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Top10: 2 - Bharti: Mobile Warrior

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Voice&Data Bureau
New Update

Bharti Airtel ended the FY 2005-06 with a revenue of Rs
11,663 crore, as against Rs 8,003 crore in the previous fiscal, a growth of
around 46%. The net profit stood at Rs 2,258 crore, up 51% over FY 2004-05. The
cash profit for the year was Rs 4,095 crore, up 46% from last year. 

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The total customer base of Bharti grew 77% to about 20.9 mn
during FY 2005-06. Bharti continued to maintain its leadership position in
mobile services, with a market share of 21.5% as on March 31, 2006.Â
The company's subscriber base grew 8.6 mn during the year under review.

BHARTI


Area of operation: Mobile
Services, Fixed Lines/Broadband and Internet Services, ILD, and DLD


Address: Bharti Airtel Limited, Qutab Ambience, Mehrauli Road, New
Delhi - 110 030

Phone: +91-11-4166
6000


Fax: +91-
11-4166
6011/12

On the wireless front, Bharti's subscriber base stood at
19.5 mn, up from 10.9 mn in FY 2004-05. Out of this, a good 82.7% were pre-paid
customers. Thanks to fall in tariff, the ARPU declined by 12% to reach Rs 442.
Non-voice revenue was 10.7% of the total revenue, while SMS formed 6.8%. With
the launch of its mobile service in Assam, Bharti became the first private
service provider to have its footprints in all 23 circles of the country.

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The total fixed line and broadband services subscriber base
grew by 57% to reach 1.3 mn and broadband comprised a mere 0.3 mn. This figure
also includes a majority of 128 kbps customers, which according to the Broadband
Policy definition does qualify to be broadband service. The ARPU from fixed and
broadband services continues to be more than double the mobile ARPU. It stood at
1,063, showing a decline of 14% over the previous year.

HIGHLIGHTS
  • Started services in
    the 23rd circle, thus becoming a pan-India player

  • Continues to lead
    mobile services with a market share of 21.5%

  • Vodafone invested
    approx Rs 6,700 crore to acquire 10% stake in Bharti Airtel

Bharti underwent major restructuring, aimed at aligning its
entire telecom business. Manoj Kohli was given the role to lead the unified
management structure of Bharti Airtel, the newly created entity. The year was
also significant for the company, as it joined hands with IBM to offer managed
services to enterprises in India. The companies agreed to jointly develop and
market IT and telecom solutions for the Indian enterprise market under the
'Joint-Go-To-Market Program'. The initiative is aimed at helping customers
achieve continuous access to their enterprise information and critical business
processes. The first phase will see the launch of managed hosting, business
resiliency, and continuity services. The services are targeted at BFSI,
manufacturing, and the government.

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Bharti also launched one lakh 'Easy Music' shop
allowing subscribers to download songs of their choice. The company also
expanded its BlackBerry product portfolio, targeted at high-end enterprise
customers. Delhi did Bharti proud by becoming the first metro to have 2 mn
mobile customers.

'The best of
Bharti is yet to come'

Bharti has come a
long way. How would you rate its performance over the years?

Our performance has been gratifying over these years. The 10-year-old
company has become the island of excellence in the Indian economy. It is
the island of entrepreneurship and passion.

It has been
institutionalized into a long-term, sustainable leadership brand. We think
we have just started the journey, but the best of Bharti is still to come.

President

Manoj Kohli

What's going to be
your next growth strategy?

We have adopted a new vision of being the most admired brand by 2010.
It would be a brand that is loved by customers, targeted by top talent,
and be a benchmark for business. We have initiated huge transformation.
There are certain areas where change would be seen in the coming
days-customer service, an ethical work culture with no place for
bureaucracy, hierarchy, and politics, and more importantly unique business
model. As we move into the future, we will make our business model more
unique and healthier.

What were the
challenges that the company has faced after completing a decade of
operations in the country?

Though there were numerous challenges, but we have been successful.
The first big challenge was the regulatory challenge, second was a market
challenge. Till 1999, the market was not growing and later on when it
started growing, there was intense competition. There are seven market
players, but we are still leading. Third was financial challenge. We
emerged as a company that had no capital and today, we have achieved the
status of top 5-6 companies with good financial health.

What is going to be
your growth strategy?

Retail and distribution would be a very important strategy for Airtel.
We call it a 'Matchbox' project. This simply means that Airtel service
will be as easily available as a matchbox. We have about 900 exclusive
showrooms and 4,000 multi-brand retail outlets across the country right
now. In the next 12-18 months we will add another 300 exclusive showrooms
and retail outlets will also increase it by 30-40%. All these retail shops
will be based on franchisee model, as we don't have any strategy to own
these outlets.

What is your rural
strategy?

We have divided the rural market into three parts. The priority is top
100 towns, which has more than 60% telecom revenues. In the remaining
5,000 towns, small and medium services would be launched by March 2007. We
have a strong rural strategy for third category towns. Our initial
experience in 80,000 villages has been quiet positive.

What kind of
investment have you planned for the next generation services?

We have capex of Rs 2 bn, of which two-third would be spent on mobile
and the rest in other non-mobile services. At this stage, we will like to
invest as much as possible for growth. As soon as the government announces
its spectrum policy, we will be ready to launch our 3G trials. We are
looking at metros for the first phase.

In a major development with long-term financial
repercussions, Vodafone entered into an agreement with Bharti marking the entry
of the world's largest telco in India. Vodafone offered to invest
approximately Rs 6,700 crore to acquire around 10% stake in Bharti, thus
becoming the single largest investor in the country so far. With this, Warburg
Pincus made a complete exit from Bharti.

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If everything goes according to the plan and spectrum
allocation issue is sorted out, Bharti would launch its 3G services in 2007. The
other new service in the pipeline is IPTV, the trials for which are currently
on.

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