Bharti Airtel Limited (NSE: BHARTIARTL, BSE: 532454), commonly known as Airtel, is an Indian telecommunications company that operates

in 20 countries across South Asia, Africa and the Channel Islands. It operates a GSM network in all countries, providing 2G or 3G services depending upon the country of operation.[2] Airtel is the 3rd largest telecom operator in the world with over 243.336 million customers across 20 countries as of March 2012.[3] It is the largest cellular service provider in India, with over 176.95 million subscribers at the end of January 2012.[4] Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider of broadband and subscription television services. It offers its telecom services under the Airtel brand and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve this Cisco Gold Certification. To earn Gold Certification, Bharti Airtel had to meet rigorous standards for networking competency, service, support and customer satisfaction set forth by Cisco.[5] The company also provides land-line telephone services and broadband Internet access (DSL) in over 96 cities in India. It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. It is known for being the first mobile phone company in the world to outsource all of its business operations except marketing, sales and finance. Its network (base stations, microwave links, etc.) are maintained by Ericsson, Nokia Siemens Network and Huawei,[6] business support is provided by IBM, and transmission towers are maintained by another company (Bharti Infratel Ltd. in India).[7] Ericsson agreed for the first time to be paid by the minute for installation and maintenance of their equipment rather than being paid up front. This enabled the company to provide pan-India phone call rates of Rs. 1/minute (US$0.02/minute). Call rates have come down much further.[8] During the last financial year [200910], Bharti has negotiated for its strategic partner Alcatel-Lucent to manage the network infrastructure for the Telemedia Business.

History
Sunil Bharti Mittal founded the Bharti Group. In 1983, Sunil Mittal was into an agreement with Germany's Siemens to manufacture the company's push-button telephone models for the Indian market. In 1986, Sunil Bharti Mittal incorporated Bharti Telecom Limited (BTL) and his company became the first in India to offer push-button telephones, establishing the basis of Bharti Enterprises. This first-mover advantage allowed Sunil Mittal to expand his manufacturing capacity elsewhere in the telecommunications market. By the early 1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless telephones. In 1992, Sunil Mittal won a bid to build a cellular phone network in Delhi. In 1995, Sunil Mittal incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi. In 1996, cellular service was extended to Himachal Pradesh. In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell Communications, in Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises went public in 2002, and the company was listed on Bombay Stock Exchange and National Stock Exchange of India. In 2003, the cellular phone

operations were rebranded under the single Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005, Bharti extended its network to Andaman and Nicobar.'2009, Airtel launched its first international mobile network in Sri Lanka. In 2010, Airtel began operating end Today, Airtel is the largest cellular service provider in India and fifth largest in the world
Organisational Structure The organisational structure that existed till recently concentrated on the hierarchy of the operations(not services)inside the company as a whole. The structure depicts the corresponding operation/region of different in-charges and hence it didn't hold anyone responsible for each of its services. So, the company found it better to restructure its organisational chart and it came into implementation from 1 August. The transformed organisational structure will have two distinct Customer Business Units (CBU) with clear focus on B2C (Business to Customer) and B2B (Business to Business) segments. Bharti Airtel's B2C business unit will comprehensively service the retail consumers, homes and small offices, by combining the erstwhile business units Mobile, Telemedia, Digital TV, and other emerging businesses (like M-commerce, M-health, M-advertising etc.). The B2C organization will consist of Consumer Business and Market Operations. It is the largest telecommunication company in India.

Worldwide presence

Coverage map of Bharti Airtel across 20 countries Airtel is the 5th largest mobile operator in the world in terms of subscriber base and has a commercial presence in 20 countries and the Channel Islands.

Its area of operations include:

The Indian Subcontinent: o Airtel Bangla, in Bangladesh o Airtel, in India

Airtel Sri Lanka, in Sri Lanka Airtel Africa, which operates in 17 African countries: o Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia. The British Crown Dependency islands of Jersey and Guernsey, under the brand name Airtel-Vodafone, through an agreement with Vodafone.

Airtel operates in the following countries:

Mobile

Airtel has nationwide presence and is the market leader with a market share of almost completely (as of May 2010). It is 6th most valued brand according to an annual survey conducted by Brand Finance and The Economic Times in 2010.[16][17] On 19 October 2004, Airtel announced the launch of a BlackBerry Wireless Solution in India. The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research In Motion (RIM). The Apple iPhone 3G was rolled out in India on 22 August 2008 by Airtel & Vodafone. Both the cellular service providers rolled out their AppleiPhone 3GS in the first quarter of 2010. However, high prices and contract bonds discouraged consumers and it was not as successful as the iPhone is in other markets of the world. The AppleiPhone 4 was introduced on 27 May 2011 by Airtel & Aircel. The iPhone 4S in India was available on Airtel and Aircel. While in other countries carrier locked phones (phones using the network only of carrier from which they are brought) have less price compared to fully unlocked phones (phones having the allowance of using any network supported) the carrier of India Sell at the same price of an unlocked version and are available more expensive then other countries, and therefore having less buys.
[edit]3G

On 18 May 2010, 3G spectrum auction was completed and Airtel will have to pay the Indian government 12,295 crore (US$2.7 billion) for spectrum in 13 circles, the most amount spent by an operator in this auction. Airtel won 3G licences in 13 telecom circles of India: Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (east), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, North East, Jammu & Kashmir.[18] Airtel also operates 3G services in Maharastra, Goa, Kanpur and Kolkata through an agreement with Vodafone and in Gujarat through an agreement with Idea. This gives Airtel a 3G presence in 15 out of 22 circles in India. On 20 September 2010, Bharti Airtel said that it has given contracts to Ericsson India, Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for providing 3G services in the country. These vendors will plan, design, deploy and maintain 3G-HSPA (third generation, high speed packet access) networks in 13 telecom circles where the company has won 3G licences. While Bharti Airtel has awarded network contracts for seven 3G circles to

Ericsson India, NSN would manage networks in three circles. Chinese telecom equipment vendor Huawei Technologies has been introduced as the third partner for three circles.[19] On 24 January 2011, Airtel launched 3G services in Bangalore, Karnataka its largest circle by revenue. With this launch, Airtel became the third private operator (fifth overall) to launch its 3G services in the country following Reliance Communications and Tata Docomo.[20] On 27 January 2011, Airtel launched 3G in Chennai and Coimbatore. On 27 July 2011 Airtel launched 3G in three major cities in Kerala (Trivandrum, Cochin and Calicut) with 3G network sharing agreement between idea.[21] Airtel plans to cover 1,500 cities across 13 circles by the end of March 2012. The company, which has 3G licences for 13 circles, is also in talks with other service providers to roll out the services in the remaining 10 circles as part of its roaming offerings.[22] Airtel had about 3 million 3G subscribers as of May 2011.[23]
[edit]4G

On 19 May 2010, the broadband wireless access (BWA) or 4G[24] spectrum auction in India ended. Airtel paid 3314.36 crores for spectrum in 4 circles. The circles it will provide 4G in are Maharashtra, Karnataka, Punjab and Kolkata.[25] Airtel has selected ZTE to build and operate its TD-LTE network in Kolkata and Nokia Siemens Networks in Maharashtra.[26] Airtel is expected to launch 4G services in March 2012 using TD-LTE technology in 2.3 GHz frequency band.[27][28]

Zain
Zain Group is a mobile telecommunications company founded in 1983 in Kuwait as MTC or Mobile Telecommunications Company, and was later rebranded to Zain in 2007. Zain has commercial presence in 7 countries across Africa and the Middle East with about 37.6 million customers as of 31 March 2011. It employs 6000 people.[3]

Presence in Africa
From 2005 to 2010, Zain maintained a presence in a number of countries in Sub-Saharan Africa, in addition to its core market in the MENA region. Zain entered Africa in May 2005 through the $3.4 billion purchase of Celtel International which had 13 country operations in Africa, serving five million customers at that time. Zain invested heavily across the continent through network upgrades and acquiring two more country licences. By June 2010, Zain had over 40 million customers across the continent, operating in Burkina

Faso, Chad, Democratic Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia. In early 2010, Zain accepted an offer for the sale of all its Africa operations. On 8 June 2010, Zain announced that it had satisfied all required conditions precedent to closing of the sale of 100% of Zain Africa BV to Bharti Airtel Limited for $10.7 billion on an enterprise basis.[4] Operations Bahrain Iraq Jordan Kuwait Lebanon Morocco Saudi Arabia Sudan

Financial highlights
Zain is listed on the Kuwait Stock Exchange. There are no restrictions on Zain shares as the companys capital is 100% free float and publicly traded. The largest shareholder is the Kuwait Investment Authority (24.6%). On 20 September 2008, Zain Group announced the completion of its capital increase raising US$4.49 billion (KWD1.2 billion) with 29% of all shareholders subscribing. The number of subscribed shares exceeded 1.4 billion, bringing the total number of Zain shares to 4.28 billion with total shareholders equity reaching US$6.42 billion.[citation needed]

[edit]One Network
Zain's One Network is the worlds first, borderless mobile service offering over 64 million Zain customers in 21 countries favorable rates, free of high roaming charges for cross-border communications.[citation needed] Zain's One Network service replaced roaming in the following countries: Jordan, Bahrain, Iraq, Sudan, Nigeria, Uganda, Burkina Faso, Republic of Congo, Democratic Republic of Congo, Gabon, Chad, Tanzania, Kenya, Malawi, Nigeria and Saudi Arabia.[7] Zain announced in May 2009, the launch of cross-border data services across the Middle East and Africa on the One Network platform.

Bharti completes acquisition of Zain's Africa biz for $10.7bn

PTI Jun 8, 2010, 03.39pm IST

NEW DELHI: In the largest ever telecom takeover by an Indian firm, Bharti Airtel today completed a deal to buy Kuwait-based Zain Telecom's African business for $10.7 billion (about Rs 48,000 crore). Announcing the closure of the deal, Sunil Mittal said, "We are delighted at the closure of this transformational deal for India and Bharti Airtel. The transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion." Bharti completes acquisition of Zain's Africa biz for $10.7bn

NEW DELHI: In the largest ever telecom takeover by an Indian firm, Bharti Airtel today completed a deal to buy Kuwait-based Zain Telecom's African business for $10.7 billion (about Rs 48,000 crore). Announcing the closure of the deal, Sunil Mittal said, "We are delighted at the closure of this transformational deal for India and Bharti Airtel. The transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion." On March 30, 2010, Bharti had entered the deal to acquire Zain Telecom's operations in 15 nations, excluding Sudan and Morocco. Zain has operations in 17 African countries. The closure of the deal implies that Bharti has received all the approvals from the governments and regulators of each of these 15 nations. This acquisition, besides giving Bharti its much-desired presence in Africa, makes it the world's fifth largest wireless company with operations across 18 countries and a subscriber base of around 179 million. Bharti had failed twice in the last two year's to forge an $23 billion merger deal with South African telecom giant MTN. The Zain acquisition, the second largest by an Indian entity after Tatas' Corus deal, would take the revenue of the combined entity to an estimated $13 billion. The African business would widen Bharti's reach, which was hitherto restricted to Asia and the Indian Ocean region with businesses in Sri Lanka, Bangladesh and Seychelles. Of the $10.7 billion enterprise value of Zain, Bharti will be paying $8.3 billion upfront and $700 million after a year. It would also take over approximately $1.7 billion of Zain's debts as on December 31, 2009. Of the $8.3 billion paid to Zain, Bharti has raised debt from a consortium of foreign banks and State Bank of India with the lead-arranger and lead-advisor Standard Chartered Bank committing the highest amount $1.3 billion, followed by Barclays at $900 million. The rest of the co-advisors ANZ, BNP, Bank of America-Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation have allocated $600 million each. State Bank of India has agreed to an up to $one billion loan in rupee terms.

Bharti-Zain deal: Will it benefit Sunil Mittal?

Last Updated: Thursday, March 25, 2010, 10:57

1
Tags: Bharti-Zain deal, African telecom market, Sunil Mittal

Rijo Jacob Abraham Sunil Mittal can now have plenty of meat to eat as the Kuwait-based Zain Telecom gave its nod to the transaction with Bharti. The Bharti group chairman, who is in the due diligence process for acquiring the African assets of Kuwaits Zain telecom, avoids meat whenever his group closes in to making business deals. He had done the same twice last year when Bharti was in acquisition talks with South Africas MTN. But his spare diet didnt bear fruit after the MTN deal fell through. The $24 billion deal was an ambitious one, no doubt. It would have surpassed Tata acquisition of Corus by almost double. The problem, Bharti said in a press release, was regulatory approvals from the South African side. The talks went on smoothly from May 2008, when they hit on a roadblock in August -- dual listing the company in stock exchanges of two countries. The actual problem was politics, what some columnist call economic nationalism. The South African government did not want their flagship corporate firm to lose it national identity. Mittals months of penance failed. But he should persist. Market data shows why he is not giving up, and why he should not. Airtels profit margins have fallen lowest in three years in the quarter ended December 2009. ARPU or Average Revenue Per User has fallen drastically to around Rs 24, thanks to the increased mobile subscription rates. India has the worlds largest growing mobile markets -- the number of cell phone connections stood at 525 million in December 2009. India has around 13 cell phone operators now, with the latest entrants being Telenor and Sestemia (which operates as MTS). Stiff competition has swamped the call charges in the country. Further, to boost the rural penetration

of cell phones, the government had lowered the mobile termination charge (MTC) -- the charge one mobile operator pays to another for each call made to it. Bharti stands to lose the greatest from this move. With Indian markets showing early signs of saturation, Bharti has few options but to look overseas. According to market analysts, the Indian telecom giants operations in Sychelles, Jersey and Guernsey (Channel Island), Sri Lanka and the recent acquisition of Warid Telecom in Bangladesh are just not good enough to increase profits. It needs bigger geographies, like that of he MTN or the Zain with growth potential. The Zain deal With the global economy emerging from recession, valuations of troubled assets have increased and loss-making companies like Zain Africa BV (Zains Africa operations) are willing to sell them. Merger and acquisition opportunities have widened compared to the past one-and-a-half years. On February 15, Bharti Airtel announced the USD 10.7-billion deal for acquiring Zains 15 operations in Africa.

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The deal, Bharti Airtel clarified, includes a $1.7 billion debt assumption, which will be figured into the enterprise value. In this all-cash acquisition, $700 million will be paid a year after the deal is inked. Further the deal carries a penalty of $150 million for the parties if either fails to complete the deal. Mittals Minutes factory Africa is too good an opportunity for Mittal. With a population of a billion spread out in 56 countries, Africas cell phone penetration is comparable to that of India 10 years back. Mittals minutes factory, what he refers to as low-cost, high volume model, which made him market leader with should work in Africa as well. The demand for mobile services is growing at a rate of 25 percent across these countries.

Despite Mittals optimism, its 8.2 million shares changed hands since the deal was announced and its value fell to 16-month low of Rs 272.45. Why? Just market vagaries? No. Investors knew that the deal will be largely debt-funded. Though Mittal is a man, who keeps his debts low( it is just 0.4 times the 2010 EBITDA), the deal could stretch its balance sheet a tad too much. The upcoming 3G auction adds to the worry. Investors consider Bharti present valuation of $2 billion debt ridden company at eight times its EBITA is not worthwhile. A deal at two times the EBITA, they consider, would have been good enough. Credit rating agencies Crisil and S&P have placed Bhartis long-term banking facilities and debt programmes on rating watch with negative implications. The macroeconomic set-up of the continent is also not suitable. Also, investors are wary as to how Bharti will fare in African market, with 15 different regulatory bodies. According to Forbes, investors know that it easier for Sania Mirza to win the Wimbledon than for Bharti to make money in Africa. Organisationally Zain, with 46 percent of its shares with the Kharafi Group, is a Middle East phenomenon. Its under-investment in the area and weak execution of projects had weakened its prospects. Its top-to-bottom management approach has made it unviable in the African domestic market. It is precisely here where Bharti aims to capitalise. Economies of scale and scope On March1, Sanjay Kapoor was elevated chief executive for India and South Asia. And Mittals trusted lieutenant, Manoj Kholi, is to head its international operations. The entire management structure is being revamped. According to reports, Inder Walia, the groups HR head, has begun gathering top-notch professionals to help the company take root in an alien environment.

Once this, economy of scale--liberalising the management and adapting to local culture -- has been set, it would move on to implement the economy of scope by manipulating the demand side. This is where Mittals minute factory or price war will come into play. This is yet another daunting challenge. Of the African countries, Zain has significant presence only in five, Nigeria leading the lot. This doesnt mean that Nigerian business is profitable. It means it has 25 percent market share. Bhartis hope partly lies here too. According to analyst, it is not ARPUs that correlate to profitability. It is the market share. Tower costs in Africa are four times that of India.

Bharti can bring down costs considerably. The debt funded deal will cost Bharti $500 million per year in interest. This means the EBITDA has to be improved by 40 percent to fund just for the deal. But, Sunil Mittal has not diversified his company much. He is concentrating on what he does best delivering cheaper rates and higher volume. His mantra is simple make cell phones the cheapest means for people to stay in touch with each other. Innovation, growth and profits will follow. Hopefully, this mantra will work in the markets of Africa as well.