumbai
and Delhi and rest of India respectively. A detailed overview of the Indian Telecom industry can be
obtained from Exhibits 1a to 1d and Exhibit 2.

The Indian mobile telecom market was continuing to attract a lot of attention in the global telecom
sector owing to the fact that it was one of the world's fastest-growing telecommunications markets
(Exhibit 1b). Despite the significant growth in subscriber base, the mobile penetration level in India

* Written by S. Jeyavelu and A. Radha, IIM Kozhikode based on secondary data.

1
Airtel breaks into world's Top 10 with 50 mn users, Economic times, 2 Oct, 2007
2
http://www.india-cellular.com/Market-Share.html accessed on 6 Feb, 2008
3
http://www.coai.in/archives_statistics_2007_q2.htm accessed on 4 Feb, 2008
4
Congratulate Sunil Bharti Mittal, Economic Times, 27 Oct, 2007
5
Bharti Airtel Limited Annual report 2006-07
6
Lifetime offers may dent ARPUs for operators. http://www.moneycontrol.com/
mccode/news/article/news_article.php?autono=195771 accessed on 6 Feb, 2008
was still around 20.5% as compared to the world average of 50%, which was amongst the lowest in
the world and was a clear indicator of the huge potential for further growth7.

The two technologies used for mobile services in India are Global System for Mobiles (GSM) and
Code Division Multiple Access (CDMA)8. GSM and CDMA technologies were not currently
compatible or interchangeable with each other and required separate types of wireless phones and
network infrastructure. In 2008, all the major players in the industry were aggressively investing in
infrastructure, primarily in network upgradation and rollout.

Competitors

The Indian mobile telephony market was highly competitive and the top five players Bharti, Reliance
Communications, Vodafone, BSNL-MTNL and Tata Tele controlled 83% market share. The other
players such as Idea cellular (11 circles), Aircel (9 circles) Spice telecom (2 circles) had lined up plans
to expand their presence and become a pan India operator to get a sizeable share of the growing
market. The growth in both the GSM and the CDMA segments was phenomenal and the total number
of GSM subscribers had reached 121.43 million by March 2007. Bharti Airtel was holding a 30.6%
share of this market with 37.1 million customers at the end of March 2007, followed by Bharat
Sanchar Nigam Ltd (BSNL) with 27.4 million (22.6% market share). Vodafone’s Hutch-Essar had
26.4 million subscribers (21.8%), while Idea had 14 million customers (11.5%). Exhibits 1a, 1a & 1d
gives industry statistics.

Reliance Communications, the flagship company of the Anil Dhirubhai Ambani Group (ADAG) of
companies, was the second largest wireless telecom operator in the Indian telecom industry with
presence in both CDMA and GSM segments and also the largest provider of long distance carrier
services. It was the leading player in the CDMA market and had a subscriber base of 34.8mn and a
market share of 17.7% with a pan India CDMA and 8 circles GSM presence. The company owned
and operated FLAG telecom, which owned 76,500 km of submarine cable system, the largest
submarine cable system in the world. There was a stiff competition between Reliance
Communications and Bharti Airtel for market leadership and in March 2006, Bharti Airtel was
lagging behind Reliance Communications in terms of market share. But post FY06, Bharti had not
only gained a leadership position in the Indian mobile industry, but also consistently increased its
market share, consequently widening the gap between itself and Reliance Communications.

Bharat Sanchar Nigam Ltd. was the second largest GSM operator in the country. It was formed out
of the former DoT in October 2000 as a public sector unit. It was the World's 7th largest
Telecommunications Company providing comprehensive range of telecom services in India
comprising Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-
VPN, VSAT, VoIP services, IN Services etc. MTNL holds the license to provide cellular services in
Delhi and Mumbai, and commenced its cellular services during February 2001.

Vodafone Group Plc was the world's leading mobile telecommunications company, with a significant
presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the
Company's subsidiary undertakings, joint ventures, associated undertakings and investments. It was
keen on entering the Indian mobile telephony market and ventured into it through its acquisition of
interest in Bharti Airtel. Later, it acquired Hutch, one of the top players in the Indian GSM segment to

7
http://www.cellular-news.com/story/28809.php; and http://investing.reuters.co.uk/news/articleinvesting.aspx?
type=media&storyID=nL29172095&pageNumber=1&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-
ArticlePage1 accessed on 7 Feb, 2008.
8
GSM works by dividing a single radio frequency into multiple time slots so it can support multiple calls.
CDMA technology works by encoding individual conversations into a series of digits and then spreading the
transmission of the sequence over available spectrum.
get a firm foothold in the market. It was expected to offload its ownership in Bharti Airtel in the
coming years to avoid any potential conflicts of interest.

Idea cellular, a part of the prestigious Aditya Birla Group, provided mobile telephony services on the
GSM platform in 11 out of the 23 circles in India. IDEA Cellular's footprint in 2008 covered
approximately 45% of India's population and over 50% of the potential telecom-market. It operated in
the circles Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh,
Uttaranchal, Haryana, UP-West, Himachal Pradesh and Kerala. The company had a subscriber base of
21mn and an overall market share of 9.2% in the mobile industry.

Spice amongst top 6 private GSM operators in India with a customer base more than 3.0 million. It
had tie-ups with over 448 international operators across 208 countries and was the first to introduce
unique VAS services in India.

History of Bharti Airtel

Bharti was founded by Sunil Mittal in 1976 in his hometown of Ludhiana, after he graduated from
Punjab University. He was a first generation entrepreneur who started his venture with a capital of
about Rs. 20,000, borrowed from his father, a congress party politician. He was involved in a variety
of trades before he ventured into the mobile phone business. He started by making crankshafts for
local bicycle manufacturers. Within three years he set up two more plants, one that turned out yarn
and the other that produced stainless-steel sheets used for surgical utensils. In 1980 he sold both the
plants and shifted base to Mumbai, where he reinvented himself as a trader who sold imported
stainless steel, brass, plastics, and zip fasteners. Though this business was good, Mittal's first real
break came in 1982 when he became the exclusive India agent for Suzuki Motor Company of Japan
for importing portable generators. He took up this business after recognizing that the portable
generators presented a great business opportunity in India while they did not have a huge market in
Japan. The portable generators could attract many buyers in India owing to the frequent and regular
power outages that many regions in the country were subjected to. He was proved right with his
business doing very well and within two years Mittal established a national distribution network with
offices in four cities. But the complex industrial licensing regime took its toll on him and his business
was wiped out all of a sudden when the government banned import of generators in India in order to
support the large industrial houses that ventured into that business.

Mittal viewed this setback too as an opportunity and luckily, by this time, he was already fascinated
by the touch-tone phones that he came across in Taiwan. In those days Indians were exposed only to
the rotary phones, and Mittal could see that these sleek phones had a huge potential. Immediately, he
signed a contract with a Taiwanese supplier and months later, he was selling the gadgets to customers
in India under the German-sounding brand name Mittbrau, a short form for Mittal brothers9. But the
regulatory environment was still stringent and the government did not allow import of push button
phones. So he entered into a tie up with Siemens, to manufacture the company's push-button
telephone models for the Indian market. In 1986, Mittal incorporated Bharti Telecom Limited (BTL)
and his company became the first in India to offer push-button telephones under the brand ‘Beetel’,
establishing the basis of Bharti Enterprises.

When this business started flourishing, the regulators decided that touch-tone phones should be made
in India and they handed out licenses to 52 Indian firms, relegating Bharti to second-tier status behind
other larger industrial groups. Since phones weren't a priority for the big groups, his venture continued
to do well and as of 2008 Bharti was the only player existing out of the original 52 licensees. He
expanded the company’s manufacturing capacity in the telecommunications market and by the early
1990s, he also launched the fax machines and cordless telephones in the country for the first time.

9
Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1
In 1991, the liberalization gave a new lease of life to the entrepreneurs. In 1992, when the telecom
services business was opened up to private players and bids were welcomed for licenses to operate
India's first mobile-phone networks, Mittal saw a huge opportunity and moved to London to learn
more about this fledgling industry and to assemble a world-class tender offer10. Even though it was
unwilling to match the sky-high offers of competitors, Bharti managed to win licenses in India's four
largest cities, in collaboration with French telecom major Vivendi. This dramatic start was dampened
due to a series of legal battles by some rejected rivals and Bharti was able to start its operations only
in Delhi. This proved to be a blessing for Bharti as the mobile phone service license in India was
highly overvalued and the service proved to be costlier than what anyone had imagined.

On 7th July 1995, the cellular operations of the organization was incorporated as Bharti Tele-Ventures
Ltd (BTVL) for promoting investments in diversified telecom service projects and rolled out services
under the Airtel brand in Delhi. The company was formed as a 80:20 joint venture between the Bharti
Group through its subsidiary Bharti Telecom and STET International Netherlands NV, a company
promoted by Telecom Italia, Italy. Exhibit 3 gives the mile stones in the history of Bharti Airtel.

Growth story

After beginning its operations in Delhi, the company began slowly expanding into other regions and
in 1996, the services were extended to Himachal Pradesh11. In 1999, Bharti sold a 20% equity interest
to the private equity firm Warburg Pincus which chose it over its competitors as it was the only
mobile company in India with a clear business model and used this capital inflow to finance its next
stage of growth. In the same year, Bharti Enterprises acquired control of JT mobiles, and extended
cellular operations to Punjab, Karnataka and Andhra Pradesh. With this, it became the largest private
sector telecom operator in India. It also acquired a 30.20% equity interest of Telecom Italia in Bharti
Telenet and 18.8% from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bharti
Tele-Ventures. Starting from 2000, Bharti began to get licenses to operate in new circles and began to
establish an All-India footprint while consolidating its position by buying up all the struggling
competitors. In 2000, Bharti acquired control of Skycell Communications in Chennai and in 2001, the
company acquired control of Spice Cell in Calcutta. Despite this consolidation and continued growth,
Bharti was not big by international standards. It wanted to consolidate its presence and become a
permanent, sustainable business player in the market. Bharti Enterprises went public in 2002, and was
listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). It raised $172 million
in its initial public offering (IPO) and when it plowed its resources into bringing its assets up to speed,
formidable players entered the fray12. This resulted in Bharti's stock plunging to less than half its IPO
price early in the year and the company was almost written off by all quarters. But the company
pulled up its socks and regained its position through its consolidation and branding efforts.

In 2003, Bharti Tele-Ventures, with the market leadership at a 20% share, was at a strategic inflection
point. While the market showed huge potential with the number of mobile subscribers almost
doubling every year, the competition in the market was rising with the entry of large Indian
conglomerates and foreign players. To retain its market leadership, there was need for fast growth in
the network infrastructure and people. But Mittal did not have the resources to meet the challenge of
managing the breakneck growth. It was at this point that he initiated his unique outsourcing deals
where he outsourced the network and the IT and later the call centers through long term partnerships
which proved to be one of the most critical drivers of Bharti Airtel’s growth.

In the same year, after a brief corporate restructuring, all the mobile operations were merged into
Bharti Cellular Limited and all fixed line, long distance and data services into Bharat Infotel Limited.
Also the cellular phone operations were rebranded under the single Airtel brand. Bharti, which lost

10
Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1
11
Bharti Airtel Limited Annual report 2006-07
12
Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1
money every year until 2003, posted rising profits every year since then. In the year 2003-04, it joined
the US$1 billion revenue club and also launched BlackBerry wireless solution in India.

In April 2004, BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd were merged with
the company. It also acquired control of Hexacom and entered Rajasthan. In 2005, the company
launched its mobile operations in seven new circles of Assam, Bihar, Jammu & Kashmir, North East,
Orissa, Uttar Pradesh (East) and West Bengal. Bharti, became the first private service provider in the
country to have an All-India footprint when it launched its services in Assam – the 23rd circle on
April 13th 2005.

During 2005-2006, Vodafone, the world’s largest mobile service provider, acquired 10% interest in
the company by way of subscription of convertible debentures in Bharti Enterprises Limited,
representing an indirect economic interest in Bharti Airtel Limited and acquisition of direct interest in
the company from Warburg Pincus LLC. In 2005-06, Bharti Airtel became India’s largest integrated
private operator based on the total customer base. In 2006, the name Bharti Tele Ventures Ltd was
changed to Bharti Airtel. In 2006-07, it made a foray into the USA with the launch of Airtel
CallHome service for Non resident Indians based there. During 2007, the company also incorporated
Bharti Airtel (USA) Ltd, Bharti Airtel (UK) Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hong
kong) Ltd as a wholly owned subsidiaries of the company for providing international calling services
and wholesale voice switching and data products in the respective countries13. In Jan 2008, it covers
an addressable 59% of the total population of India. Refer to Exhibit 3 for the major milestones in the
growth of the organization.

The organization

The company was structured into three strategic business units, Mobile Services which offered Global
System for Mobile communication (GSM), Infotel Services which provided broadband & Telephone,
national and international long distance services, and Enterprise services which offered services to
Carriers and other business customers (refer to Exhibit 4).

Mobile Services - The Company’s mobile communication services include information services, short
message, and prepaid and post paid services, as well as wireless application protocol-enabled Internet
access and roaming services. In addition to being the largest GSM player in the country, it was also
the largest wireless service provider in the country, with a share of 23.4% of wireless market (as on
September 30, 2007).

Broadband & Telephone Services – The company’s telephone services include telephone services,
dial-up services, special phone plus services, unified messaging, and audio conference services; and
broadband services comprise integrated services digital network, leased line, virtual private networks,
and wireless fidelity networks. It offered supply & installation of fixed-line telephones providing
local, national & international long distance voice connectivity and broadband Internet access through
DSL. The business also provided value added services such as intelligent network based advance
management services, viz. toll free numbers, virtual private automatic branch exchange networks, ring
back tones and call forwarding among others.

Enterprise Services - The company offers enterprise services, such as voice services, mobile services,
satellite services, managed data and Internet services, and managed e-business services. This division
comprises of the Carriers and Corporate Business units. Carriers business unit was India's first private
long distance communications service provider, offering a portfolio of wholesale services in data and
voice domain with both national and international long distance services. Corporate business unit
serves as the single point of contact for all data and telecommunication needs for large business
customers and small and medium enterprises (SMEs) and provides end-to-end telecom solutions.

13
http://www.valuenotes.com/q22008/Bhartiairtel_q2.pdf accessed on 6 Jan, 2008
Talent focus

The company employed more than 20,000 employees and always had a talent-oriented HR strategy
that emphasized talented manpower as a key strength. In line with this talent focus, the company
emphasized on acquiring the right talent at all levels and in this endeavor, it employed a competency
based selection methodology to get the right talent in the organization.

It managed to establish itself as a recruiter of choice across top business schools and engineering
colleges across the country. This was done by leveraging its size to offer its talent the space and
empowerment they need. It was also recognized as an organization that facilitated faster growth by
providing its employees with high responsibilities early in their career as well as multiple avenues to
reach the top14.

It used a comprehensive program called the "young leader" program through which the fresh talent
pool with an innovative mindset, were brought in every year. In order to retain its talent, the company
used ESOPs, in addition to which it lays great emphasis on development of leadership skills and on
building employee motivation. The organization also used policies like Continuing Education Policy
(CEP) which provided higher education opportunities to its employees who are keen on pursuing
further education and Flexible Time Policy (FTP). In addition, the organization also relied heavily on
internal sourcing to fill up the talent requirements in an endeavor to prepare its people for greater
responsibilities15.

Corporate Social Responsibility

Bharti Airtel always looked at ways to contribute to the society and had its own foundation which
works for several causes that help the society. Its foundation, the Bharti Foundation was established in
2000 with the vision “To help underprivileged children and young people of their country realize their
potential.” Thus the foundation created and supported programs that bring about sustainable changes,
predominantly in the field of education. The flagship program of the foundation was 'Satya Bharti
Schools', which were high-quality pre-primary and primary schools intended to provide quality
education to poor, migrant underprivileged children in rural areas, especially to girl children. This
program had set an impressive aim of establishing 1000 village-based schools. The company had
promoted active community involvement in the rural areas and owing to its belief in Public Private
Partnership, had actively sought the help of village panchayats to make the ventures successful.

The company also partnered with other government schools and anganwadis to provide mid day
meals for children and also offered several scholarships for higher education in many institutions. It
also opened several Bharti Computer Centres and Bharti Libraries. Bharti Computer Centres was one
of the key programs, which aimed at improving learning levels of underprivileged children, using
computer-aided learning. It also provided computer exposure and training to disadvantaged youth in
the communities. Bharti Library and Activity Centres aim at improving basic reading ability and
learning levels of children. Mid-day-meal program of Bharti Foundation provided mid-day meals to
underprivileged children in Vrindavan. Bharti Scholarship Scheme was initiated to enable financially
weak meritorious students pursue higher education. The foundation funded IIT Delhi to establish
Bharti School of Telecommunication Technology and Management, and Bharti Centre for
Communication at IIT Bombay.

Bharti Airtel formulated its policies and practices after due consideration of its CSR and had
constantly showcased its social responsibility through its various initiatives which operated on the
foundation of sound environmental conservation. These various policies were intended to minimize
the consumption of energy and optimize the use of material produced out of natural resources, which

14
Bharti Airtel Limited Annual report 2006-07
15
www.pwc.com/ceosurvey, accessed on 4 Feb, 2008
were continuously monitored and improved upon. These efforts have been widely recognized and
won several laurels. During 2003-04, it was assigned highest Governance and Value Creation (GVC)
rating viz. ‘Level 1’ rating by CRISIL, indicating that the company’s capability with respect to
creating wealth for all its stakeholders was the highest, while adopting sound Corporate Governance
practices. This rating was re-affirmed by CRISIL on April 20, 2006. The Bharti Foundation also
received the prestigious Golden Peacock Award for CSR for 2007.

Other Businesses

Bharti had a joint venture with ELRo Holdings India Ltd. – ‘FieldFresh Foods Pvt. Ltd’ - for global
distribution of fresh fruits and vegetables grown in India to supermarkets in Europe. Bharti also had a
joint venture - ‘Bharti AXA Life Insurance Company Ltd.’ - with AXA, world leader in financial
protection and wealth management. It was on its way to transform India's underdeveloped retail
market by partnering with Walmart.

In August 2007, Walmart formally marked its entry into India by signing two agreements with Bharti
Enterprises. As per these agreements, Bharti Retail Private Limited would be set up as Bharti’s wholly
owned subsidiary, in which Bharti would handle the front end and Walmart would take care of the
back-end supply chain management. This would enable them to leverage the strengths of both the
sides, the excellent customer service of Bharti and the expertise in logistics, sourcing, and supply-
chain management of Walmart16. Bharti Retail Private Limited was planning to open hundreds of
stores over the next five years in formats ranging from supercenter to neighborhood market, and
predicted that investment in the venture will exceed $1 billion.

Strategic Partnerships

Many foreign players like SingTel, Singapore's state-owned telecommunications firm, and British
firm Vodafone, had a stake in Bharti Airtel. In Jan 2008, the stake of Bharti Enterprises in Airtel
stands at 26%, while SingTel owns 31% of Bharti Airtel. Vodafone had acquired 10% of Bharti Airtel
in 2006, mostly from early Bharti investor Warburg Pincus. In 1999 Mittal had sold an 18% stake in
Bharti to Warburg Pincus for $294 million which Warburg unloaded, reaping a net gain of $1.9
billion.

The technology alliances proved to be the key factor in the business strategy of Bharti Airtel. These
helped it surge ahead of the other service providers and retain its top slot in the industry. Not just in
terms of getting the best possible technology, these partnerships also enabled Bharti to focus on core
competencies. By freeing itself from managing technology, the company has used all its resources to
focus on its core competencies – strategic management i.e building their own strategy without
external consultants; people management (identifying, motivating and empowering talent); financial
management; and working with regulation and regulators17.

The company deployed the finest technology and operates state-of-the art networks using the services
of its partners like Ericsson, Nokia and Siemens. The company had an information technology
alliance with IBM for the group-wide information technology requirements and with Nortel for call
center technology requirements. During 2006-07, Bharti Airtel entered into agreement with Microsoft
to offer software and services for the Small and Medium business market in india. It also had an
agreement with Google to offer services on Airtel Mobile. Sunil Mittal says
We have a transparent relationship with our partners, and on a scale of 10 we are at 10. We
are transparent and honest in our dealings18.

16
Wireless Wonder, Chandler, Clay, Levinstein, Joan L., Fortune, 00158259, 1/22/2007, Vol. 155, Issue 1
17
http://www.gidabyte.com/focus/106/ accessed on 6 Feb, 2008.
18
http://voicendata.ciol.com/content/speak/106083102.asp accessed on 6 Feb, 2008.
Leadership of Mittal

One of the main faces behind the cellular revolution in India, Sunil Bharti Mittal was the owner and
the chairman and group managing director of Bharti Group. Sunil Mittal was born in 1957 to Sat Paul
and Lakshmi Mittal. He was a graduate of Punjab University and completed the owner/president
management program at Harvard Business School in 199919.

Since the time he started his bicycle parts manufacturing business after graduating from Punjab
University, his life had revolved around his business. He always had a hands-on approach towards his
business which changed in 2007 when he took on his new role as the chairman and group managing
director of Bharti Enterprises with the apex-level strategic reorganization of structure. He started to
shift focus towards macro issues and on mentoring, strategy and governance20. Manoj Kohli who was
groomed personally by Sunil Mittal assumed office as the CEO.

In addition to his responsibilities at Bharti, Sunil held several other leadership positions. He was the
president of Confederation of Indian Industry (CII) and a member of the Prime minister's Council on
Trade and Industry. He served on several boards including the Board of Standard Chartered PLC, the
International Advisory Board of the Center for the Advanced Study of India (CASI); University of
Pennsylvania, Harvard Business School India advisory board, International Business Council of the
World Economic Forum, Global GSM Association, Indo-British Partnership (IBP), Singapore-India
partnership foundation, the Indian Institute of Management, Lucknow, and the Indian Institute of
Technology, Mumbai. For the numerous awards that he received, refer to Exhibit 5.

Innovations

Bharti's strong management team had continuously focused on innovating, improving services
offerings with a strong focus on the front-end activities and at the same time outsourced the non-core
activities of the business. The Company's prime focus was on ensuring customer satisfaction through
superior network quality, customer service and continuous innovation in value-added services that
would help expand its mobile customer base and drive up volumes.

Bharti Airtel had numerous innovations to its credit, the most pertinent being its path breaking
partnerships with companies like Nokia, Siemens, Ericsson and IBM for its network planning, supply
& management and IT requirements respectively21. These deals became trend setters in the global
telecommunication industry.

In addition, the company was a pioneer in bringing many new and innovative services to the market.
Recently, the company and the GSM Association had launched the Global money transfer pilot
project in India which would enable 25 million Indians abroad to remit money to India through their
mobile phones22. It entered into strategic partnerships with Google for setting new grounds in mobile
search and with Microsoft, thus became the first telecom operator to offer Microsoft Windows mobile
5.0 technology.

During 2005 the company introduced new products like BlackBerry wireless solution, Airtel Live and
Ring back tones (Hello Tunes) which were all firsts in the country. Also the company was the first to
introduce Stock and Portfolio Tracker on the mobile in association with the Bombay Stock Exchange.
During the year 2005, the Company introduced new and innovative products that were received well
in the market and enabled the Company to maintain its leadership position despite competitive
pressures. The Company launched 'Future Factory - Centres of Innovation' to incubate pioneering

19
http://www.businessweek.com/it100/2006/10.htm accessed on 6 Feb, 2008.
20
At 50, Mittal to turn mentor at Bharti, Hindu business, Oct 08, 2003
21
Bharti Airtel Ltd, Capitaline Plus
22
Bharti Airtel Limited Annual report 2006-07
mobile applications. The Future Factory was conceptualized with the purpose of developing
applications to cater to the needs of customer segments across the entire spectrum.

Brand characteristics

Bharti Airtel always had a brand focused approach and it even puts forth its services as ways towards
dissolving global boundaries and to enable people to stay connected. It always sought brand
ambassadors who communicate the right brand equity. Hence the key factor in zeroing in on the brand
ambassadors was the extent to which there was a fit between the core values of the brand and the
personality of the ambassador. The company went for a variety of advertising using different brand
ambassadors, starting from cricket icon like Sachin Tendulkar to renowned music composer A. R.
Rahman to cine stars like Shahrukh Khan, Kareena Kapoor, Madhavan etc. It also adopted
combinations of functional and symbolic campaigns, national and regional campaigns, but all with a
common theme running across. It always went for high visibility advertising, targeting a variety of
customer segments.

In the year 2003, Sachin Tendulkar was signed as their brand ambassador and they unveiled a new
brand campaign `Express Yourself' to communicate Airtel’s vision, which was to make mobile
communications a way of life and on enabling customers to make their point in the most expressive
way anytime, anywhere and in any manner23. It also introduced in the same year, its brand campaign
featuring the signature A. R. Rahman melody, which had set a world record with over 4 million single
ringtone downloads.

Later, their other brand ambassador Shahrukh khan was signed on. The rationale for signing icons like
Sachin Tendulkar and Shahrukh khan was based on the studies which showed that Shahrukh Khan's
core values of being a self made actor with his success and glamour and Sachin Tendulkar's
dedication, innocence and performance acted as drivers of self-identification amongst the masses24.
Also their nationwide appeal was a key factor which was in line with the presence of Bharti Airtel’s
services across the length and breadth of the nation. In the year 2006, the brand ended its association
with Sachin Tendulkar which was seen as a reflection of his falling rating based on his performance
on field25. The company also used stars like Madhavan and Kareena Kapoor for its campaigns for
brief periods.

Bharti Airtel always used an advertising strategy that concentrated more on its brand and its values
than its products and services. Some of the main factors that the organization brings out about itself
through its advertising are its patriotism through its India-focus and Indianness, emphasis on customer
value, trust and human bonding and its pioneering role. These factors also brought out very clearly in
most of its campaigns, resulting in coherence between the organization’s values and its
communication and also in its communication itself.

Bharti Airtel bagged several awards for marketing and brand excellence as well as for distribution and
service excellence over the last few years. In the year 2004, the Bharti Airtel was adjudged the "World
Communications Best Brand of the Year". This was a prestigious award that recognized outstanding
performance by companies and brands from across the world in the telecommunications industry. It
also emerged as ‘The Second most trusted Brand' in the most trusted Brand 2007 survey conducted by
The Economic Times (ET) Brand Equity.

Bharti Airtel was acclaimed for its innovative campaigns in accordance with the changing times with
different themes. Some of its innovative advertisements which captured the imagination of the
country were the Airtel Showdown campaign featuring the icons Sachin Tendulkar and Shahrukh

23
Tendulkar, Airtel's brand Ambassador, Hindu business, Oct 08, 2003
24
http://www.indiantelevision.com/mam/headlines/y2k5/mar/marmam103.htm, accessed on 5 Jan, 2007
25
Airtel drops Tendulkar as brand ambassador, Press trust of India, November 02, 2006
Khan which proudly announced that Airtel was the largest GSM provider in the country and its latest
television commercial to promote Google Search on Airtel Live, which had the look of a Hollywood
period film26.

The brand focus of the company can be understood from the chairman's quote "refine your processes,
strive for dominance and build a brand", which was Exhibited prominently in the website. Its belief in
partnerships was reflected in its positioning as an enabler and in some of the catchy slogans, the
company promoted in order to cement its relationship with all stakeholders: ‘With You’; ‘Let's Talk
Leadership; ‘Building Telecom, Building Partnerships’.

Strategy

Bharti's strength was grounded in its brand management, people management and customer
management capabilities. These strengths were based on the turnaround process that the company
initiated in 2002-03, when it went in for its unique outsourcing partnerships with the top firms of the
world. These partnerships form the core of the strategy of Bharti Airtel. By 2003, Bharti obtained
licenses for mobile operations in 15 out of the total 23 circles. It had a 25% market share of the total
Indian mobile market and 6 million mobile subscribers. And by this time, the Indian mobile market
had grown to be highly attractive with the number of Indians taking up mobile services was growing
exponentially, and at the same time, highly competitive. There were seven major operators in the
Indian telecommunications market: Bharti, BSNL, Hutchison, Reliance, Tata, Idea Cellular, and
MTNL. There were also several strong regional mobile operators, such as Spice and BPL.

Mobile rates were as low as three to four U.S. cents per minute, and ARPU (the average monthly
revenue per customer unit) had fallen by 50% in three years as telecom providers fought to capture
new subscribers27. With industry consolidation, the focus was switching from having a national
footprint to having the ability to provide value-added services. Operators needed 2.5G or 3G
technologies to provide those services, and the transition upward from 2G represented a major capital
investment challenge for any telecom operator. Bharti Airtel adopted a sustainable business model
which enabled it to scale up to serve the growing market and also differentiate its services to tackle
the competition.

The company also signed a managed capacity expansion contract with Ericsson to provide managed
services and expanded its GSM/GPRS network into rural India in 15 circles. To achieve the objectives
of sustainable business model and differentiation, Bharti Airtel went in outsourcing the build and
management of its telecom and IT network to its key telecom network equipment vendors, Ericsson,
Nokia, and Siemens; and to its IT equipment vendor, IBM. Thus after having roped in the best-in-
business technology providers, it took upon itself the task of managing the brand and customers and in
creating and marketing new telecom services. By passing on its entire IT system to IBM, Bharti not
only benefited from getting a robust IT platform to handle scale but also drew a lot of value from IBM
expertise in expanding its business capabilities across the board. Thus it was able to upgrade its
technical infrastructure by having IBM handle functions like rollout of an ERP system and improving
its intranet.

In addition, a very comprehensive business intelligence and data warehousing capability were also
introduced to Bharti which helped it understand better the market segmentation and customer usage
pattern. This model of outsourcing became the oft-quoted example of IBM’s “On Demand” model of
customer relationship and for its business transformation outsourcing (BTO) which IBM was seen to
be promoting aggressively as the future of the partnerships. Bharti strengthened partnership with IBM
further in November 2007, by signing a new agreement estimated at US$ 150 million, for using
IBM’s expertise in implementing IT systems that will enable it to launch differentiated services in its

26
http://www.indiantelevision.com/mam/headlines/y2k5/mar/marmam103.htm, accessed on 5 Jan, 2008
27
Strategic Outsourcing at Bharti Airtel Limited, HBR, December 4 , 2007
new thrust areas of DTH and IPTV. This would also be geared towards helping to leverage the current
channels of Bharti Airtel to deliver new services.

Though outsourcing the traditional information technology was not a radical departure from the
normal outsourcing practice, Bharti Airtel was the first telecom company in the world that handed
over its network operations over to third parties, albeit to world leaders like Nokia and Ericsson28. It
gave its networks, which were built by those vendors back to them to manage and told them that it
would only pay for traffic that came out of the networks29. Bharti’s arrangement with the telecom
vendors was made on the basis of installed erlang30 capacity and was structured in two parts. The first
outlined the network design and installation and the second concerned the maintenance and running of
the network once it was installed. The scale of the success of the deal can be understood by the vast
business opportunities that it opened up for companies like Ericsson and NSN, as based on this deal,
both added close to 150 similar clients across the world between themselves.

A critical factor that has aided the success of this arrangement was the nature of engagement, which
was reflected even in the model of payment which was based on a predetermined percentage of
Bharti’s revenues rather than for services based on hours worked or some other standard method. That
way, as Bharti grew and demands on its service providers expanded, their compensation would
increase in lock step31. Thus the vendors had to be partners in true sense to Bharti Airtel as their
fortunes were closely associated with that of Airtel.

Though the deal proved to be a great success in terms of enabling Bharti Airtel scale up to achieve the
required capacity and in helping its partners realize sufficient benefits in terms of the revenues and a
new model which brought them many additional deals and businesses, it was not without its share of
difficulties. At the start of the implementation of the deal, the management at Bharti had to contend
with the high internal expectations from the deal as suddenly IT requests were pouring in from every
office. This required a great deal of internal communication to clarify the limits of the agreement with
IBM and the process that would be used to handle requests.

Another chief difficulty was due to the different objectives of the partners from the deal which
stemmed from the vastly diverse cultures at the two organizations. While Bharti had its start-up
culture, IBM was quite the opposite and thus while Bharti looked at the deal to enable it to respond
better in a high-intensity environment, IBM looked at it as long term arrangement wherein the
objective was to generate a world class infrastructure. Thus there were many initial glitches in
reconciling these two diverse objectives, but the discussions between the partners helped in sorting
this to a great extent. Another important issue was the transfer of personnel from the IT and
infrastructure teams to the partner organizations. The employees were skeptical about their future
owing to their attachment to Bharti Airtel and the cultural differences between the two organizations.
To take due care of this, the deal had a clause which provided the employees till two years after the
deal, with an option to return to Bharti Airtel if they were not satisfied with their new workplace.

Considering the uncertainties like the frequent changes in the telecom policy, this kind of an
arrangement provided the company adequate strength to tackle them effectively. The level of trust that
underlies the deal was the foundation on which the deal stands. Bharti Airtel even involved its
partners in its internal strategy meetings, in order that they are aligned to the common goal of revenue
maximization. Another factor that helped in improved engagement and trust was the long term nature
of the arrangements—12 years with Ericsson and NSN and 10 years with IBM. These deals turned out
to be a model for business partnerships and several Fortune 500 companies contacted the top

28
Bharti: A case study in how to manage outsourcing, BusinessWeek, October 15, 2007
29
Profile: Sunil Bharti Mittal, Financial Times, Nov 27, 2006
30 a unit of traffic intensity in a telephone system
31 Bharti: A case study in how to manage outsourcing, BusinessWeek, October 15, 2007
management of Bharti, NSN, Ericsson and IBM to know more about their successful outsourcing
partnerships. It was also featured on the cover page of the Wall Street Journal as an Indian company
that pioneered a phenomenon of “reverse outsourcing”. Refer to Exhibit 6 for the list of awards that
Bharti Airtel has been honored with.

The Road Ahead

Bharti Airtel was the only integrated telecom player with a predominant emphasis on mobile
telephony. It has a vision to be the most admired brand in India by 2010 on three accounts-loved by
more customers, targeted by top talent and benchmarked by more business32. Having already
overtaken China to become the fastest-growing market, with only 20% mobile penetration, the Indian
mobile telephony market was poised for greater growth. The company planned to get the lion’s share
of this market and hence made considerable investments in Network expansion, around $2 billion in
2007 to double the size of its network and cover 50% of India's population, up from 40% currently33.

Manoj Kohli, MD of Bharti Airtel mentioned at a conference in Management Development Institute,

Gurgaon on December 13, 2007 the objectives, “We should be able serve any location where a match
box is sold”; “We would reduce the price to one cent per minute”. It aims to establish a presence in all
5,200 census towns and over 500,000 villages across India by 2010, covering 95% of the country’s
total population34. The Cellular Operators Association of India (COAI) reported that significant
growth opportunities existed in rural areas, where penetration remained around 1%, while worthwhile
growth prospects also remained in urban areas, where penetration was running at 40%. Bharti intends
to reach new customers in rural areas, and aims to cover 75% of India's largely rural population35. It
also aims at servicing the rural market to stay ahead of the increasing competition.

The company’s strategic focus was on further strengthening the Airtel brand through best-in-class
customer service, backed by wide national distribution and the direction in the broadband & telephone
business was to focus on the cities with high revenue potential36. Bharti was all set to establish itself
in the emerging Broadcasting segment by launching its direct-to-home television service (DTH) and
TV over the internet (IPTV) in 200837. The company also planned to expand its telecom operations
internationally in select markets and in line with this, was expected to start its first international
operations in Srilanka to provide 2G and 3G mobile services wireless operations by March 2008. The
future looks very promising and the company looks all set to establish itself as one of the leading
players in the world telecommunication industry arena. Will it be able to continue the remarkable
growth it has shown in the past? And what are the challenges in maintaining or bettering its past
performance? (Exhibit 7 gives the consolidated results for the period 2004-7). Manoj Kohli, the CEO
of Bharti AirTel says catering to the demands of the three screens, the mobile screen, the television
and the computer screen will be the major challenge facing him38.

Sunil Mittal was surprisingly Indian in his expectation from Bharti Airtel,

Well, Bharti should represent the innate goodness of the house of Tatas with the speed of
Reliance. I would like it to be a hybrid of two great companies.39

32
www.bhartiairtel.in accessed on 5th January, 2008
33
http://www.businessweek.com/it100/2006/10.htm
34
Bharti Airtel Limited Annual report 2006-07
35
Bharti Airtel Limited Annual report 2006-07
36
www.bhartiairtel.in accessed on 5th January, 2008
37
Bharti Airtel Ltd, Capitaline Plus
38
Meet the lord of the rings Sunil Mittal, Economic Times, 19 Oct 2007.
39
Meet the lord of the rings Sunil Mittal, Economic Times, 19 Oct 2007.
 Exhibit 1: Indian Cellular Industry

Exhibit 1a: Market share as of 31-12-200740

No of Subscribers
Organizaiton %
in million
Airtel(GSM) 55.16 24.09
Reliance (CDMA + GSM) 40.63 17.75
Vodafone Essar(GSM) 39.86 17.41
BSNL(GSM) 32.71 14.29
Tata (CDMA) 21.74 9.50
IDEA(GSM) 21.05 9.20
Aircel(GSM) 9.42 4.12
Spice(GSM) 3.80 1.66
MTNL(GSM) 2.95 1.29
BPL(GSM) 1.24 0.54
HFCL (CDMA) 0.25 0.11
Shyam (CDMA) 0.10 0.04
Total 228.94 100.00

Exhibit 1b: Number of GSM subscribers and the year-on-year growth rates 41

Year Subscribers Annual growth

1997 794, 200 -
1998 1, 070, 600 35%
1999 1, 599, 400 49%
2000 3, 107, 500 94%
2001 5, 478, 900 76%
2002 10, 480, 400 91%
2003 21, 991, 700 110%
2004 37, 378, 900 70%
2005 58, 503, 100 57%
2006 105, 430, 000 80%
2007 (Dec) 172, 219, 135 63%

40
http://www.india-cellular.com/Market-Share.html, accessed on 4 Feb, 2008
41
http://www.coai.in/cellularstatistics.htm , accessed on 4 Feb, 2008
 Exhibit 1c: Mobile subscribers and market share by region/circle (as on June 2007)42

Circle No. of Region/Circle Subscribers Market

service (million) share
areas
Mumbai, Delhi, Calcutta &
Metros 4 33.06 18%
Chennai
Corresponds to Andra Pradesh,
Circles A 5 Maharashtra, Gujarat, 65.92 35.8%
Karnataka & Tamil Nadu
Corresponds to Uttar Pradesh,
Punjab, Rajastan, Haryana,
Circles B 8 66.63 36.2%
Kerala, Madhya Pradesh &
West Bengal
Corresponds to Bihar, Orissa,
North East Assam, Jammu &
Circles C 6 18.31 10.0%
Kashmir, Himachal Pradesh, &
Andaman and Nicobar Islands
Total 23 183.92 100%

Exhibit 1d: Licenses per cellular service provider (CDMA &GSM)43

Service provider* Licensed service areas No. of circles

BSNL All India (except Delhi & 21
Mumbai)
Reliance All India 23
Aircel All India 23
Vodafone All India 22
Tata Teleservices All India 20
IDEA Select circles 13
BPL Mumbai 1
MTNL Delhi, Mumbai 2
Spice communications Karnataka, Punjab 2
HFCL Punjab 1
Shyam Telelink Rajasthan 1
*as on 31 March, 2007

42
http://www.trai.gov.in/annualreport/AReport2006-07English.pdf, accessed on 4 Feb, 2008
43
http://www.trai.gov.in/annualreport/AReport2006-07English.pdf, accessed on 4 Feb, 2008
 Exhibit 2: Reforms in the Indian mobile telephone industry44

Year Event
1854 Telegraph facilities were opened up for public with the opening of a separate
department of the government
1914 Postal department and the telegraph department were merged during World War I
1950 196 telephone exchanges were absorbed from princely states with installed
capacity of 13362 lines and 11296 working connections
1985 Two separate departments for post and telecommunications were created (DoP
and DoT)
1986 Departmental reorganization with secondary switching areas as basic units
Bombay (Mumbai) and Delhi telephones were separated to form Mahanagar
Telephone Nigam Ltd (MTNL)
1989 Telecom Commission constituted
1992 Telecommunication sector in India liberalized and private sector is allowed to
participate
1994 The National Telecom Policy was announced with the objective of universal
service coverage across the country.
Government began to offer licenses for the metros Delhi, Mumbai, Chennai and
Kolkata. It was to be a duopoly with not more than two licensed cellular
operators in each telecom circle, under a fixed license fee regime for 10 years.
1995 19 more telecom circles get mobile licenses
In August 1995 Kolkata became the first metro in India to have a cellular
network
1997 Telecom Regulatory Authority of India (TRAI) was set up to provide effective
regulatory framework and protect consumer interests through fair competition
1999 The National Telecom Policy was announced with additional emphasis on
balance between universal service to uncovered areas and high level services to
meet countries economy
2000 Amendment of TRAI Act to overcome implementation difficulties
Bharat Sanchar Nigam Ltd (BSNL) created as a public sector unit from the
department of telecommunications to operate telephony services across the
country except Mumbai and Delhi
2004 Broadband policy was announced recognizing the potential of broad band
services influence on GDP growth and societal transformation through tele
medicine, tele education, e governance and employment generation

44
http://www.coai.in/aboutus-history.htm, and Indian Telecom History Vol I
http://www.telecomindiaonline.com/indiantelecomhistory.pdf accessed on 4 Feb, 2008
 Exhibit 3: Major milestones in the history of Bharti Airtel

Year Milestone
1976 Bharti founded in Ludhiana to make crankshafts for local bicycle manufacturers
1982 Bharti begins import of portable generators as the India agency for Suzuki Motors of
Japan
1984 Bharti goes in for nationwide distribution & the GoI bans the import of generators
1986 Bharti Telecom Limited (BTL) gets incorporated, becoming the first in India to offer
push-button telephones under the brand ‘Beetel’
1991 Sunil Mittal launches country's first fax machines and its first cordless telephones.
1992 Bharti bids for a license for India's first mobile phone business in collaboration with
Vivendi
1995 Bharti Tele-Ventures Ltd. (BTVL)) gets incorporated and services commence in
Delhi
1996 Extends the services to Himachal Pradesh
1999 Bharti sells 20% equity interest to the private equity firm Warburg Pincus and uses
this capital inflow to finance its next stage of growth.
1999 Acquires control of JT mobiles
1999 Extends cellular operations to Punjab, Karnataka and Andhra Pradesh and becomes
the largest private sector telecom operator in India
1999 Acquires a 30.20% equity interest of Telecom Italia in Bharti Telenet and 18.8%
from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bhati
Tele-Ventures.
2000 Bharti acquires control of Skycell Communications
2001 Acquires control of Spice Cell in Calcutta.
2002 Bharti goes public and gets listed on BSE and NSE. With the entry of formidable
players, its stock plunges to less than half its IPO price and the company gets almost
written off
2003 A brief corporate restructuring was done to group all the operations under two
divisions - Bharti Cellular Limited and Bharat Infotel Limited. Also rebranding of all
cellular operations under a single brand ‘Airtel’
2003- Joins the US$1 billion revenue club
04
2004 BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd merged with the
company.
2005 Becomes the first telecom company to have an all India mobile footprint
2005- Vodafone, the world’s largest mobile service provider, acquires direct and indirect
06 economic interest in Bharti Airtel
2006 The name ‘Bharti Televentures’ changed to Bharti Airtel
2006- Forays into the USA with the launch of Airtel CallHome service for Non resident
07 Indians based there
2007 Incorporates Bharti Airtel (USA) Ltd, Bharti Airtel (UK) Ltd, Bharti Airtel (Canada)
Ltd, Bharti Airtel (Hong Kong) Ltd as a wholly owned subsidiaries of the company
for providing international calling services and wholesale voice switching and data
products in those countries
2007 Bharti Airtel becomes the fastest private telecom company in the world to reach the
landmark of 50 million customers in a single country, within just 143 months of start
of operations
 Exhibit 4: Airtel structure

Airtel

Infotel Mobile Services Enterprise

Services (GSM) Services

Broadband & Long Carriers Corporate

Telephone Distance

Exhibit 5: Awards and recognition to Sunil Mittal

Year Award
2006 ‘Asian Businessman of the Year’ by the Fortune Magazine

2006 ‘CEO of the year 2005’ at the Frost and Sullivan Asia Pacific ICT Awards

2006 ‘Telecom Person of the Year’ by Voice & Data

2005 Institutional Investor ‘Best CEO, India’

2005 `Best Asian Telecom CEO' at the Telecom Asia Awards 2005

2004 Ernst & Young ‘Entrepreneur of the Year’

2002 ‘Dataquest IT Man of the Year 2002’

2002 Business India “Businessman of the Year – 2002”

 Exhibit 6: Awards and recognition to Bharti Airtel

Year Award
2007 Ranked third globally in ‘The Infotech 100’ list for best returns to the
shareholders by the BusinessWeek Magazine
2006 ‘Best Indian Carrier’ in the Telecom Asia awards 2006
2006-07 ‘Wireless Service Provider of the year’ and 'Competitive Service Provider of
the year 2006' by Frost & Sullivan Asia Pacific
2006 ‘Competitive Service Provider of the year award’ in the Telecom Asia
Awards 2006
2006 ‘Most Preferred Cellular Service Provider Award’ in the telecom category at
the CNBC Awaaz Consumer Awards 2006
2006 ‘MIS Asia II Excellence Award 2006’ for Best Knowledge Management
2006 ‘Most Customer Responsive Telecom Company in India’ by the Avaya-
Economic Times Global Connect Awards 2006
2006 ‘The Nasscom IT Innovation Award’ for the Business Model Innovation for
2006
2006 In the Indian MAKE study, which rated Indian organizations against a
framework of eight key knowledge performance dimensions, Bharti Airtel
was recognized for its organizational learning, and managing customer
knowledge abilities
2005 'Mobile Operator of the Year, India Award', 'Best GSM carrier in Asia' in the
Telecom Asia Awards 2005, 'Best Indian Carrier' in the Telecom Asia
Awards
2005 “Avaya GlobalConnect Customer Responsiveness Awards, 2005” for Best
Customer Service in the telecom sector
2005 Forbes Global 2000 leading companies in the world for the year 2005
2005 ‘Best GSM Carrier in Asia’
2005 Ranked 2nd among the 'Best Managed Company' in India, in Asia's Best
Companies 2005 poll conducted by Finance Asia
2005 'Indian Mobile Operator of the Year 2005' by Asian Mobile News
2005 Became the top-most Telecom Company and was featured amongst the top
three companies across the sectors in the ET 500
2005 'Market Leadership Award for Managed WAN Services Market, 2005' by
Frost & Sullivan
2005 ‘India’s Best managed company in 2005 by Asia Money
2005 Was featured in the Forbes’ ‘400 list of the Best Big Companies’ and was
ranked 2nd among the 'Best Managed Companies' in India
 Exhibit 7: Financials

Customer Statistics45 2004 2005 2006 2007 30-Jun-07

Total Customer Base
(000s) 7141 11842 20926 39013 44676
Mobile Services
(000s) 6504 10984 19579 37141 42704
Broadband and Telephone Services
(000s) 637 857 1347 1871 1972

CONSOLIDATED FINANCIALS AS PER US GAAP

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

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

45
Bharti Airtel Limited Annual report 2006-07