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Bharti Airtel Ltd. is an Indian telecommunications services company founded by Sunil Bharti Mittal in 1995. From making push-button phones, fax machines and cordless phones, Mittal was able to transform Bharti Airtel into a major mobile networking powerhouse.
Based in New Delhi, the company provides information and communications technology services in 18 countries across South Asia, Africa and the Channel Islands. It is the second-largest mobile network provider in India and ranks amongst the top three mobile network providers in the world in terms of number of subscriptions.
With Airtel as the brand name, the company offers 4G and 4G+ services all over India and recently started 5G services in selected cities.
Singapore’s Singtel and the Mittal family are the promoters of Bharti Airtel, and together hold a 55% stake in the company, as of June 5.
Among the services offered, Airtel has wireless services, fixed line services, mobile commerce, high-speed home broadband and DTH television services across 700 cities in India.
Business model of Bharti Airtel Ltd
With the exception of marketing, sales, and finance, Airtel is credited with pioneering the business strategy of outsourcing all of its operations and creating the ‘minutes factory model’ of low cost and high volume. Several operators have since embraced the tactic. Huawei, Ericsson, and Nokia networks provide and maintain Airtel’s equipment, while Amdocs handles IT support. Bharti subsidiaries and joint venture firms, including Bharti Infratel and Indus Towers in India, are responsible for maintaining the transmission towers.
Hardware, network management, backend applications (billing, etc.), and other services are among the numerous tasks that are outsourced.
Airtel provides broadband internet via DSL, leased internet lines, MPLS solutions, IPTV, and fixed-line telephone services under the Telemedia segment. The company is providing its customers with specialised and integrated solutions thanks to its strong presence in the Telemedia market.
Airtel is also known for providing Direct TV Network or DTH (Direct-to-Home) TV services across India.
The company also offers USB modems, push-on BlackBerry services, Airtel data cards, easy mail, and has its own mobile application that lets users keep track of all the services and bundles they have purchased.
The company also has a banking service via the Airtel Payments Bank platform. Airtel’s mobile wallet service enables customers to pay for goods, services, and utility bills. The Android, iOS, and Windows versions of the Airtel Money app are used to complete it.
Cloud and managed services, digital signage, NLD/ILD connection, Wi-Fi dongles, voice solutions, and conferencing solutions are the six key products that make up the Airtel Business segment. These products cater to a variety of industry verticals, including BFSI, IT/ITeS, manufacturing, government and hotel.
Airtel serves as an example of a successful business plan. The two main areas of concentration for Airtel are business development/expansion and customer acquisition and servicing. The company is known in India for its wide service network and quality of services.
Airtel uses cutting-edge infrastructure, sophisticated automation tools, and cutting-edge technology to provide its clients with the finest network quality possible.
Earnings and stock details
For the year ended March 31, 2023, Bharti Airtel Ltd posted a revenue of Rs 1.39 tn ($16.8bn) and a net profit of Rs 83.46 bn ($1.01 bn).
“Our focus on acquiring quality customers has resulted in 7.4 million new 4G customers, as we exit the quarter with an industry leading ARPU of Rs. 193. A simple strategy and our relentless focus on execution has ensured that we close the year with market share gains across all businesses. We are also pleased to see the increased velocity of our digital deliveries across all parts of our business. This has been due to our sustained focus on digital platforms and talent. We continue to ramp up our 5G roll out and expect to connect all major towns and key villages by the end of this year,” Gopal Vittal, Managing Director of Bharti Airtel said in the Q4 results announcement.
Listed on the National Stock Exchange and the Bombay Stock Exchange, Bharti Airtel’s stock price has risen over 20%. The company has a market capitalisation of Rs 4.82 tn ($58.4 bn). The stock has a PE Ratio of 55.31 and a price-to-book ratio of 6.01.
“From a long-term perspective, we believe that backed by the highest penetrations, Bharti Airtel would continue to gain market share with minimum Capex requirement. With a stronger digital portfolio backed by rising per-user data, we are positive about the future growth of Airtel,” as per Indian broker Axis Direct.
Outlook for Bharti Airtel Ltd
With an eye towards bringing in new verticals, the brand focuses on the growth of its non-mobile wings, such as Airtel Business, Digital TV, and broadband offerings.
As part of its ongoing efforts to retain its top position in India, Airtel is focusing on future strategies in addition to its core ones. These include bringing more innovation to its services, launching new plans and products, and offering its clients high-quality services.
According to Goldman Sachs, Bharti Airtel’s wireless business in India is expected to have compound annual growth rates in revenue and operating income of 22% and 37%, respectively, during the course of FY22–24, with the likelihood of yearly tariff increases also expanding.
Meanwhile, JP Morgan stated that a re-rating should be driven by Airtel’s sustained market increases due to enhanced network quality, improving ARPU from greater data consumption, and 4G improvements combined with outstanding digital metrics.
According to Jefferies, Bharti Airtel is likely to see 13% growth in its mobile average ARPU over FY23-25 adding that market share gains are likely to accelerate amid 5G rollouts.
In addition to giving its customers free access to 5G services at launch, Airtel has made a big move in the telecom industry by adding unlimited 5G data consumption to some of its prepaid and postpaid plans.
Airtel is focusing on reducing its investments in 4G capacity and shifting to 5G. This comes after the business noticed a shift away from 4G towards increasing traffic on 5G at specific locations.
After years of exploring and later abandoning a merger deal with Africa’s No. 1 telecom operator MTN, Airtel Africa has set its eyes on surpassing the company to become the continent’s top carrier. As part of its efforts to expand its mobile-money business across the continent, Airtel Africa expects to increase its capital investment to as much as $750m in 2023.
“While tariff hike timing is unknown and may not be possible in near term, we remain constructive on Airtel for the medium to long term, given the disproportionate benefits of market consolidation in the Telecom Sector,” as per ICICI Direct.
