telecom sector-bhartiairtel

7/30/2019 Telecom Sector-BhartiAirtel

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Security Analysis and Business Valuation

Telecom Sector Bharti Airtel

Project team Group 4

Manish Bhasin (23)

Aryadipta Dash (09)

Prince Yadav (34)

Yogesh Yadav (68)

Samdarsh Nayar


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Company Overview One of worlds leading providers of telecommunication

services Presence in 19 countries including

India & South Asia and Africa

Largest wireless service provider in India

Customer Base (status as on March 31, 2012) India & South Asia:

188,008,000 GSM mobile

3,270,000 Telemedia customers and

7,228,000 Digital TV Services

Africa: 53,140,000 GSM mobile customers.


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Company Overview- Business Division

India and South Asia B2C Services

Mobile Services GSM in South East Asia across India, Bangladesh , Sri-lanka.

Rs. 188 million customers in these geographies (181.3 million in India)

Post-paid , Pre-paid ,Roaming, Internet , m-Commerce and VAS

Launched pan IndiaAritel Moneyperson to person money transfer service

Telemedia Services Broadband (DSL), Data, Land Line telephone service.

Launched 4G services in Kolkata based on TD-LTE

Superfast access to HD streaming etc..

Digital Services Airtel Digital TV 7.2 million base.

HD-Set top box and Digital TV recorder

B2B Services Airtel Business

Airtel business offers network infrastructure, integration & management with a combinationof cutting edge global network infrastructure, technical skills and world-class servicesthrough

Passive Infrastructure Owns 42% in Indus Tower


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Company Overview - Trends


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Economic Analysis

World Economy Turmoil in the Euro-zone - World economy shaky again after

brief recovery

Eurozone likely to slip into recession again

IMF projection - Global economic growth dwon from 4% in 2011to 3.5% in 2012, before picking up to 4% in 2013.

The worst-case scenarios for the global economy have not cometo pass

The bond, inter-bank and sovereign debt markets in Europeremain jittery

Political gridlock in many major countries, makes it difficult tostrike the right trade-offs between growth and fiscal andmonetary restraint


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Economic Analysis Indian Economy

Growth momentum slowed considerably over the past year

Growth in industrial production in the April 2011-February 2012 period slid to

3.5%, compared to 8.1% during the same period last year Major slippages on the fiscal side

The current account deficit, in the April-December 2011 periodwidened to 4.0% of GDP, a clear warning sign

Rupee depreciation free fall?


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Economic Analysis Indian Economy Indian Economy

Inflation, particularly in food items, remains high

Oil prices, taxes, supply side issues

Interest Rates have now come to constant growth or may decline


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Industry Analysis

Telecom sector - 2.5% of GDP but impacting 919 millionlives

Total telecom subscribers in India (GSM + CDMA +Wire-line) at the end of March 2012 rose by 7.85 mnsubscribers to 951.34 mn as compared to February2012

Tele-density - 78.66% at the end of March 2012

The urban wireless tele-density - 162.82%

Rural wireless tele-density - 38.33%

Industry is however directly impacted by differentRegulatory Environment

License cancellation 2G licenses alloted in 2008

2G scam

Clarity on policies like sharing of 2G specturm , allocation etc


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Industry Evaluation-Porters 5 Force

Bargaining Power of Buyers- Lack of service differentiation among service providers. Mobile number portability almost 0 switching cost

Highly competitive pricing.

Bargaining Power of Suppliers A number of competitors vying to supply equipment and network

management services to the Telecom operators (e.g. Nokia-Siemens,Ericsson, Alcatel Lucent, Motorola, Cisco and so on)

Emergence of Chinese vendors has worsened the competition amongsuppliers leading to lower price points and competitive offerings.

An ecosystem exists for sharing of Tower infrastructure among differentoperators. Co-dependence.

-Medium cost of switching as changing h/w infrastructure can impactdeployment architecture.


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Industry Evaluation-Porters 5 Force

Threat of New Entrants Strong entry barriers. High infrastructure cost and License Cost

Strong brand pull of existing players like Vodafone, Airtel and Ideamakes it difficult for new players to gain a firm footing easily.

Stringent Govt Policy for Spectrum and License allocation

Threat of Substitutes No Major threat (e.g Satelite Phone)

Rivalry among competitors Hyper-competition, especially in the wireless market to gain customer

share. Price wars and competing for new and better services

Huge Exit Barriers 5-6 players in each region, with big players present in majority of

region.

Innovations are replicated fast and all use network elements from fixedvendors


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Company Analysis - SWOT

Strength Operations in 23 circle in country. Maximum subscriber base way

ahead of competitors

Highest no of towers by Airtel making it easier to launch 3G/4Gservices using the same passive infrastructure making it costcompetitive

Strong brand pull

Strategic partnership (e.g. with SingTel that enables it to expandrapidly and get investment) and others like technology, networks andinfrastructure partnerships

Quick to introduce technologies like 3G and Airtel Money and gainingfirst mover advantage

Weakness Still majority of revenue from domestic market, need to globalizemore


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Company Analysis - SWOT

Opportunity Large untapped landscape Huge scope for growth in Rural India as

well as Africa

New technologies like 3G/4G opening up new avenues for growthusing VAS

Indian telecom industry is one of the fastest growing telecom marketin the world and Airtel is already market leader. Positioned forgrowth

Threat Regulatory environment

Increased competition may reduce market share and/or revenue

2G spectrum re-allocation

Change in Govt policy on FDI in telecom sector, may allow big globalplayers to enter Indian market.

Number portability has enable competitors to switch customers atlow cost.


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Valuation


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Thank you

telecom sector-bhartiairtel

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