Bharti Airtel Limited was promoted by Mr. Sunil Mittal in the year 1995. With the opening of
Question:
Bharti Airtel Limited was promoted by Mr. Sunil Mittal in the year 1995. With the opening of telecom sector in India, the company launched its mobile services under the brand name ‘Airtel’ in Delhi and Himachal Pardesh. The company now has a presence in all the 22 telecom circles in India. After having established itself as the leading telecom service provider in India, in 2009 the Company made foray in Sri Lanka through its wholly owned subsidiary Bharti Airtel Lanka (Pvt.) Ltd and is recognized as Sri Lanka’s fastest growing wireless service provider. The Company acquired 70% stake in Warid Telecom, Bangladesh (Warid) in January 2010. Warid is a leading mobile services provider across all 64 districts of Bangladesh. In March 2010, the Company acquired Zain Africa B.V. (Zain). The company is currently ranked number 3 globally in terms of the subscriber base and has presence in 20 countries with a customer base exceeding 342 million.
The Company went public in the year 2002 with its maiden public issue of 18.53 crore equity shares. The issue was priced at ₹ 45 per share and the company mobilized ₹ 834 crore. The shares of the Company are listed on the Stock Exchange, Mumbai and the National Stock Exchange. As on 31st March 2016, the company has 225,685 shareholders. The shareholding pattern of the Company is given below:
The shares of the Company are actively traded. The company provides adequate disclosures to the shareholders and prospective investors through quarterly reports and also through its website. Frequent and transparent communication with investors keeps the Company closer and accessible to the investors. The Company is in constant touch with majority of analysts and research desks by providing right information to enable them to form their own informed opinion. As a responsible corporate, interaction with opinion makers is equally important as they serve the interest of investors.
The Company enjoys outstanding rating from rating agencies—both domestic and international. It is rated as AA+ by CRISIL and ICRA for longterm borrowings. For shortterm borrowings, it enjoys A1+ ratings from CRISIL and ICRA, respectively. The Company was rated ‘Investment Grade’ with a ‘Stable’ outlook by three international credit rating agencies—Fitch, Moody’s and S&P. The aggregate borrowings of the company, as on 31st March 2016, from banks and other lenders amounted to ₹ 424,001 million.
As on 31st March, 2016, the Company has 24,940 employees on its payroll. In a high tech sector like telecom service, Bharti Airtel treats its people as the most valuable asset. The Company has a robust Employees Stock Option Plan (ESOP) and till 31st March 2016, the Company has approved 18,734,552 options under ESOP Scheme, 2005 and 31,680,000 options under ESOP Scheme, 2001. ‘Besides attraction of new talent, the policies also help in retention of well performing employees, who are contributing to the growth of the Company.’
The Company has adopted a business model which uses outsourcing as a strategic tool. It has partnered with global leaders for managing its IT systems and networks, thus focusing on its core competence, i.e., customer acquisition. Accordingly, the entire IT management has been outsourced to IBM whereas network management is done by Ericsson, Nokia Siemens Networks and Huawei (for Sri Lanka). Even the transmission towers are managed by Indus Towers and Bharti Infratel.
Telecom sector in India is regulated by the Department of Telecom, Government of India. The Telecom Regulatory Authority of India (TRAI) has been set up by the Government of India as the nodal authority for this purpose. TRAI regulates the telecom services including fixation/revision of tariffs. With effect from 1st August, 1999, the Company pays a variable licence fee to the government, computed at the prescribed rates of revenue share. Revenue for this purpose is computed as per the respective license agreements. The cumulative contribution of the company to the exchequer in India in the last 5 years amounts to ₹ 995.8 billion.
The company undertook various initiatives towards corporate social responsibility (CSR) in the areas of promotion of education, rural sanitation programme, higher and technical education, child welfare programmes, disaster relief initiatives, community development programmes, environmental initiatives and awareness and employability and entrepreneurship. The Company spent over ₹ 534.69 million towards the CSR activities during 2015–16.
The brief financials of the company for the years 2014–15 and 2015–16 are set out below:
Questions for Discussion
1. Identify various users—both internal and external—who are interested in the financial information about Bharti Airtel Limited?
2. What kind of financial information do you think these users would need?
3. What is your assessment of the financial health of Bharti Airtel Limited?
Step by Step Answer:
Detailed Explanation 1 Various users both internal and external who may be interested in the financial information about Bharti Airtel Limited include Internal Users Management and Board of Directors ...View the full answer
