Bharti Airtel - Undiputed Leader in Mobile Services - India - by Narasimhan
Bharti Airtel announced FY 08 results on the April 25th, 2008. The revenues went up to Rs. 78.19 Billion, a rise of 45% over the past year. Profits rose to Rs. 18.53 Billion, increasing at 37% over FY 07. It has made impressive addition to the client numbers, which at 6.92 million. Incidentally Indian telecom market rose to become the second largest in the World ahead of US in FY 07-08. The mobile services major have an impressive average usage of services at 507 minutes representing an increase by 7 percent over the previous year. The average revenue however has dropped to Rs. 357 as the increase in revenue has not matched the growth in client numbers. Significantly the company achieved higher revenue by shedding the tariff ranging 3% to 4%. There was welcome increase in the footprints as the population coverage went up to 71% from the 68% in the past year. Bharti now covers 22, 000 small towns in addition to the 100 major locations it is present. The need to get as much coverage of clients as possible to make this new asset additions viable has led to revenue slashing and gain in client base as well as revenue growth. Nevertheless there is threat looming as more and more experienced service providers such as AT &T are eyeing Indian market.
The fixed wire and broad band market have grown by 22% in numbers to reach 2.28 Million clients in FY 08.
Briefly
Bharti Airtel is structured into three strategic business units - Mobile services, Telemedia services and Enterprise services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles. The Telemedia business provides broadband and telephone services in 94 cities and is foraying into the IPTV and DTH segments. The Enterprise services business provides end-to-end telecom solutions to corporate customers and national and international long distance services to carriers. All these services are provided under the Airtel brand. Airtel’s high-speed optic fiber network currently spans over 73,787 kms covering all the major cities in the country. The company has two international landing stations in Chennai that connects two submarine cable systems - i2i to Singapore and SEA-ME-WE-4 to Europe
What the investors can expect?
The telecom market in India is experiencing an unprecedented growth of more than 40 -60% in the past decade. Mobile operators and the instrument providers have made it possible to take this market to large population as witnessed by the mobile services more than 80% of country with foot prints in almost all the rural areas. The life time tariff of Rs. 250 (USD 6.25) and the average outgoing charges of Re .1 or less (USD 2.5 Cents) per minute makes India a largest mobile services market that has witnessed an inclusive growth. This trend is likely to continue as the urbanization is relocating wage earners. The communication need the mobile service companies provide has become an unavoidable part in every one’s life. Investors can look forward another year of growth and good returns.
The long term investors need to wait for pull backs to invest while the near term investors can ride the present uptrend.