Airtel- The tale of the modern network

December 15, 2021 by Vandana S · 6 min read

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Bharti Airtel is a multinational telecommunication company operating in more than 18 countries. It provides 2G, 3G, 4G network mobile services, broadband internet services, landline services, VolTe services for internet and audio calling services, and TV services. It ranks second largest network provider in India and ranks 2nd in the globe for the largest mobile service network provider.

How it started?

In the year 1984, Sunil Mittal was the pioneers to start the assembly line for push-button phones in India. Bharti Telecom Industries (BTL) was set up and collaborated with Siemens AG for the manufacture of push-button phones. The first push-button was named Mitbrau. In the year 1992, Sunil bid 1 of the 4 mobile phone networks licenses which were auctioned in India. The only condition of the bid was that the. Bidder needs to have experience in the telecom industry. Mittal made a deal with the French telecom group- Vivendi. He was one of the early entrepreneurs who recognized how big the telecom industry might get. In the year 1994, Delhi approved BTL as a mobile network operator and from 1995 the services were made available under the brand name AirTel. Within few years Airtel crosses 2 million mobile subscriptions.

In 1999, it acquired JT Holdings and extended its operation to other states like Karnataka and Andhra Pradesh. In 2000, Airtel acquired Skycell Communication in Chennai, and in 2001 it acquired Spice Cells in Kolkata. In the year 2002, Bharti Communications entered the stock market world and was listed in BSE and NSE. In 2004 it acquired Hexacon and entered Rajasthan. Soon it entered in Andaman and Nicobar Islands, thus giving its services throughout India. In the same year, Airtel launched Hello tunes- A caller ring back service, which became extremely popular, and the caller tune was composed by AR Rahman.

In the year 2008, it acquired MTN a South African company, which operated in 21 countries in Africa and the Middle East. It acquired it for a sum of 45 billion USD, one of the highest acquisitions by an Indian company. In 2009 Airtel negotiated a deal with Alcatel- Lucent to handle the fixed-line network set up across India. Airtel was awarded for setting up the Internet Protocol Access Network in India. This aided customers to have fast internet connectivity.

In 2009, Airtel launched its first international mobile network in Sri Lanka. In June 2010, Airtel acquired the African business of Zain Telecom for $10.7 billion making it one of the largest ever acquisitions by an Indian telecom firm. In 2012, Bharti tied up with Wal-Mart, the US retail giant, to start several retail stores across India.

The 4G Race

On 24 May 2012, Airtel announced an agreement to acquire a 49% stake in Wireless Business Services Private Limited (WBSPL) at an investment of ₹9.07 billion. This deal helped Airtel get 4G presence in 18 cities. Airtel acquired an additional 2 % in 2013 making it hold a stake of 51%. Soon an announcement was made where 100% ownership was with Airtel for a sum that is not known to the public. Airtel purchased Augere Wireless Broadband India Private Limited, a company that owned 4G spectrum in the Chhattisgarh-Madhya Pradesh circle in 2015.

On 23 February 2017, Airtel announced that it had entered into a deal to acquire Telenor. As part of the deal, it acquired the network control in Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West), and Assam. It also got a radio station 43.4 MHz spectrum in the 1800 MHz band from the Telenor acquisition.

In October 2017, Bharti Airtel announced that it would acquire the consumer mobile businesses of Tata Teleservices Ltd (TTSL), Tata Docomo, and Tata Teleservices Maharashtra Ltd (TTML) in a debt-free cash-free deal.

Other services

The Digital television business provides Direct-to-Home (DTH), TV services across India under the brand name Airtel digital TV. It started services on 9 October 2008 and had about 16.027 million customers at the end of June 2019.

Financials

As of March 2021, the revenue earned by Airtel is USD 1,006,158 million. Their EBITDA is good where the margin is 48.9%. Their earnings before tax are approximately 5048 crores in the 4th quarter of the financial year 2020-21. Reliance Jio had approximately 5509 crores as their earnings before tax. Although the net profit of Jio is better than airtel, the good news is that airtel is performing better in every quarter.

In FY21, the company has reduced its borrowing by 11,816 crores. There was fundraising of 7500 crores through debt instruments. Their Capex is close to 3.25 billion USD and their free cash flow doubled to 2.95 billion USD from 1.45 billion USD.

Comparisons

The number of subscribers is gradually increasing over the quarters. Currently, 32.14 crores of subscribers are loyal to airtel. Reliance Jio has a much larger base of subscriber count closing approximately to 42.62 crores. The number of customers leaving airtel increased in March 2021 to 2.2% as compared to Jio which had a rate of 1.26% customers leaving their network provider. The wireless data consumption rate is more for Jio as compared to Airtel which stands at 920 GB for airtel and 1668 GB for Jio as of Match 2021. This is due to more subscribers who have opted for Jio.

Per month consumption of internet for Airtel is 16.83GB and for Jio it is 13.3 GB. Airtel closing up more GB usage per month as compared to JIO. This is due to loyal customers and an increase in customers shifting to the 4G network. Per capita, voice consumption is more for Airtel which stands at 1053 crores minutes, and for Jio which stands at 823 crores per minute.

Total subscribers market share, the highest is taken up by Reliance Jio taking in 35.54 %, running closely behind is Airtel at 29.83%, followed by Vodafone Idea at 24.20%, BSNL has 10.14% and MTNL stands at 0.28%. Although the active subscriber base market share is led by airtel with 34.6% users, followed by Jio at 33% users, 26.1% held by Vodafone Idea, 6.2% by BSNL, and 0.1% by MTNL.

Active wireless subscribers’ active percentage is again led by Airtel with 97.47% users, followed by 90.17% by Vodafone Idea, whereas Reliance Jio stands at 78.16%.

From the above data, Airtel and Jio look promising and they are leading the telecom industry with both profitability and a loyal customer base. Currently, Airtel is trading at 727 INR per share. The revenues are rising gradually, the debts are increasing and the profitability of the company is just enough to sustain. Investing in airtel will not be a good bet now, although it’s one of the only 2 leading network operators performing consistently over the years. Jio looks more promising than Airtel based on current performances and they are the market leader, hence investing in them would be a safe bet.

Do you want to invest in Airtel? Do let us know.

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