Investor Presentation: Bharti Airtel Limited

Investor Presentation
Bharti Airtel Limited

October 2010
Disclaimer
The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the
applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken
care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future
events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information
contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any
jurisdiction or countries were such distribution or use would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this
presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may
also contact us directly for any questions or clarifications at our end.
This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general
business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and
regulatory environment. In addition to statements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends,
anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward looking statements.
Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations,
estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or
developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social
conditions in India. It is cautioned that the foregoing list is not exhaustive
This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any
investment decision.
“The information contained herein does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United
States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be
made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well
as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will
not be accepted.”
Investor Relations :- http://www.bhartiairtel.in

For any queries, write to: [email protected]
The Company...Bharti Airtel – An Integrated Telco
Wireless Services Enterprise Services

2G Carriers
Corporates
3G
Rural Market
Passive Infrastructure Services
Infratel
Telemedia Services
Indus
Fixed Line
Broadband DTH
IPTV Pay per view / HD
Interactive Services including
Gaming
Fully integrated telecom player offering end to end solutions

and entering new geographies
3
Mobile Services Telemedia Services Enterprise Services DTH
Bharti – a growth journey
No. of circles Today

1 5 15 22 19 countries
DELHI
‘
1996 2001 2003 2004 2010
4
Growth trajectory reflected in the numbers
1996 2010
Single Circle Operator + telephone Company Profile Largest integrated private telecom
instruments operator
< 25k Customers ~ 137 mn
~ USD 17 mn Revenue ~ USD 9 bn
~ USD 2.5 mn EBITDA ~ USD 4 bn
~ USD 1.4 mn Cash Profit ~ USD 4 bn
~ USD 16 mn Market Capitalization ~ USD 26 bn
Continuing on our journey of Value Creation
Note: 1) 2010 financials are as per FY 2010 results. 2) Exchange rate: Financials as of 31st Mar 10 : Rs 45.14
5
Revenue & Profitability trends
Total revenues 36%

EBITDA
CAGR
39%
5,000
CAGR
10,000
8,776
8,188
8,000 4,000 3,550
3,360
5,987
6,000 3,000 2,519
4,103
4,000 2,000 1,651
2,000 1,000
0 0
2007 2008 2009 2010 2007 2008 2009 2010
Years Years
Cash profit from operations Net profit

42% 42%
42%
CAGR CAGR
CAGR
4,000 3,679
2,500
3,500
3,103 2,017
2,000
1,876
3,000
2,467
2,500 1,484
1,500
2,000
1,619 943
1,500 1,000
1,000
500
500
0 0
2007 2008 2009 2010
2007 2008 2009 2010
Years
Years
Bharti Airtel – demonstrating robust performance

Source: Financials for the year ended March 31, 2006, 2007, 2008, 2009 & 2010 are audited and as per USGAAP. The above numbers are in Mn USD re-stated at 31st Mar 10
exchange rate.
6
Exchange rate as of 31st Mar 10 : Rs 45.14
Financials & Positioning
Key financial metrics Positioning in the world & in India

3rd LARGEST wireless operator in the world (1)
FY 10 (in Mn)
LARGEST private INTEGRATED telecom
Customers 137.0
company in India
Revenue $ 9,271
5th LARGEST INTEGRATED telecom operator
EBITDA $ 3,714
in the world
Cash Profit $ 3,710
LARGEST operator in NLD, ILD and VSAT
Net Income $ 1,989 business
EBITDA Margin (%) 40.3* LARGEST TELECOM company listed on Indian

ROCE (%) 24.4 Stock Exchanges
Note: FY10 numbers are as per IFRS as per June10 quarterly report. Exchange rate for Re to $ conversion: 45.14.
* EBITDA Margin before acquisition related costs of Rs 976 mn for the quarter & FY ended Mar 31, 2010.
7
(1) 3rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers.
Latest Results – 1Q’11
Key operating and financial metrics Continued Strong Performance
Q1 FY 11* Y-on-Y
Wireless CMS 21.5%
Customers 183.37 mn 71.0% Wireless RMS 31.2%
Total MOU carried in Qtr 206.2 bn

Revenue $ 2,625 mn 17.4%
Balance sheet strength:
EBITDA $ 947 mn 3.0%
Assets $ 31 bn
Cash Profit $ 857 mn -10.0%
Net debt $ 12.9 bn
Net Income $ 361 mn -32.0% Net debt to EBITDA 2.9 Times

(annualized)
EBITDA Margin 36.9%
Continues to be FCF positive on a standalone
ROCE 18.4% basis
•Includes 23 days of Airtel Africa Exchange rate as of 30th June 2010:

46.60 8
Performance dashboard - 3 line graph
115,000 112,725 80%

69%
66%
110,000 63% 63% 65% 70%
Gross Revenue (USD Mn)
105,000 107,491 60%
104,143 103,785
100,000 103,053 50%
95,000 40%
38.1% 39.9% 40.9% 40.6%
38.4%
90,000 30%
85,000 20%
80,000 10%
Q110 Q210 Q310 Q410 Q111
Gross Revenue (USD Mn) (LHS)

Opex to Gross Rev (RHS)
Revenue (annualized) to Gross Cummulative Capex (RHS)
Productivity Indicators = growing revenues + cost efficiencies + capital productivity

Note: (1) The graph shown above is based on Bharti Airtel (India & South Asia), excluding Bharti Airtel African Operations as it is for less than one month in this quarter
9
Wireless Services
10
Indian Market
Overall Telecom Market Wireless Market
Sub Base c.652 mn

Population 1.2 billion
Wireless Penetration c.55%

→ Relatively large youth population
Telecom penetration c.58% Operational metrics per month

(~688 mn telecom subs)
Usage per user 480 min
→ Sub number should go upto 1 Billion by 2015 ARPU ~ US$ 4.6
Rate per minute US$ 0.01

Broadband penetration 0.83% (9.77 mn)
→ Govt. target to reach 20 mn. Broadband subs by VAS ~ 11.6%
2010
Lot of opportunity ahead….
Note: (1) Subscriber numbers and wireless penetration numbers as on July 31, 2010 are as per TRAI release (2) Other indicators on the slide are based on Global
Wireless Matrix 2Q10 dated 9th July 10 by Merrill Lynch, and reflective of Industry numbers. 11
Rapidly Growing Indian Wireless Market
Net Adds in Aug 18.2 Mn…greater than over

S-curve triggered
last 3 months average run rate of 17.1 Mn
Closing Subscribers Net Adds

90%
800 22 80%
20 70%
700
18
600 60%
16
500 14 50%
12
400 40%
10
300 8 30%
200 6 20%
4
100 10%
2
- - 0%
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
India - Fastest Growing Market in the World
Note: (1) Actual Data as per Industry Association Releases and Industry Estimates in India.
12
Wireless Market Structure in India
Subscriber Trends Customer Market Share – CMS (%)

160
141
140
25%
23.6%
120 115 114
108 23%
21.1%
21%
100 18.4%
84 81 81 19% 17.7%
17.2%
77 17.0%
80 73 69 17%
62 15% 13.6%
60 50
13% 12.1%
43 40 11.5%
34 10.8% 11.0%
40 33 31 33 11% 10.3%
29 9.4%
19 23 9%
20
7% 6.3%
- 5%
Airtel
Vodafone
BSNL+MTNL
Reliance
Idea
Tata
Others
A ug-10 A ug-09 Net adds during the year CMS(Aug'10) CMS(Aug'09)
• Airtel continuously consolidating its market leadership position despite intense competition
• Airtel current monthly net adds at 2.0 million vs. 2.8 million a year ago
• Airtel ranks 1& 2 in 17 circles in terms of number of subscribers
• Over 62% of net adds coming from B&C circles (rural India)
Airtel Continues to lead on Revenue Market Share

Note: Based on subscriber data for India as on August 31 2010 as per TRAI press release.
13
Airtel…Performance Indicators (Operational)
Customers & Market Share Prepaid/Postpaid
105%
160 26%
101.1%
24.0% 99.6%
23.5% 100% 101.7% 99.2%
100.8% 97.5%
120 24% 97.9% 100.4%
22.7% 98.4%
95.2% 95.3% 95.8% 96.0%
95% 94.7%
80 21.8% 21.5% 23% 93.5% 94.2%
92.9%
92.3%
40 102.4 110.5 118.9 127.6 21% 90%

136.6
0 20% 85%
Q110 Q210 Q310 Q410 Q111 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 1Q11
Prepaid Subs Prepaid Net Adds
Customers (mn) CM S (%)
ARPU & RPM MoU/Sub/Month & MON
278
0.8 252 300
230 220 500 300,000
215 195,197
0.6 480 140,713 172,797
200 153,241 200,000
143,680
0.4 460
0.60 0.58 0.48 0.45 100 100,000
0.53 440 478 450 446 468 480
0.2
420 0
- 0
Q110 Q210 Q310 Q410 Q111
Q110 Q210 Q310 Q410 Q111
RPM (Rs.) ARPU (INR) MoU/Sub (Min) Total minutes on Network (Mn Min)
14
Current positioning and way forward…
Leadership Positioning Growth strategy and plans
Revenue New Revenue

Streams
Revenue size Changing face of
(>$ 9 Bn) growth through M-Com,
Revenue Market M-entertainment & 3G
Share
Cost
Net Adds
Improving cost efficiencies Maximizing
Non financial Driven by rural strategy
vitals Lowest cost GSM network usage
Brand Increasing the usage through U&R drive

Distribution Wallet share
Churn lower than industry
Spectrum Mix (900/1800 MHz)
15
Telemedia Services
16
A snapshot
Largest private operator having presence in the voice , broadband , IPTV and data.
Focus on SMB segment & Broadband at Homes
Key Performance Indicators
1. Voice (wire-line) and Data (DSL) Presence in 88 top cities of India.
2. Target Segment : Retail and Small and Medium Enterprises.
3. Customer base: 3.2 million (end August2010)
4. Broadband (DSL with speeds>256 kbps) penetration at 42.6% of customer base.
5. Average ARPU for Quarter ended Jun’10 $ 20.6 per month.
6. Segment contributing to 7% of overall revenues of the company.
7. EBITDA margin of over 44.0%.
Broadband revolution to follow wireless revolution in India
SMB opportunity across ICT stream

17
Enterprise Services
18
A snapshot
Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier customers
Corporates: Single point of contact for all telecommunication needs for Top 2500 corporate
customers, providing full suite of voice, data, and managed communications solutions
Carriers: Wholesale voice and data services to over 130 domestic and 450 international
telecommunications carriers, as well as ILD and NLD carriage for Airtel’s own customers
Extensive national and international infrastructure
Pan-India network with 129,244 Route kms of optical fiber, over 4,150 MPLS and SDH POPs
Access network (terrestrial) in 88 cities, Wimax network in 143 cities, and over 1,500 local POIs
International network with 225,000 Route Kms, connecting over 50 countries and 5 Continents.
Key Performance Indicators (Q1 ‘11)
NLD Minutes Carried: 17.3 Billion ; ILD Minutes Carried: 3.0 Billion
Revenue: Rs.10,186 Million (8 % Segment Contribution Share)
EBITDA: Rs. 2,497 Million (24.5% EBITA Margin)
19
Emerging Growth Engines
►Passive Infra
► Africa iiiiiiiiii
20
Financial Performance – Passive Infra
Revenue EBITDA
10,000
32.6 34.2 34.0 37.1 35.5
30,000 9,000
26,000 8,000 7,224 7,240
20,412 7,000 6,267

22,000 19,459
18,407 5,831
17,049 6,000
18,000 15,937 5,201
5,000
14,000
4,000
10,000 3,000
Q110 Q210 Q310 Q410 Q111 Q110 Q210 Q310 Q410 Q111
EBITDA (INR Mn)

Revenue (in INR Mn)
Focus on tenancy enhancement…driving Revenue & Profitability
21
Operational Performance – Passive Infra
Infratel Indus
Towers (nos) & Sharing Factor

Towers (nos) & Sharing Factor
104,901
32,000 31,196 1.70 105,000 1.80
102,938
102,696
31,000 30,568 103,000
29,806 1.75 1.70
1.65 100,728
30,000 1.62 1.60 101,000 1.71
29,112
97,925 1.66
29,000 99,000 1.60
28,078 1.57
1.61
28,000 1.50 97,000 1.55
1.49 1.50
27,000 1.43 95,000
26,000 1.40 93,000 1.40

Q1 10 Q2 10 Q3 10 Q410 Q111 Q110 Q210 Q310 Q410 Q111
No of t owers Sharing Factor No of towers Sharing Fact or
Sharing Revenue per Sharing Operator per Sharing Revenue per Sharing Operator per
Month (Rs) Month (Rs)
41,000 40,000
38,107
36,696 36,878 36,290 35,000
37,000 36,420 30,379
28,915 28,333 29,674
30,000
33,000 25,917
25,000
29,000 20,000
25,000 15,000
Q110 Q2 10 Q3 10 Q410 Q111 Q110 Q210 Q310 Q410 Q111
Sharing Revenue per Sharing Operator per mont h Sharing Revenue per Sharing Operator per month
Aims to enhance the tenancy ratio & be the preferred choice of vendor for all
existing and new operators
22
Transaction Rationale
Shareholding and
Management
100% Cash Transaction
Control Focus on Core
Brand – ‘Airtel’ Global Middle East
Stature Operators
Clean / Emerging Market
certainty
Characteristics
of transaction
Strong Platform
for Future
Expansion
Low Competitive
Manageable Intensity
Deal Size
Diversification of
Significant
Speed in
India Risk Synergies Transaction
Repayment of
Avoid Greenfield Debt

The proposed transaction meets the objectives of Airtel with long term
strategic benefits and creates tremendous shareholder value
23
Differences between the two markets
India Africa(1)
Mobile Penetration 55% 32%
Average Number of
10-12 3-5
Competitors
Business Model High usage, low pricing model Low usage, high pricing model
Minutes of Usage ~480 ~100
ARPU (US$) ~$5 ~$7
ARPM (US cents ¢) 1¢ 7¢
And therefore huge opportunity space

Source: Global Insight, annual / quarterly reports.
1. Data pertaining to the 15 African countries where Zain Africa has operations.
24
Africa – Strong Platform
Airtel Africa Coverage Addressable Market Opportunity

Population, 2009 (mn)
Population, 2009 (mn)
50.9%
32.0%
Total Africa: Airtel Africa

1,025mn 450mn
575
450
Airtel Africa Footprint Other African Countries
Penetration, 2009
Leading African Operators

Telecom Operators by Subs in Africa
Subscribers, 2009 (mn) • Large addressable population with low tele-
density
77
• Leading telecom operations acquired
(1)
42 39 through Zain Africa

22 19 15
• Strong competitive positioning
Source: Zain Filings, WCIS.

25
Another Growth Engine - Africa
Customer Base : 36.36 Mn

Performace Indicators (CY 2009):
Revenue: $ 3,667 Mn
EBITDA: $ 1,160 Mn
Prepaid Base: 99.3%

→one of the highest in the
world
Usage per sub per month: 103 Minutes

→one of the lowest
ARPU: ~ US$ 7.4
Rate per minute: ~ US¢ 7.2

→ one of the highest
VAS: ~ 7.9%
→One of the lowest
26
Recent Honours
27
Bharti Airtel – Leadership in business Recent Honours
NDTV Profit Business Leadership Awards 2010
Top Telecom Company
Sunil Bharti Mittal - Business Innovator of the Year
India’s Most Innovative company - Wall Street Journal
Most Preferred Cellular Service Provider - 2010 CNBC Awaaz Consumer Awards
Tele.net Telecom Operator award

Won in 6 out of total 14 categories. Few among them being
Most Admired company Best Internet and Broadband operator
Best National Mobile operator Best Enterprise services
‘Powerful Brand’ - Economic Times (the only corporate brand to be awarded the AAA rating)
Bharti Airtel rated as India’s Best Enterprise Connectivity Provider- Users choice award
Instituted by PC Quest
Sunil Bharti Mittal – Global Telecom Leader - Voice & Data magazine
– ‘Philanthropist of the Year’ at Asian Awards 2010

Akhil Gupta, Deputy Group CEO and MD - Asia Corporate Dealmaker Award 2010
Manoj Kohli, CEO( International) & Joint MD - Telecom Man of the year - Tele.net
Business world – FICCI – SEDF Corporate Social Responsibility Awards 2009-10

28
Disclaimer
The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the
applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken
care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future
events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information
contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any
jurisdiction or countries were such distribution or use would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this
presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may
also contact us directly for any questions or clarifications at our end.
This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general
business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and
regulatory environment. In addition to statements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends,
anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward looking statements.
Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations,
estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or
developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social
conditions in India. It is cautioned that the foregoing list is not exhaustive
This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any
investment decision.
“The information contained herein does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United
States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be
made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well
as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will
not be accepted.”
Investor Relations :- http://www.bhartiairtel.in

For any queries, write to: [email protected]

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Investor Presentation

Bharti Airtel Limited

Investor Relations :- http://www.bhartiairtel.in

Wireless Services Enterprise Services

Fully integrated telecom player offering end to end solutions

No. of circles Today

1996 2001 2003 2004 2010

< 25k Customers ~ 137 mn

~ USD 17 mn Revenue ~ USD 9 bn

~ USD 2.5 mn EBITDA ~ USD 4 bn

~ USD 1.4 mn Cash Profit ~ USD 4 bn

~ USD 16 mn Market Capitalization ~ USD 26 bn

Continuing on our journey of Value Creation

Total revenues 36%

Cash profit from operations Net profit

Bharti Airtel – demonstrating robust performance

Key financial metrics Positioning in the world & in India

EBITDA Margin (%) 40.3* LARGEST TELECOM company listed on Indian

Key operating and financial metrics Continued Strong Performance

Customers 183.37 mn 71.0% Wireless RMS 31.2%

Total MOU carried in Qtr 206.2 bn

Net Income $ 361 mn -32.0% Net debt to EBITDA 2.9 Times

•Includes 23 days of Airtel Africa Exchange rate as of 30th June 2010:

115,000 112,725 80%

105,000 107,491 60%

Gross Revenue (USD Mn) (LHS)

Productivity Indicators = growing revenues + cost efficiencies + capital productivity

Overall Telecom Market Wireless Market

Sub Base c.652 mn

Wireless Penetration c.55%

Telecom penetration c.58% Operational metrics per month

→ Sub number should go upto 1 Billion by 2015 ARPU ~ US$ 4.6

Rate per minute US$ 0.01

Lot of opportunity ahead….

Net Adds in Aug 18.2 Mn…greater than over

Closing Subscribers Net Adds

India - Fastest Growing Market in the World

Subscriber Trends Customer Market Share – CMS (%)

Airtel Continues to lead on Revenue Market Share

40 102.4 110.5 118.9 127.6 21% 90%

Prepaid Subs Prepaid Net Adds

Customers (mn) CM S (%)

ARPU & RPM MoU/Sub/Month & MON

Revenue New Revenue

Brand Increasing the usage through U&R drive

Focus on SMB segment & Broadband at Homes

Key Performance Indicators

1. Voice (wire-line) and Data (DSL) Presence in 88 top cities of India.

2. Target Segment : Retail and Small and Medium Enterprises.

3. Customer base: 3.2 million (end August2010)

4. Broadband (DSL with speeds>256 kbps) penetration at 42.6% of customer base.

5. Average ARPU for Quarter ended Jun’10 $ 20.6 per month.

6. Segment contributing to 7% of overall revenues of the company.

7. EBITDA margin of over 44.0%.

Broadband revolution to follow wireless revolution in India

SMB opportunity across ICT stream

Extensive national and international infrastructure

Key Performance Indicators (Q1 ‘11)

Revenue: Rs.10,186 Million (8 % Segment Contribution Share)