Airtel Quarterly Report Q1

Quarterly report on the results for the first quarter ended June 30, 2009

Bharti Airtel Limited
(Incorporated as a public limited company on July 7, 1995 under the Companies Act, 1956)
Aravali Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase II, New Delhi – 110 070, India

July 23, 2009

The financial statements included in this quarterly report fairly presents in all material respects the financial condition, results of
operations, cash flows of the company as of, and for the periods presented in this report.

Mobile Services I Enterprise Services
Telemedia Services I

Supplemental Disclosures

Safe Harbor: - Some information in this report may contain as described above are provided solely for the convenience
forward-looking statements. We have based these forward- of the reader, and no representation is made that the Indian
looking statements on our current beliefs, expectations and Rupees or United States dollar amounts referred to herein
intentions as to facts, actions and events that will or may could have been or could be converted into United States
occur in the future. Such statements generally are identified dollars or Indian Rupees respectively, as the case may be,
by forward-looking words such as “believe,” “plan,” at any particular rate, the above rates or at all. Any
“anticipate,” “continue,” “estimate,” “expect,” “may,” “will” or discrepancies in any table between totals and sums of the
other similar words. amounts listed are due to rounding off. Information
contained on our website www.airtel.in is not part of this
A forward-looking statement may include a statement of the Quarterly Report.
assumptions or bases underlying the forward-looking
statement. We have chosen these assumptions or bases in Use of Certain Non-GAAP measures: - This result
good faith, and we believe that they are reasonable in all announcement contains certain information on the
material respects. However, we caution you that forward- Company’s results of operations and cash flows that have
looking statements’ and assumed facts or bases almost been derived from amounts calculated in accordance with
always vary from actual results, and the differences United States Generally Accepted Accounting Principles
between the results implied by the forward-looking (US GAAP), but are not in themselves US GAAP measures.
statements and assumed facts or bases and actual results They should not be viewed in isolation as alternatives to the
can be material, depending on the circumstances. You equivalent US GAAP measures and should be read in
should also keep in mind that any forward-looking statement conjunction with the equivalent US GAAP measures.
made by us in this report or elsewhere speaks only as of the Further, disclosures are also provided under “Use of
date on which we made it. New risks and uncertainties Non - GAAP financial information” on page 19
come up from time to time, and it is impossible for us to
predict these events or how they may affect us. We have no Others: - In this report, the terms “we”, “us”, “our”, “Bharti”,
duty to, and do not intend to, update or revise the forward- or “the Company”, unless otherwise specified or the context
looking statements in this report after the date hereof. In otherwise implies, refer to Bharti Airtel Limited (“Bharti
light of these risks and uncertainties, any forward-looking Airtel”) and its subsidiaries, Bharti Hexacom Limited (“Bharti
statement made in this report or elsewhere may or may not Hexacom”), Bharti Airtel Services Limited, Bharti Infratel
occur and has to be understood and read along with this Limited (Bharti Infratel), Bharti Telemedia Limited (Bharti
supplemental disclosure. Telemedia), Bharti Airtel (USA) Limited, Bharti Airtel (UK)
Limited, Bharti Airtel (Canada) Limited, Bharti Airtel (Hong
General Risk: - Investment in equity and equity related Kong) Limited, Bharti Airtel Lanka (Private) Limited, Bharti
securities involve a degree of risk and investors should not Airtel (Singapore) Private Ltd, Network i2i Limited, Bharti
invest any funds in this Company unless they can afford to Airtel Holdings (Singapore) Pte Ltd, Bharti Infratel Lanka
take the risk of losing their investment. For taking an (Private) Limited (subsidiary of Bharti Airtel Lanka (Private)
investment decision, investors must rely on their own Limited) and Bharti Infratel Ventures Limited (subsidiary of
examination of Bharti Airtel including the risks involved. Bharti Infratel).

Convenience translation: - We publish our financial Disclaimer: - This communication does not constitute an
statements in Indian Rupees. All references herein to offer of securities for sale in the United States. Securities
“Indian Rupees” and “Rs.” are to Indian Rupees and all may not be sold in the United States absent registration or
references herein to “US dollars” and “US$” are to United an exemption from registration under the U.S. Securities Act
States dollars. All translations from Indian Rupees to United of 1933, as amended. Any public offering of securities to be
States dollars were made (unless otherwise indicated) using made in the United States will be made by means of a
the rate of Rs. 47.87 = US $1.00, being the RBI Reference prospectus and will contain detailed information about the
rate as announced by the Reserve Bank of India on June Company and its management, as well as financial
30, 2009. All amounts translated into United States dollars statements.

Page 2 of 43

TABLE OF CONTENTS

4
Section 1 - Bharti Airtel – Performance at a glance

5
Section 2 - An Overview

Section 3 - Financial Highlights as per US GAAP
3.1 Consolidated - Summary of Consolidated Financial Statements 7
3.2 Segment-wise Summarized Statement of Operations 8
3.3 Segment-wise Investments and Contribution 9

10
Section 4 - Operating Highlights

Section 5 - Management Discussion and Analysis
5.1 Key Industry and Company Developments 13
5.2 Results of Operations 15

17
Section 6 - Stock Market Highlights

19
Section 7 – Use of Non-GAAP Financial Information

Annexure - Detailed Financial and Related Information
A.1 Consolidated Financial Statements as per US GAAP 26
A.2 Trend and Ratio Analysis 29
A.3 Key Accounting Policies as per US GAAP 33
A.4 Summarized Consolidated Profit and Loss Statement as per Indian GAAP 37
A.5 Summary of differences in net income / profit between US GAAP and Indian GAAP 37

38
Glossary

Page 3 of 43

Section 1

BHARTI AIRTEL – PERFORMANCE AT A GLANCE

Quarter
Full Year Ended March 31,
Ended
Particulars UNITS
June 30,
2006 2007 2008 2009 5
2009

Total Customer Base 000’s. 20,926 39,013 64,268 96,649 105,196
Mobile Services 000’s. 19,579 37,141 61,985 93,923 102,368
Telemedia Services 000’s. 1,347 1,871 2,283 2,726 2,828

Consolidated financials as per US GAAP

Revenue INR Mn. 116,215 185,196 270,250 369,615 99,416
EBITDA INR Mn. 43,374 74,508 113,715 151,678 41,518
Cash profit from operations INR Mn. 40,862 73,070 111,374 140,065 44,123
Income before income taxes INR Mn. 25,366 48,860 76,537 93,073 30,088
Net income INR Mn. 22,567 42,571 67,008 84,699 25,167

Consolidated financials as per US GAAP

Revenue US$ Mn. 2,613 4,297 6,753 7,254 2,077
EBITDA US$ Mn. 975 1,729 2,841 2,977 867
Cash profit from operations US$ Mn. 919 1,695 2,783 2,749 922
Income before income taxes US$ Mn. 570 1,134 1,912 1,827 629
Net income US$ Mn. 507 988 1,674 1,662 526

Key Ratios
EBITDA Margin % 37.3% 40.2% 42.1% 41.0% 41.8%
Net Profit Margin % 19.4% 23.0% 24.8% 22.9% 25.3%
Net Debt to Stockholders Equity 5 Times 0.45 0.31 0.19 0.23 0.14
Return on Stockholders Equity % 29.5% 37.4% 38.0% 32.5% 31.8%
Return on Capital employed % 21.3% 28.2% 31.7% 30.4% 28.5%
1. Annual financial highlights for the year ended March 31, 2006, 2007, 2008 and 2009 are based on consolidated audited results as per United States
Generally Accepted Accounting Principles (US GAAP).
2. Financial highlights for the quarter ended June 30,2009 are audited and are based on the consolidated results as per United States Generally Accepted
Accounting Principles (US GAAP).
3. Income before income taxes for the full year ended March 31, 2007, March 31, 2008 and March 31, 2009 are after fringe benefit tax.
4. Exchange rate for Rupee conversion to US$ is (a) Rs. 44.48 for the financial year ended March 31, 2006 (b) Rs. 43.10 for the financial year ended March
31, 2007 (c) Rs. 40.02 for the financial year ended March 31, 2008, being the noon buying rate as announced by The Federal Reserve Bank of New York at
the end of the respective periods, (d) Rs.50.95 for the financial year ended March 31, 2009 and, (e) Rs 47.87 for the quarter ended June 30, 2009, being
the RBI Reference rate as announced by The Reserve Bank of India at the end of the respective periods.
5. Net Debt to Stockholders Equity for the period amounts to 0.05 times exclusive of fully and compulsory convertible, non-cumulative, unsecured and interest
free Debentures.

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Section 2

AN OVERVIEW

2.1 Introduction The strategy of our Telemedia business is to focus on cities
with high revenue potential, except for DTH which is an all-
We are one of Asia’s leading providers of telecommunication India offering. Airtel digital TV is available to customers
services with presence in all the 22 licensed jurisdictions through more than 45,000 retail points in over 5,000 cities and
(also known as Telecom Circles) in India, and in Srilanka. towns across the country.
We served an aggregate of 105,195,762 customers as of
June 30, 2009; of whom 102,367,881 subscribe to our GSM Enterprise Services - Enterprise Services provides a broad
services and 2,827,881 use our Telemedia Services either portfolio of services to large Enterprise and Carrier customers.
for voice and/or broadband access delivered through DSL. We are regarded as the trusted communications partner to
We are the largest wireless service provider in the country, India's leading organizations, helping them to meet the
based on the number of subscribers as of June 30, 2009. challenges of growth.
We also offer an integrated suite of telecom solutions to our
enterprise customers, in addition to providing long distance We provide long distance wholesale voice and data services
connectivity both nationally and internationally. We have to carrier customers as well as to other business units of
recently forayed into media by launching our DTH and IPTV Airtel. We own a state of the art national and international long
Services. All these services are rendered under a unified distance network infrastructure enabling it to provide
brand “Airtel”. connectivity services both within India and connecting India to
the world. Our national long distance infrastructure comprises
The company also deploys, owns and manages passive of 104,540 Rkms of optical fibre, over 1,500 MPLS and SDH
infrastructure pertaining to telecom operations under its POPs and over 1,500 POIs with the local exchanges,
subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of providing a pan India reach.
Indus Towers Limited. Bharti Infratel and Indus Towers are
the two top providers of passive infrastructure services in The international infrastructure includes ownership of the i2i
India. submarine cable system connecting Chennai to Singapore,
consortium ownership of the SMW4 submarine cable system
2.2 Business Divisions and investment in capacities across a number of diverse
submarine cable systems across transatlantic and transpacific
Mobile Services - We offer mobile services using GSM routes. In past we have announced investments in new cable
technology on 900MHz and 1800MHz bands, and are the systems such as Asia America Gateway (AAG), India Middle
largest wireless service provider in the country, based on the East and Western Europe (IMEWE), Unity North, EIG (Europe
number of customers. Our 102,367,881 mobile customers India Gateway) and East Africa Submarine System (EASSy).
accounted for a customer market share of 24% of wireless
market, as on June 30, 2009. We also deliver end to end telecom solutions to India’s large
corporates. We serve as the single point of contact for all
We offer post-paid, pre-paid, roaming and value added telecommunication needs for corporate customers in India by
services through our extensive sales and distribution providing full suite of communication services across data,
channel covering 1,272,314 outlets. voice and managed services.

Our network is present in 5,067 census towns and 423,149 We specialize in providing customized solutions to address
non-census towns and villages in India, thus covering unique requirements of different industry verticals; BFSI, IT,
approximately 82% of the country’s population. Our services ITeS, Manufacturing and distribution, media, education,
are now fully operational in Sri Lanka. These services have telecom, Government, PSUs and retail among others.
been launched on a state-of-the-art 3.5G network.
These services include; Internet, MPLS -VPN, domestic and
Telemedia Services – We provide broadband (DSL) and international private leased circuits, Satellite services (VSAT),
telephone services (fixed line) in 95 cities with growing focus Audio and Video conferencing, Data centre services,
on new media and entertainment solutions such as DTH and Managed network services, corporate value added services,
IPTV. We had 2,827,881 customers as on June 30, 2009 of EPBX, Centrex, Contact centre solutions, Toll free services
which 40.3% were subscribing to broadband/ internet and Mobile enterprise enablement solutions.
services. Our product offerings in this segment include
supply and installation of fixed-line telephones providing Passive Infrastructure Services – Bharti Infratel provides
local, national and international long distance voice passive infrastructure services on a non-discriminatory basis
connectivity and broadband Internet access through DSL. to all telecom operators in India. Bharti Infratel deploys, owns
and manages passive infrastructure in 11 circles of India.
We also remain strongly committed to our focus on Small Infratel also holds 42% share in Indus Towers (a Joint Venture
and Medium Business enterprises. We provide a range of between Bharti Infratel, Vodafone and Idea Cellular). Indus
customised Telecom/ IT solutions and aim to achieve operates in 16 circles (4 circles common with Infratel, 12
revenue leadership in this rapidly growing segment of the circles on exclusive basis).
ICT market.
Bharti Infratel has 28,078 towers in 11 circles, excluding the
35,066 towers in 12 circles for which the right of use has been

Page 5 of 43

assigned to Indus with effect from 1st Jan 2009. Indus across our networks. IBM has been working closely with us to
Towers has a portfolio of 97,925 towers including the towers transform our IT system, key business processes and
under right of use. establishing an enterprise integration platform. Telephone
services and long distance networks equipment partners
2.3 Partners include Siemens, CISCO, WIPRO, Alcatel Lucent and Tellabs
among others. Nortel, IBM Daksh, Mphasis, Firstsource,
Strategic Equity Partners - We have a strategic alliance Teleperformance, Aegis and HTMT are associated with us for
with SingTel, which has enabled us to further enhance and providing excellent customer experience through dedicated
expand our telecommunications networks in India to provide call center operations. We have a strategic partnership with
quality service to our customers. The investment made by Infosys to provide a suite of products, including devices,
SingTel in Bharti is one of their largest investments made in application servers and interactive applications to enhance
the world outside Singapore. digital lifestyle for our customers. We work with globally
renowned organizations such as On Mobile, Comviva, Yahoo,
Equipment and Technology Partners - We have Google and Cellebrum among others to provide each of our
established strong alliances with equipment and technology customers with a unique experience in the areas of
partners who share the same drive for the development of cRBT(caller ring back tone), Music on Demand, Email
innovative solutions. Ericsson, Nokia Siemens and Huawei services and other Airtel Live applications.
are equipment partners supporting our aggressive
expansion plans by deploying state of the art technology

Page 6 of 43

Section 3
FINANCIAL HIGHLIGHTS
This section presents the (1) audited financial results for the first quarter ended June 30, 2008, and (2) audited financial
results for the first quarter ended June 30, 2009 as per United States Generally Accepted Accounting Principles
(USGAAP).
Detailed financial statements, analysis and other related information is attached to this report as Annexure (page 26). Also, kindly refer to
Section 7 (use of Non - GAAP financial information on page 19) and Glossary (page 38) for detailed definitions.

3.1 Consolidated - Summary of Consolidated Financial Statements

3.1.1 Consolidated Summarized Statement of Operations (net of inter segment eliminations)

Amount in Rs. Million, except ratios
Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
Total revenues 99,416 84,833 17%
EBITDA 41,518 35,221 18%
Cash profit from operations before
41,624 35,068 19%
Derivative and Exchange Fluctuation
Cash profit from operations after Derivative
44,123 33,389 32%
and Exchange Fluctuation

Income before Income taxes
30,088 23,814 26%
Current tax expense 6,821 3,053 123%
Income after current tax expense 23,267 20,761 12%
Deferred tax expense / (Income) (2,379) 229
Net income 25,167 20,250 24%
EBITDA / Total revenues 41.8% 41.5%

3.1.2 Consolidated Summarized Balance Sheet

Amount in Rs. Million
As at
Particulars
June 30, 2009
ASSETS
Total current assets 141,986
Total non current assets 474,098
Total assets 616,084

LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities 210,817
Total non current liabilities 64,208
Total liabilities 275,025

Non Controlling Interest 11,183
Total stockholders' equity 329,876

Total liabilities and stockholders' equity 616,084

Page 7 of 43

3.2 Segment - wise Summarized Statement of Operations

3.2.1 Mobile Services - comprises of consolidated statement of operations of Mobile Services.

Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
EBITDA 27,183 21,218 28%
EBIT 19,262 15,720 23%

3.2.2 Telemedia Services – comprises of consolidated statement of operations of Telemedia Services.

Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
EBITDA 3,463 3,367 3%
EBIT 1,787 1,981 -10%

3.2.3 Enterprise Services – comprises the Carriers and Corporates segments which have been combined based on
audited results.

Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
EBITDA 10,468 8,655 21%
EBIT 8,740 7,383 18%

3.2.4 Others – comprises of Digital TV operations, Bharti corporate offices and new projects

Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
Total revenues 1,027 826 24%
EBITDA (2,136) (1,244) -72%
Depreciation and Others 643 (300) 314%
EBIT (2,779) (944) -194%

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3.2.5 Passive Infrastructure Services – represents Bharti Infratel Ltd, and comprises of passive infrastructure being
provided to telecom operators

Quarter Ended
Particulars Y-on-Y
June 2009 June 2008
Growth
Total revenues 8,020 10,563 -24%
EBITDA 3,557 3,870 -8%
EBIT 325 1,689 -81%
Share of profits/(loss) in associates/ joint
247 (115) 314%
ventures

3.3 Segment-wise Investments and Contribution

3.3.1 Investments in projects
As at June 30, 2009
Segment
Rs. Million % of Total
Mobile Services 307,806 49%
Telemedia Services 72,962 12%
Enterprise Services 88,253 14%
Passive Infrastructure Services 145,767 23%
Others 15,536 2%
Total 630,324 100%
Less:- Accumulated Depreciation and Amortization 167,401
Net Fixed Assets and Other Project Investment 462,923
Note: Enterprise Service comprises of combined audited results of Carrier and Corporate segments.

1
3.3.2 Segment-wise contribution to Revenue, EBITDA and Capital expenditure incurred during the period

Quarter Ended June 2009
Segment Revenue EBITDA Capex
Rs. Million % of total Rs. Million % of total Rs. Million % of total
Mobile Services 82,285 83% 27,183 65% 9,257 34%
Telemedia Services 8,550 9% 3,463 8% 4,095 15%
Enterprise Services 21,333 21% 10,468 25% 1,804 7%
Passive Infrastructure Services 8,020 8% 3,557 9% 3,780 14%
Others 1,027 1% (2,136) -5% 8,155 30%
Sub Total 121,215 122% 42,535 102% 27,091 100%
Eliminations (21,799) -22% (1,017) -2%
Total 99,416 100% 41,518 100% 27,091 100%
Note1: Revenue and EBITDA eliminations are on account of inter-segment transactions. Capex is net of eliminations
Note: Enterprise Service comprises of combined audited results of Carrier and Corporate segments.

Page 9 of 43

SECTION 4

OPERATING HIGHLIGHTS
The financial figures used for computing ARPU, Non Voice revenue, SMS revenue, Gross revenue per employee per month are
based on United States Generally Accepted Accounting Principles (US GAAP).

4.1 Bharti Airtel Consolidated

June 30, March 31, Q-on-Q June 30, Y-on-Y
Parameters Unit
2009 2009 Growth 2008 Growth
Customers on our Network
Mobile Services 000's. 102,368 93,923 9% 69,384 48%
Telemedia Services 000's. 2,828 2,726 4% 2,394 18%
Total 000's. 105,196 96,649 9% 71,777 47%
Non Voice Revenue as a % of Total Revenues % 14.8% 14.1% 14.8%
Total Employees No. 23,789 24,538 -3% 26,144 -9%

4.2 Mobile Services

Parameters Unit
2
Subscriber Base
All India Mobile Subscribers 000's. 426,948 391,761 9% 286,868 49%
Mobile Customers on Bharti's Network 000's. 102,368 93,923 9% 69,384 48%
Net Additions
All India Mobile Subscribers 000's. 35,187 44,867 -22% 25,789 36%
Mobile Customers on Bharti's Network 000's. 8,445 8,273 2% 7,399 14%
Market Share
Bharti's Mobile Market Share % 24.0% 24.0% 24.2%
Bharti's Market Share of Net Additions % 24.0% 18.4% 28.7%
Pre-Paid Subscribers
Total Customer Base % 94.7% 94.2% 92.3%
Total Net Additions % 101.1% 100.8% 97.9%
Other Operating Information
Average Revenue Per User (ARPU) Rs. 278 305 -9% 350 -20%
Average Revenue Per User (ARPU) US$ 5.8 6.4 -9% 7.3 -20%
Average Minutes of Use Per User Minutes 478 485 -2% 534 -11%
Monthly Churn
Post-paid Voluntary Churn % 1.2% 1.2% 1.0%
Post-paid Company Initiated Churn % 1.3% 1.4% 1.4%
Pre-paid % 3.5% 3.2% 3.8%
Non Voice Revenue
SMS Revenue as a % of Mobile Revenues % 4.3% 3.7% 4.2%
Non Voice Revenue as a % of Mobile Revenues % 9.3% 9.3% 9.7%
Note 2: All India mobile subscribers for the month of April 2009 and May 2009 are as per report published by TRAI. Due to the non publication of
TRAI report for June 2009 as on date, all India mobile subscriber net additions for June 2009 are as reported by COAI and AUSPI.

Page 10 of 43

4.3 Telemedia Services

Parameters Unit
Telemedia Customers 000 2,828 2,726 4% 2,394 18%
Net additions 000 102 107 -5% 110 -8%
Average Revenue Per User (ARPU) Rs 1,027 1,071 -4% 1,138 -10%
Average Revenue Per User (ARPU) US$ 21.5 22.4 -4% 23.8 -10%

4.4 Traffic Details

Parameters Unit
Mobile Services Mn Min 140,713 130,669 8% 105,217 34%
Telemedia Services Mn Min 4,746 4,737 0.2% 4,842 -2%
National Long Distance Services Mn Min 11,781 11,690 1% 10,322 14%
International Long Distance Services Mn Min 2,869 2,772 4% 2,048 40%
3
Total Minutes on Network Mn Min 160,109 149,867 7% 122,428 31%
Note 3: The minutes are gross of Intersegment Elimination

4.5 Network and Coverage

Parameters Unit
Mobile Services
Census Towns No. 5,067 5,060 7 5,048 19
Non-Census Towns and Villages No. 423,149 414,906 8,243 364,287 58,862
Population Coverage % 82% 81% 74%
Network Sites No. 96,149 93,368 2,781 75,876 20,273
Telemedia Services
Cities covered No. 95 95 - 94 1
Enterprise Services (National Long Distance)
Optic Fibre Network Rkms 104,540 101,337 3,203 78,540 26,000

4.6 Passive Infrastructure Services

4.6.1 Bharti Infratel

Parameters Unit
Total Towers4 No. 28,078 27,548 2% 58,013 -52%
Key Indicators
Sharing Revenue per Sharing Operator per month Rs. 36,420 33,586 8% 31,893 14%
Sharing Factor Times 1.43 1.34 - 1.22 -
Note 4: Total towers as on June 30, 2009 and March 31, 2009 are excluding 35,066 towers in 12 circles for which the right of use has been assigned
to Indus with effect from 1st Jan 2009

4.6.2 Indus Towers

Parameters Unit
Total Towers5 No. 97,925 95,154 3% - -
Key Indicators
Sharing Factor Times 1.55 1.48 - - -
Note 5: Bharti Infratel holds 42% in Indus towers

Page 11 of 43

4.7 Human Resource Analysis

Parameters Unit
Consolidated
Total Employees No. 23,789 24,538 -3% 26,144 -9%
Number of Customers per employee No. 4,422 3,939 12% 2,745 61%
Mobile Services
Number of Customers per employee No. 13,388 11,992 12% 8,130 65%
Gross Revenue per employee per month Rs. 3,587,279 3,495,127 3% 2,700,981 33%
Telemedia Services
Number of Customers per employee No. 297 272 9% 208 43%
Gross Revenue per employee per month Rs. 299,559 285,538 5% 231,757 29%
Enterprise Services
Gross Revenue per employee per month Rs 2,113,853 1,945,185 9% 1,715,302 23%

Page 12 of 43

SECTION 5

MANAGEMENT DISCUSSION AND ANALYSIS

5.1 Key Industry and Company Developments
5.1.1 Industry

Withdrawal of DoT’s order on “Reduction in contribution to • Every request for porting of mobile subscriber number
Universal Service Obligation Fund (USOF)” shall be accompanied by payment of applicable porting
charge.
Presently, UASL / CMTS / Basic operators are paying licence • Subscriber can withdraw his porting request not later
fee @ 10%, 8% and 6% for Metro & “A” Category Service Areas, than at least one day prior to the tentative date of
“B” Category Service Areas and “C” category service areas porting, but in such case no refund would be given on
respectively out of which 5% is a USOF levy. porting charge.
• Recipient Operator (RO), within five days of receipt of
Vide its order dated October 1, 2008, DoT had stated that from the porting request, would carry out subscriber
st
1 April 2009 onwards, if any UASL / CMTS / Basic operator’s verification.
coverage is more than 95% of the total number of Development • Mobile Number Portability Service Provider (MNPO) to
Blocks, the applicable USOF levy / licence fee would be as verify whether the mobile subscriber number sought to
under:- be ported has been ported earlier and if so a period of
ninety days from the date of activation of such mobile
Percentage Applicable Annual subscriber number after its last porting has expired.
Coverage of Licence fee inclusive of • If the 90 days is not expired RO shall communicate the
total number USOF levy (as % of same to the concerned subscriber and also refund
Applicable AGR) in respect of the porting charges paid by the subscriber.
of
USOF levy eligible licensee
Development • Upon receipt of the details of porting request the
(as % of
Blocks in a Category of Service concerned DO shall, within two working days, verify such
AGR)
service area Area (except in 'Metro' details and communicate to the MNPO.
covered by service areas) • MNPO on receipt of the communication from DO within
the licensee ‘A’ ‘B’ ‘C’ two working days fix the tentative date and time of
5% (no porting of such mobile subscriber number and
Up to 95% 10 8 6 communicate the same simultaneously to the DO and
change)
RO.
More than
95%
3% 8 6 4 • Recipient Operator shall forthwith communicate the
same to the subscriber telephonically and also inform the
subscriber about the expected No Service Period during
However, subsequently, on May 15, 2009, DoT rescinded the
st the completion of the porting process.
above order w.e.f 1 April 2009.
Apart from the above, the draft regulations also indicates the
Withdrawal of benefit of “Exemption of Licence Fee for rights, obligations & duties of service providers, Donor
Fixed Wireline Services in rural areas” Operator (where the subscriber exists before porting),
th
recipient operator (where the subscriber moves after porting)
Vide its earlier order dated 29 August 2008; the licence fee for and MNPO (who facilitates the mobile number portability
fixed wireline services in rural areas had been exempted for all through its clearing house and Number portability Database
st
telecom operators w.e.f 1 October 2008. Centre)
However, vide its order dated May 15, 2009, the said order / After obtaining the views of all stakeholders, TRAI will issue a
benefit has been held in abeyance till further order. final regulation. TRAI is also expected to issue a consultation
paper on per port transaction charges and dipping charges
Draft Regulations on Mobile Number Portability (MNP) shortly.
On June 30, 2009, TRAI issued the draft regulations wherein it 5.1.2 Company
laid down the business process for implementing MNP. Major
highlights of the draft regulations are as under:- Key developments

• Mobile subscriber shall be eligible to make a request for • Bharti Airtel crossed 100 million customers mark,
porting only after expiry of a period of ninety days from the which makes it the 3rd largest single country mobile
date of activation of his mobile connection or from the date services operator and sixth largest in-country integrated
of activation of his mobile subscriber number after the last telecom operator in the world.
such porting.
• An undertaking would be given by the subscriber making • Bharti Airtel formed a Joint Venture with Alcatel
the porting request that he has already paid all billed dues Lucent to manage Bharti Airtel’s pan-India Broadband
to the Donor Operator (DO) as on the date of the request and Telephone services and help Airtel’s transition to
for porting and that he shall continue to pay all future dues Next Generation Networks, offering advanced services
to the Donor Operator. like High-speed internet, Triple Play, Media-rich VAS,
MPLS, VPN for both retail and business customers.

Page 13 of 43

• Bharti Airtel marked its entry in the cloud computing space distinguished by their contributions to business, arts,
with the launch of Airtel Net PC - a low-cost online government or public life in general.
computer for its broadband customers. Powered by
Microsoft and Nivio, the product is initially available in New
Delhi, Gurgaon and Noida.

• Bharti Airtel launched a new application MATE (Mobile
Application Tool for Enterprise) that enables mobile devices
to become an integral part of enterprise network, by
allowing seamless, secure and On-demand access to
Enterprise business data from anywhere, anytime. The
platform promises to be a great proposition for various
industries that depend on their field force like retail, media,
FMCG etc.

• Bharti Airtel entered into a five-year partnership with
Manchester United Football Club. The partnership is first
of its kind for both Manchester United and Airtel, where
Airtel customers will have access to rich and exclusive
Manchester United content on their mobiles and some
lucky customers will get an opportunity to train at one of the
Manchester United Soccer Schools.

• Sunil Bharti Mittal, Chairman & Group CEO, Bharti
Enterprises, was awarded the Global Economy Prize by
The Kiel Institute (Germany). The Global Economy Prize is
awarded annually to an economist, a politician, and a
businessperson who have made outstanding contribution to
establishing a just and protective society based on
individual initiative and responsibility.

• Bharti Airtel in partnership with handset maker HTC
Corporation launched India’s first Android based mobile
phone. The Android ™ platform opens up a unique
opportunity to Airtel customers to customize their device
with multiple mobile applications. Airtel customers can avail
many utility based applications such as Portfolio Manager,
Hello Tune Manager, Weather Channel, Mobshare, In-
mobile search and City Search

• Bharti Airtel was declared as the ‘Service Provider of the
Year’ and ‘Wireless Service Provider of the Year’ by
Frost & Sullivan Asia Pacific ICT Awards for its
outstanding performance in the South Asian region.

• Airtel digital TV launched mChek application for its
customers- a new and a hassle free payment mode for
Airtel digital TV customers who are Airtel mobile customers.
Similar to the mChek payment facility which is available for
utility payment, DTH customers would be able to recharge
their DTH account through mChek.

• Airtel digital TV partnered with Pizza Hut to enable
customers order pizza from their TV – a first for a DTH
service operator in the country.

• On the occasion of the ICC Twenty20 World Cup, Airtel
digital TV partnered with ESPN to launch iSports interactive
service. This sports-based interactive service showed not
only the Live Matches but also simultaneous access to
match highlights, on-demand info on player and team stats,
tour calendar, results of past games and facts on cricket
etc.

• Sunil Bharti Mittal, Chairman & Group CEO, Bharti
Enterprises, was awarded the degree of Doctor of Laws
honoris causa by the University of Leeds, UK. The
University of Leeds awards honorary degrees to people

Page 14 of 43

5.2 Results of Operations

The company has reported its (1) audited financial results for the quarter ended June 30, 2008; (2) audited financial results for the quarter ended June 30,
2009. The financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP).

Key Highlights - For the quarter ended June 30, 2009
• Overall Customer base at 105.2 million.
• Highest ever-net addition of 8.5 million customers in a single quarter.
• Market leader with a market share of all India wireless subscribers at 24%
• Total Revenues of Rs. 99.4 billion (up 17% Y-o-Y).
• EBITDA of Rs. 41.5 billion (up 18% Y-o-Y).
• Cash profit from operations of Rs. 44.1 billion (up 32% Y-o-Y).
• Net Profit of Rs. 25.2 billion (up 24% Y-o-Y).

Bharti Airtel Consolidated

Customer Base depreciation and amortization expenses of Rs.
As on June 30, 2009, the company had an aggregate of 14,330 million.
105,195,762 customers, consisting of 102,367,881 GSM mobile
and 2,827,881 Telemedia customers. Its total customer base as Income Before Income Taxes (PBT)
on June 30, 2009 increased by 47% compared to the customer The income before income tax for the quarter was Rs. 30,088
base as on June 30, 2008. million, an increase of 26%, as compared to the quarter ended
June 30, 2008. The current tax for the quarter ended June 30,
Revenues/Turnover 2009 was Rs. 6,821 million and deferred tax expense /
During the quarter ended June 30, 2009, the company had (income) of Rs. (2,379) million.
revenues of Rs 99,416 million; a growth of 17% compared to the
quarter ended June 30, 2008. Revenues from mobile services Net income
represented 83% of the total revenues for the quarter ended The net income for the quarter ended June 30, 2009 was Rs
June 30, 2009. Non-voice revenue contributed to approximately 25,167 million.
14.8% of the total revenues for the quarter.
Balance Sheet
Operating Expenses (ex-revenue share license and As on June 30, 2009, the company had total assets of Rs.
spectrum fee) During the quarter ended June 30, 2009; the 616,084 million and total liabilities of Rs. 275,025 million
company incurred an operating expenditure of Rs. 36,401 million respectively. The difference of Rs. 341,059 million was on
representing 37% of the total revenues. The operating expense account of stockholder’s equity and non-controlling interest.
comprises:
The company had a net debt of Rs. 47,790 million (US$ 998
Rs. 18,165 million towards network operations costs million) as on June 30, 2009, resulting in a net debt to
(~18.3% of turnover) EBITDA (LTM) of 0.30 times. However, Net Debt to EBITDA
Rs. 4,662 million towards employee costs, (~4.7% of (LTM) for the period amounts to 0.10 times exclusive of fully
turnover) and compulsory convertible, non-cumulative, unsecured and
Rs. 93 million towards equipments costs, and interest free Debentures.
Rs. 13,481 million towards selling general and
administrative costs (~13.6% of turnover) Capital Expenditure
During the quarter ended June 30, 2009, the company
The operating expenses grew by 27% compared to the quarter incurred capital expenditure of Rs. 27,091 million (US$ 566
ended June 30, 2008. The increase in the operating expenses is million).
associated to the costs pertaining to the expansion of
operations. Human Resources
As on June 30, 2009, the company had a total of 23,789
EBITDA, Finance Cost and Cash Profit from Operations employees consisting of 7,646 in Mobile services, 9,514 in
During the quarter ended June 30, 2009, the company had an Telemedia services, 3,364 in Enterprise services, 2,539 in
EBITDA of Rs. 41,518 million; a growth of 18% compared to the Others and 726 in Passive Infrastructure services.
quarter ended June 30, 2008. The EBITDA margin for the
quarter was 41.8%. Mobile Services

The net finance income for the quarter ended June 30, 2009 Customer Base, Churn, ARPU and MoU
was Rs. 2,605 million. The interest on borrowings during the As at the end of the quarter the company had 102,367,881
quarter was Rs. 841 million and the finance income (primarily GSM mobile customers on its network, which accounted for a
related to income on marketable securities) was Rs. 1,205 market share of 24% of the all India mobile market.
million. The balance amount was other finance costs, effect of
exchange fluctuation and derivative accounting. Of its 102,367,881 GSM mobile customers as of June 30,
2009, post-paid customers contributed 5.3% to the overall
The cash profit from operations after derivative and exchange customer base while pre-paid customers contributed the
fluctuations for the quarter was Rs. 44,123 million, an increase balance 94.7%. During the quarter, Bharti’s share of
of 32%, as compared to the quarter ended June 30, 2008. 8,444,633 net additions was 24% of all India wireless
During the quarter ended June 30, 2009, the company had subscriber net additions.

Page 15 of 43

The average monthly churn for the quarter ended June 30, 2009 respectively. The EBITDA margin for this segment was 40.5%
was 2.4% (1.2% voluntary churn and 1.3% company initiated for the quarter ended June 30, 2009. The EBIT for the quarter
churn) for its post-paid segment, and 3.5% for the pre-paid ended June 30, 2009 was Rs 1,787 million.
segment.
Capital Expenditure
During the quarter, blended ARPU was Rs. 278 (US$ 5.8 ) per During the quarter ended June 30, 2009, the company
month as compared to Rs 305 (US$ 6.4 ) per month in the incurred a capital expenditure of Rs. 4,095 million (US$ 86
quarter ended March 31, 2009. The blended monthly usage per million) on its Telemedia services.
customer, during the quarter, was at 478 minutes. Non voice
revenue, which includes Short Messaging Service (SMS), voice Enterprise Services
mail service, call management and other value added services
like Hello Tunes, Music on Demand and Airtel Live contributed
to approximately 9.3% of the total revenues of the segment. The Revenues, EBITDA and EBIT
Short Messaging Services (SMS) revenue, which is primarily The revenues for the quarter ended June 30, 2009 for
text messaging, accounted for 4.3% of the total revenue of the Enterprise services stood at Rs 21,333 million, an increase of
segment, for the quarter ended June 30, 2009. 9% over the corresponding quarter last year. The revenue
from this segment contributed to 21% of the total consolidated
revenues. The EBITDA during the quarter ended June 30,
Revenues, EBITDA and EBIT
2009 was Rs 10,468 million, an increase of 21% over the
The revenues for the quarter ended June 30, 2009 for mobile
corresponding quarter last year. The EBITDA margin for the
services stood at Rs 82,285 million, an increase of 19% over the
quarter ended June 30, 2009 was 49.1%. The EBIT for the
corresponding quarter last year. The revenue from this segment
quarter ended June 30, 2009 was Rs 8,740 million as
contributed to 83% of the total consolidated revenues. The
compared to Rs 7,383 million for the quarter ended June 30,
EBITDA during the quarter ended June 30, 2009 was Rs. 27,183
2008, an improvement of 18%.
million representing growth of 28% over the quarter ended June
30, 2008. The EBITDA margin for the quarter ended June 30,
Capital Expenditure
2009 was 33%. The EBIT for the quarter ended June 30, 2009
During the quarter ended June 30, 2009, the company
was Rs 19,262 million as compared to Rs 15,720 million for the
incurred a capital expenditure of Rs. 1,804 million (US $38
quarter ended June 30, 2008, an improvement of 23%.
million) on its Enterprise Services.
Capital Expenditure
During the quarter ended June 30, 2009, the company incurred Passive Infrastructure Services
a capital expenditure of Rs 9,257 million (US$ 193 million) on its
mobile services. Towers and Sharing Operators
As at the end of the quarter, the company had 28,078 towers.
Telemedia Services Sharing factor for the quarter ended June 30, 2009 was 1.43
times.
Customer Base and ARPU
At the end of the quarter ended June 30, 2009, the company Revenues, EBITDA and EBIT
had its Telemedia operations in 95 cities. During the quarter, the For the quarter ended June 30, 2009, the revenues from its
company added 101,642 customers on its Telemedia networks passive infrastructure services were Rs. 8,020 million. The
with 2,827,881 customers as on June 30, 2009. The company EBITDA for the quarter ended June 30, 2009 was Rs 3,557
had approximately 11.38 lakh customers (~40.3% of the total million. The EBITDA margin for the quarter ended June 30,
customer base) subscribing to broadband (DSL) services. 2009 was 44%. The EBIT for the quarter ended June 30, 2009
was Rs. 325 million.
The ARPU for the quarter was Rs. 1,027 (US$ 21.5 ) per month.
Capital Expenditure
Revenues, EBITDA and EBIT During the quarter ended June 30, 2009, the company
For the quarter ended June 30, 2009, the revenues from its incurred a capital expenditure of Rs. 3,780 million (US $79
Telemedia operations of Rs 8,550 million, represented a growth million) on its passive infrastructure services.
of 7% over the corresponding quarter last year. The EBITDA for
the quarter was Rs. 3,463 million compared to Rs. 3,367 million
in the corresponding prior year quarter, an increase of 3%

Page 16 of 43

SECTION 6

STOCK MARKET HIGHLIGHTS

6.1 General Information

Shareholding and Financial Data
Code/Exchange 532454/BSE
Bloomberg/Reuters BHARTI IN/BRTI.BO
No. of Shares Outstanding (30/06/09) Million Nos. 1,898.37
Closing Market Price - BSE (30/06/09) Rs./Share 802.10
Combined Volume (NSE & BSE) (01/04/09-30/06/09) No. in Mn/day 5.98
Combined Value (NSE & BSE) (01/04/09-30/06/09) Rs. bn./day 4.65
Market Capitalization Rs. bn 1,523
Market Capitalization US$ bn 31.81
Book Value Per Equity Share Rs./share 173.77
Market Price/Book Value Times 4.62
6
Net Debt to EBITDA (LTM) Times 0.30
Enterprise Value Rs. bn 1,570
Enterprise Value US$ bn 32.81
Enterprise Value/ Annualised Q1 Revenue Times 3.95
Enterprise Value/ Annualised Q1 EBITDA Times 9.46
Note 6: Net Debt to EBITDA (LTM) for the period amounts to 0.10 times exclusive of fully and compulsory convertible, non-cumulative, unsecured and
interest free Debentures.

6.2 Summarized Shareholding pattern as of June 30, 2009

Category Number of Shares %
Promoter & Promoter Group
Indian 859,986,028 45.30%
Foreign 419,653,373 22.11%
Sub total 1,279,639,401 67.41%

Public Shareholding
Institutions 521,563,483 27.47%
Non-institutions 97,170,396 5.12%
Sub total 618,733,879 32.59%

Total 1,898,373,280 100.00%

Page 17 of 43

6.3 Bharti Airtel Daily Stock price (BSE) and Volume (Combined of BSE & NSE) Movement

1,000 24,000

20,000
price per share (Rs.)

volum (in 000's)
800
16,000

e
600 12,000
`
8,000
400
4,000

200 0
1/04/09

8/04/09

15/04/09

22/04/09

29/04/09

6/05/09

13/05/09

20/05/09

27/05/09

3/06/09

10/06/09

17/06/09

24/06/09
Volume (in 000's) Share Price (Rs.)

Source: Bloomberg

6.4 Comparison of Domestic Telecom stock movement with Sensex and Nifty

200
Bharti 30.4%
Sensex 46.4%
NSE 40.2%
150
RCOM 60.9%
MTNL 39.7%

100 TATA Comm -8.7%
Idea 43.9%
Spice 15.3%
50
1/04/09

8/04/09

15/04/09

22/04/09

29/04/09

6/05/09

13/05/09

20/05/09

27/05/09

3/06/09

10/06/09

17/06/09

24/06/09

Bharti Sensex NSE RCOM MTNL TATA Comm IDEA Spice

Source: Bloomberg

Page 18 of 43

SECTION 7

Use of Non-GAAP Financial Information
In presenting and discussing the Company’s reported financial position, operating results and cash flows, certain information is
derived from amounts calculated in accordance with US GAAP, but this information is not in itself an expressly permitted GAAP
measure. Such non - GAAP measures should not be viewed in isolation as alternatives to the equivalent GAAP measures.

A summary of non - GAAP measures included in this report, together with details where additional information and reconciliation to
the nearest equivalent GAAP measure can be found, is shown below.

Equivalent GAAP measure Location in this results announcement of
Non - GAAP measure
for USGAAP reconciliation and further information

Consolidated : - Page 20, Mobile Services : - Page
21, Telemedia Services : - Page 22, Enterprise
Earnings before Interest, Taxation,
Operating Income Services: - Page 22, Others: - Page 22, Passive
Depreciation and Amortization (EBITDA)
Infrastructure Services : - Page 23.

Consolidated : - Page 20, Mobile Services : - Page
Earnings before Interest and Taxation 21, Telemedia Services : - Page 22, Enterprise
Operating Income
(EBIT) Services: - Page 22, Others: - Page 22, Passive
Infrastructure Services : - Page 23.

Cash Profit from Operations after
Operating Income Page 20
Derivative and Exchange Fluctuations

Income after current tax expenses Income before taxation Page 20
Net Revenues Total revenues Page 20
Total Non Current Assets N.A Page 21
Total Non Current Liabilities N.A Page 21
Earnings before Interest and Taxes N.A. Page 20
Total Revenues N.A. Page 20
Schedule of Cost of services N.A Page 24
Schedule of Operating expenses N.A Page 24
Schedule of Depreciation and Amortization N.A Page 24
Schedule of Net debt N.A Page 24
Schedule of Finance cost (net) N.A Page 25
Schedule of Income tax N.A Page 25

Page 19 of 43

7.1 Reconciliation of Non-GAAP financial information based on USGAAP

7.1.1 Consolidated
Amount in Rs million
Quarter Ended
Particulars
June 2009
Operating Income To EBITDA
Operating Income 27,188
Depreciation and Amortization 14,330
EBITDA 41,518

Operating Income to Cash Profit from Operations
Interest income 8,056
Interest expense (5,451)
Cash Profit from Operations 44,123

Operating Income to EBIT
Less:
Non operating expenses 131
Add:
Share of profits/(Loss) in associates/ joint ventures 240
Other income 186
EBIT 27,483

Total Revenue to Net Revenue
Total Revenue 99,416
Less:
Access charges 11,371
Net Revenue 88,045

Income before Income taxes to Income after current tax expense
Income before Income taxes 30,088
Less:
Current tax expense 6,821
Income after current tax expense 23,267

Page 20 of 43

7.1.1 Consolidated (cont.)

Particulars Quarter Ended
June 2009
Total Non Current Assets
Property and equipment, net 422,747
Acquired intangible assets, net 13,001
Goodwill 27,054
Investment in associates and joint ventures 121
Restricted cash, non-current 14
Other assets 11,161
Total Non Current Assets 474,098

Particulars Quarter Ended
June 2009
Total Non Current Liabilities
Long-term debt, net of current portion 48,886
Deferred taxes on income 4,615
Unearned income- Indefeasible right to use sales 3,251
Other liabilities 7,456
Total Non Current Liabilities 64,208

7.1.2 Mobile Services
Quarter Ended
Particulars
June 2009
EBITDA 27,183

Add:
Share of profits/(loss) in associates/ joint ventures (7)
Other income 126
EBIT 19,262

Page 21 of 43

7.1.3 Telemedia Services
Quarter Ended
Particulars
June 2009
EBITDA 3,463

Add:
Other income 12
EBIT 1,787

7.1.4 Enterprise Services
Quarter Ended
Particulars
June 2009
EBITDA 10,468

Add:
Other income 100
EBIT 8,740

7.1.5 Others
Quarter Ended
Particulars
June 2009
Operating Income (2,653)
Depreciation and Amortization 517
EBITDA (2,136)

Operating Income To EBIT
Operating Income (2,653)
Less:
Non operating expenses 131
Add:
Share of profits/(loss) in associates/ joint ventures 1
Other Income 4
EBIT (2,779)

Page 22 of 43

7.1.6 Passive Infrastructure Services
Quarter Ended
Particulars
June 2009
Operating Income 325
EBITDA 3,557

Operating Income To EBIT
Operating Income 325
EBIT 325

Page 23 of 43

7.2 Schedules to Financial Statements

7.2.1 Schedule of Cost of services
Quarter Ended
Particulars
June 2009
Access charges 11,371
Licence fees, revenue share and spectrum charges 10,126
Network operations costs 18,165
Employee costs 4,662
Depreciation and Amortization (excluding intangibles) 13,935
Cost of Services 58,259

7.2.2 Schedule of Operating expenses
Quarter Ended
Particulars
June 2009
Network operations costs 18,165
Equipment costs 93
Employee costs 4,662
Selling, general and administrative costs 13,481
Operating Expenses 36,401

7.2.3 Schedule of Depreciation and Amortization
Quarter Ended
Particulars
June 2009
Fixed Assets 13,692
Licence Fees 168
ESOP 310
Intangibles 160

7.2.4 Schedule of Net debt
Quarter Ended
Particulars
June 2009
Long term debt, net of current portion 48,886

Short-term borrowings and current portion of long-term debt 62,076

Less:
Cash and cash equivalents 4,623
Restricted cash 83
Restricted cash, non-current 14
Short term investments 58,452
7
Net Debt 47,790
Note 7: Net Debt for the period amounts to Rs 15,755 million exclusive of fully and compulsory convertible, non-cumulative, unsecured and interest
free Debentures.

Page 24 of 43

7.2.5 Schedule of Finance cost (net)
Quarter Ended
Particulars
June 2009
Interest on borrowings 841
Finance charges 259
Finance income (1,205)
Derivatives and exchange fluctuation (2,500)
Finance cost (net) (2,605)

7.2.6 Schedule of Income tax
Quarter Ended
Particulars
June 2009
Current tax expense 6,821
Deferred tax expense / (income) (2,379)
Income tax expense 4,442

Page 25 of 43

Airtel Quarterly Report Q1

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