In this article, you will know about the business model of Bharti Airtel company. About a company that is present in 18 countries and is the second-largest telecom operator in Africa.
About Bharti Airtel: History
The company was established in 1995 by the name Bharti cellular. The company was established by Sunil Kumar Mital. And since then they are providing their services under the Airtel brand in India as well as in Africa.
The company has entered South Africa, Sri Lanka, and South East Asia also present very heavily in the country of Bangladesh.
Finance of Bharti Airtel Company
| Bharti Airtel Market Cap (Crs. INR) | 391997 |
| Net profit margin | -5.4% |
| Operating profit margin | 47.4% |
| PE (Price to earning) | 142 |
| Debt to equity | 3 |
| Return on equity | -22.2% |
| 1-year return | 39.1% |
| Current ratio | 0.54 |
| CAGR (5 years sales) | 0.83% |
| Price to book | 6.73 |
Operating Segment of Bharti Airtel Company
About the operational segment of Bharti Airtel company:
• Mobile Services (India)
• Home Services
• Digital TV Services
• Airtel Business
These 4 segments contributed to the revenue in the financial year 2021, from Mobile Services India, the company earned 53% of its revenue and Africa mobile services contributed 28%.
This means approx 80% revenue of the company is coming from mobile services from these 2 countries. 14% revenue contribution comes from Airtel business and after that the rest of the revenue the company earns from digital TV service.
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Home Services
The company’s offering comes in landline services, broadband services, fiber connectivity in which the company is giving up to 1 GB per second data.
All of these offerings come in the premium segment, from this segment you will see that contribution is only 2% in total revenue but this is their high earning model.
The company earns more ARPU per customer from this segment. They are providing home services in 523 cities and their total customers from this segment are 3.8 million.
Airtel Extreme Android 4K TV box is also being given, in which all their services are combined and provided to the customer. In which not only internet is available but also phone connectivity, digital TV services. This package (services) is for their premium segment.
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Mobile services segment (India)
Many things come under the mobile services segment such as prepaid, postpaid, data service, roaming, and other value ad services. If we look at the operational figures of September 2021, the company has 323.5 million (32 crore people) customers.
The company has more than 11 lakh outlets (distribution channel) from where it reaches out to the customers. The company’s network presence is census 7913 and non-census is 791591 customers.
It is covering approx 95.6% of the population of India and Airtel’s average revenue per user (ARPU) across all telecom operator providers is the highest in India.
The ARPU of airtel company is Rs 153 per user while that of Jio is approx 143 and Vodafone Idea is approx 109.
61% of Airtel users are those who use 4G network.
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Digital TV services
Airtel provides these services under the extreme brand. These services provide 667 TV channels in their DTH platform, 85 HD channels, 54 SVOD, 7 international channels, and also have 4 interactive features.
This particular operating segment contributes 3% of the company to its total revenue and has 17.98 lakh users. The ARPU (Average revenue per user) of this particular segment becomes Rs 148.
Airtel Business
Next comes the important business segment of Airtel Business which contributes to 14% of the revenues. Its services cover government clients, enterprise clients, business clients (voice & data to business clients, bulk SMS, toll-free calling services).
Achievements of Bharti Airtel
- It was the first company that started providing 4G service to India in 2012.
- The company has also been awarded the Cisco Gold Certification.
- The heavily slashed down rates for STD and ISD in India.
- This was the first company in India to reach a 2 million user base. The company started providing cellular service to 20 lakh people.
- And apart from this company was the first telecom provider in India who introduced the concept of hello tunes.
Bharti Airtel Company new services
Apart from this, the company has added many new services to their enterprise client:
| Bharti Airtel Company new services | Service Details |
|---|---|
| Airtel internet of things (IoT) | 5G services come in this particular segment. |
| Airtel Cloud | Cloud ways solution is provided. |
| Nxtra by Airtel | Establish a data center for your business. |
| Airtel IQ | Omni-channel communication platform. |
| Airtel Secure | There is a security solution for business. |
| Airtel Blue Jeans | Business video conferencing facilities can be used in this. |
Airtel company’s associates and joint ventures
Airtel Payments bank: This venture is very important for Airtel which may be hopefully grow in the future. Within this, the total number of users that the company has is 115.3 million out of which 31.2 million are active users.
The revenue of Airtel Payment Bank in the last financial year 2021 (Q2 FY22) is Rs 188.8 crore. And has also become profitable in Q2 in the current year by 4.5%.
Indus Towers: Indus Towers (which is the market leader in telecom tower in the country) in Airtel’s associates and joint ventures, they have approx 1 lakh 83 thousand towers in India and their presence in 3 lakh 32 thousand co-locations.
Their market cap is approx 71000 crores and the revenue of the financial year 2021 was 14000 crores, Airtel owns 41.73% stack in it.
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International Units of Bharti Airtel
Airtel’s presence in Africa, 28% of the total revenue earns Airtel from Africa. Airtel is present in 14 countries in Africa. Airtel’s ARPU in Africa is approx $3.1 and has over 122.7 million customers.
Their Africa operations come under the name of Airtel Africa which is also listed on the London Stock Exchange and Nigerian Stock Exchange.
Airtel is present in South Asia, Sri Lanka, Bangladesh where the company has a customer base of 28 lakh users including the total. Here revenue contributes 0.41% of the total revenue of the company (the financial year 2021).
The company has been able to capture 25 districts and a network of 38000 retailers in Sri Lanka.
Telecom Industry Overview
If you see the industry growth potential, you will see that smartphone is at 58% in India and 4G is at 56% which you can see in the image below:
Internet is at 37% in rural India and Airtel is a player in this market and the Indian government is also pushing for digital payments, UPI.
Buying and selling of goods on the internet online is a big contributor to this industry and its expectation is being increased 2.4 times in 2025.
So currently, if there are 807 million e-commerce users, then it is being expected that in 2025, the number of 1000 million will also be crossed.
Pros of Bharti Airtel Company
Airtel’s biggest strength is its operational expertise and brand value. If we compare the average revenue per user of India’s top 3 telecom operators, then Airtel is at the forefront.
Apart from this, in any country in which airtel is present, most of the number one or number two telecom operator’s position is held by Airtel company.
All the services companies add to their portfolio are closely linked to their core offerings. For example: After mobile network, they have added DTH services and now internet things, 5G, business cloud services are providing all these.
With this, the company can provide bundled services to its enterprise and business customers, for which they can charge more money and establish their presence better.
The third very important strength is also that Airtel has the largest presence in two such geographies, India and Africa, which is developing in a manner that there is still a huge population size untapped, which the company can tag as its customers.
And as fast as the internet is increasing in these two geographies, there is such a huge market size to go and capture them.
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Cons of Bharti Airtel Company
The first weakness is that the price competitor is very high in the market in which it is operating. Customers in India and Africa will prefer to go with that telecom operator who will provide the services at the lowest price, so profits in this telecom sector are getting reduced a lot and it is equally difficult to survive the business.
The second weakness is heavy debt. The company has a debt to equity ratio of 3:1 because of which they have a very gap between their operational profit and their final net profit. Because that entire operational profit goes to interest servicing.
So if we also refer to the financials of the latest quarter Q2 financial year 22, we will see that the operating profit is 20% of the company but the net profit is only 4%, because a lot of margins has gone to the interest servicing.
Airtel, which has been in India in the telecom sector for more than the last 25 years, seems to know its biggest specialty.
Telecom companies are present in India out of which Airtel is the oldest player and they have a premium user segment. Apart from this, the company is also present in Africa where there is a lot of potentials.
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This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.
FAQ
Airtel internet of things (IoT): 5G services come in this particular segment.
Airtel Cloud: Cloud ways solution is provided.
Nxtra by Airtel: Establish a data center for your business.
Airtel IQ: Omni-channel communication platform.
Airtel Secure: There is a security solution for business.
Airtel Blue Jeans: Business video conferencing facilities can be used in this.
It was the first company that started providing 4G service to India in 2012.
The company has also been awarded the Cisco Gold Certification.
The heavily slashed down rates for STD and ISD in India.
This was the first company in India to reach a 2 million user base. The company started providing cellular service to 20 lakh people.
And apart from this company was the first telecom provider in India who introduced the concept of hello tunes.
The company was established in 1995 by the name Bharti cellular. The company was established by Sunil Kumar Mital. And since then they are providing their services under the Airtel brand in India as well as in Africa.
The company has entered South Africa, Sri Lanka, and South East Asia also present very heavily in the country of Bangladesh.
Mobile Services (India)
Home Services
Digital TV Services
Airtel Business