Company Insights

About

Registered name	Bharti Airtel Limited
Headquarters	New Delhi, India
Number of customers (Dec 2020)	Mobile services – 307 million Fixed services – 2.79 million Digital TV services – 17.87 million
Market share India- Mobile services (2020)	29.36%
Employees	19,405
Countries in operation	18
Number of retail outlets & channel partners	Franchise stores – 1,350+ Owned stores – 630+ Channel partners – 11,000+
Capex (2020)	USD 3,212 million
Annual cloud spend*	Total Could spend – USD 23 million
Equipment and solution vendors	Ericsson – Managed services, Network and IT automation, RAN Qualcomm Technologies Inc– 5G O-RAN platforms system for the 5G rollout. Nokia – SRAN solutions, RAN equipment, NetAct OSS solution, Airscale Radio Access and Airscale Baseband solutions.
Market capitalisation group ( Dec 2020)	USD 39 billion
Revenue by major business units (2020)	Mobile services- USD 7,302 million Fixed services- USD 309 million Pay-Tv- USD 387 million B2B services –USD 1,888 million
Revenue growth group CAGR (2016-2020)	-1.15%
Revenue growth India CAGR (2016-2020)	-3.87%

1. Shareholder value (as of 31st Dec 2020)

Operating revenue	USD 9,762 million
Revenue growth (2020)	17.65%
EBITDA margin (%)	45%
EBITDA margin change (ppt)	4 ppt
Net Profit/(loss)	USD (279.80) million
Net Profit margin	-2.95%
EPS^ (Group)	USD -0.71
Price earnings ratio (x)	-9.61
Total shareholder’s return (1-year)	-35.47%

Financial performance and growth

1. The operator achieved a revenue growth of 17.65 % for India operations, attributed to 41 million 4G net adds, which was the highest in the industry (India). This coupled with tariff hikes and expansion in the broadband business was the primary driver for growth in revenues.
2. Average ARPU for the year 2020 stood strong at INR 160 (USD 2.14), consolidated by an increase in tariffs and the implementation of minimum recharge plans. On the other hand, competitor Reliance Jio witnessed an average ARPU at INR 141 (USD 1.89).
3. The operating performance remained healthy and above the industry average in the APAC region. Bharti Airtel Limited (BAL)is at par with its nearest competitor Reliance Jio with a 45% EBITDA margin.
4. At the net level, the operator incurred a loss of USD 279.80 million in 2020, largely on account of AGR provisions.
5. Status on AGR* dues: As per the Supreme Court order, the outstanding liability for Bharti on the AGR dues stands at INR 43,980 crore (USD 3.48 billion), out of which it has paid INR 18,004 crore (USD 2.41 billion). The rest of the amount remains unsettled.
6. As of 31^st Dec 2020, the balance sheet stood highly leveraged. However, 75% of the debt consists of the AGR liability and spectrum leases.
7. In 2020, operator noted a 72% increase in CAPEX compared to 2019 attributed to investments for deploying additional base stations and technologies for optimising networks amidst the rise in data traffic by 52.3% during the pandemic.

*Note – A telco in India is supposed to pay a part of its Adjusted Gross Revenue (AGR) to the government. A legal battle between government and telecoms is a result of a mismatch in the definition of AGR.

Financial capital raised by Bharti Airtel to improve its liquidity position in 2020

It launched Qualified Institutional Placement (QIP) for USD 2 billion. Further raised an additional USD 1 billion by issuing Foreign Currency Convertible Bonds (FCCBs).

Shareholding pattern

2. Customer experience

Figure 1 shows the factors used for evaluating customer experience.

A. Digital customer experience

The operator fostered digital customer experience mainly through its self-service app and digital platforms.

• Revamped the original app to Airtel Thanks, leading to more simplified and faster customer service.
• Pitched the app as more than just a recharge app by curating personalised experiences through rewards and personalised offers with its tiered approach.
• Enterprise customers have complete visibility of their services using Airtel Enterprise Hub (AEH), a self-service portal for the operator’s enterprise clients.

Initiatives taken by Airtel to engage its customers digitally since 2020:

1. Airtel believes in an omnichannel experience and launched the One Airtel platform to drive customer engagement in the digital era. The platform offers the following services: a) Free SIM delivery – same day SIM delivery with a live-tracking feature available on Airtel Thanks.b) Mobile services c) DTH and broadband services
2. Introduced paperless KYC to make the broadband installation process much faster. Airtel claims that broadband installation can run its course within 4 hours.
3. Strengthened its goal to enrich the customer experience by launching digital services like Airtel Xstream, Wynk Music, and e-books.
4. Built transparency and flexibility to choose and cancel international roaming packs conveniently.
5. Collaborated with Edu-tech partners, a step towards the reinforcement of its Pay-Tv business.
6. Leveraged API integration by hosting the Cowin platform to provide information on the availability of vaccination slots on a real-time basis for nearby vaccination centres.
7. Allowed its subscribers to do a commission-based recharge for their friends and acquaintances, which helped increase the online recharge penetration to 70%, up from 35% before the lockdown.

B. Customer service

Optimisation of digital tools and simplification in its customer services processes and products helped Bharti reduce the number of complaints by 13.6 % in FY2020 compared to the previous year. However, the number of days to resolve a mobile service-related complaint, which is 7-10 business days, is not very customer friendly. Airtel also uses third-party apps like WhatsApp and Facebook for customer interactions. Some of the other initiatives taken by Airtel along these lines:

• During COVID-19 times, the operator found a way to introduce alternate channels for mobile recharge, such as Bank ATMs, post offices, and grocery shops.
• It also removed the constraint of doing a mobile recharge for non-app users by keeping the SMS service free. Therefore, customers could ask their friends to recharge for them.

C. Network experience

Quality network experience helped Bharti Airtel thrive in the competitive Indian telecom industry. Airtel is a testimony to the fact that despite a vast price differentiation with the entry of Jio in 2016, network experience has been a key indicator defining customer experience. The 4G customers of Airtel account for 56.7% of the total subscriber base, which shows the operator’s consistency in scaling up its 4G infrastructure and consequently onboarding customers onto a better network. In terms of base stations Bharti Airtel has scaled up to 5.68 lakh base stations as of December 2020. However, Reliance Jio claims to have 2 times more base stations compared to the sum of its competitors’ base stations.

Figure 2: A glimpse of factors determining the network experience at BAL

Initiatives taken by Bharti Airtel to improve network experience, other than capacity additions:

1. Airtel aims to move its entire customer base to a 4G network with better quality. Hence, the company closed its 3G services in almost all circles.
2. The repurposing of BAL existing 3G bands to 4G, coupled with deploying high-band spectrums, would drive its customers towards an enhanced network.
3. The improved network experience for content viewers happened by decentralising the network to edge with the help of partners like Google, Facebook and other OTT partners.
4. Indoor network experience improved by introducing voice over WiFi calling.

D. Brand experience

The decline in churn rate from 2.6% in 2019 to 1.9% as of Dec 2020 reflected positively upon the overall brand experience. The Airtel brand strategy focuses both on acquiring new customers as well as retaining the existing ones.

1. Airtel has a total of 157 flagship stores across India. In addition, it plans to convert part of its retail stores into next-gen stores, designed to leave an everlasting impression in the minds of its customers. Initiatives include offering a live and engaging experience, a step towards increasing the face-to-face interaction between a telco and its customer.
2. Airtel has been driving brand experience via various ad campaigns. In 2020, it launched a campaign that acknowledged the importance of solving every complaint. This ad campaign was heart-winning as the operator boldly displayed the number of complaints received by it in every city.

3. Employee experience

Figure 3: twimbit’s five-point EX framework

A. Practiced empathy

The wellness, health and safety framework by Airtel includes policies around workplace safety for all its employees, including women. In addition to this, Airtel also covers information around flexible work and health insurance. Initiatives taken by Airtel since 2020:

1. Airtel would bear the cost of COVID-19 vaccination for its staff and their dependants in partnership with Apollo Hospitals.
2. It also partnered with many consulting platforms to support the physical, emotional and mental wellbeing of its employees and their dependents.
3. Due to the pandemic, 84% of the employees had the flexibility to work from home.

B. Culture

1. Leadership Connect at Airtel allows employees to interact with the top management personnel and business leaders continuously.
2. “Chai pe charcha and Coffee Connects help leaders link with key talent, new joiners and high-performers in an informal setting.”- Bharti Airtel.
3. There is transparency in communicating the latest research on the harmful effects of electromagnetic field (EMF) exposure and numbers related to accounting or regulatory changes.

c. Technology

1. Digital initiatives around recruitment and induction: a) Engage – a digital platform launched to enable seamless recruitment. b) NewBee- A mobile app for conducting inductions digitally, which reduced the onboarding time by 60% by eliminating classroom training.
2. Airtel X labs is an evolving innovation lab. Employees can experiment with the latest technologies and collaborate with the best tech minds in the industry to solve complex problems or build new solutions.

D. Employee as customer

1. Learning and Development (L&D)- Since the organisation is fast evolving and transformative in nature, one of the key focus areas of BAL is the continuous training and development of its employees to make them future-ready. BAL spent INR 125 million (USD 1.8 million) on L&D during FY2019-2020. However, the L&D cost per employee is low compared to operators like Orange and Verizon, which incur 10 to 20 times more on the same. The L&D cost per employee at Verizon is 0.23% of the total revenue compared to 0.01% for BAL. Similarly, Orange has allocated an L&D budget of USD 1.82 billion for the next five years, at approximately 250 million per year.

Figure 3: Three ways to define training and development programs at Bharti Airtel

Initiatives taken by operator since 2020:

1. The amount spent on training increased by 92% compared to the previous financial year FY2018-2019.
2. BAL achieved a 75% succession rate through its leadership program designed to elevate mid-level employees to top management.
3. Airtel launched an N-rich program for employees engaged in network operations in collaboration with network vendors. This program helped its employees learn more about the transformation journey of Airtel, like 5G, packet core and small cells cloud and virtualisation, and other issues revolving around the network.
4. The company introduced Introduced a Learning Management System (LMS) to offer personalised and democratised learning methods for its employees.

E. Rewards and benefits

1. The operator also recognises the efforts and contribution of its employees towards the sustainable growth of the organisation via its ‘Kudos’ program.
2. Telecom benefits like free calls, broadband and DTH services hold high value among its employees.
3. Paternity leave for five days as well as maternity leave for three months, the latter for which can is extendable by up to 6 months.

4. Digital transformation

Delivering digital customer experience always moves parallel to internal digital transformation in the form of network transformation, enabling the use of digital services.

Here are some steps taken by BAL on digital transformation since 2020:

A. Internal digitization

It is true that the dawn of the 5G era brings new use cases revolving around technologies like AI and robotics. These shifts paired with the surge in increasing workloads rose the need for telcos to make their networks suit these developments. Therefore, Airtel is modernising its network and leveraging the cloud adoption on similar lines.

Adoption of open – source architecture and cloudification Strategy

1. The open stack architecture would allow network automation and expansion, eliminating the limitations faced by the usage of legacy hardware. This move helps the operator reduce costs by detaching the barriers related to scalability.
2. Airtel, in collaboration with Red Hat and IBM, is building its very own telco cloud, which is hybrid in nature. Going forward, Airtel will use the platform to launch digital third-party services, such as gaming and enterprise services.
3. Airtel is also using a cloudband by Nokia, which makes the networks more flexible, scalable and agile to launch new digital services.

Network Optimisation : During mid-2020, Airtel renewed a pact with Ericsson for PAN-India management of network operations. Ericsson will deploy the latest technologies like Artificial Intelligence and Machine Learning (AIML) to enhance the telco’s mobile network performance with a prime goal to improve customer experience.

Network Capacity enhancement: BAL signed an agreement with Nokia to deploy a Single Radio Access Network (S-RAN) solution for managing all its network variants (2G, 3G, 4G) on a single platform. The simplified network solution would help BAL to have better control over its network to enhance operational and cost efficiencies. This solution will also be applicable for the deployment of its 5G network.

B. Digitalisation for customer channels

1. Using Optical Character Recognition (OCR) technology sped up the KYC process. It further reduced the activation time to less than 15 minutes for customers. As a result, Airtel could save INR 12 million customer acquisition cost(USD 0.16 million) on a monthly basis.
2. The Konnect app optimisation helped improvise customer service requests and improved the turnaround time from 10 to 4 days. Konnect is an exclusive service request platform.

C. Digitalisation for partners and suppliers

Airtel digitised operations of retail outlet partners with the Mitra application. As a result, it has over one million retailers transacting and making payments every day on this app.

5. Society and Planet Impact

A. CSR activities

Voluntary CSR expenditure

1. Despite not earning profits in the last three years on an average basis, Bharti Airtel spent USD 4.27 million on CSR voluntarily. Some of the initiatives taken by Bharti towards the society and environment are:
2. Under its CSR program, Bharti Airtel is contributing towards two areas, i.e., education and sanitation.

B. Carbon Footprint

Airtel is adopting greener technologies for the reduction in CO2 emissions

1. During the FY2020, Bharti Airtel witnessed a 49.11% reduction in CO2 from their data centres compared to the FY2015 period. In FY 2022, ‘Nxtra by Airtel’ aims to meet over 50% power requirements of the telco’s data centres across India through renewable sources.
2. Also, in FY2020, the share of renewable energy consumption increased compared to the previous year. Since 2014-2015, there has been a 24.5% increase in the deployment of renewable energy as the operator swiftly adopts solar energy.

Growth and innovation opportunities

#1. Potential growth opportunities to increase shareholder value

1. The B2B revenue for Airtel, which accounts for 20% of its total revenue, majorly stems from large enterprises. It has a huge potential to grow by tapping into the 60 million-plus Indian MSME market, which contributes to 29% of India’s GDP. According to a survey from Yes Bank with a sample size of 2700 MSMEs from different industries, only 5% have fully adopted digital technologies. Following steps could be taken to tap this opportunity:
   • Use sales capabilities to understand the needs of MSMEs and bundle the solution strategically while ensuring that there is enough flexibility for customers to choose from.
   • Boost awareness and provide round-the-clock assistance for after-sales services to build strong relationships by leveraging the partner ecosystem. National Small Industries Corporation (NSIC) provides technology support services via skill development through various courses.
   • Competitor Jio plans to serve around one-third of the total MSMEs (15-20 million). Jio has plans ranging from INR 901 to INR 10,000 (USD 12 to USD 133), covering basic voice and data connectivity and other enterprise solutions. Hence, selling digital services at competitive prices should be the focus of Airtel, as MSMEs are price conscious.
2. With the launch of 5G in India, Airtel would have the opportunity to bundle converged services such as enhanced mobile broadband (embb), cloud gaming, and more recent technologies like AR/VR for B2B and consumer segments. This move would unlock new revenue streams.
3. There is an opportunity to provide customised IoT solutions using a consulting-led engagement. Doing so will help the operator understand the needs of different industry verticals and provide the right business support services.
4. Continue to reduce power and fuel cost by replacing price-inflating energy resources like diesel with greener technologies.
5. Airtel should increase the effectiveness of its digitalised distribution channels to their full potential. This step would help reduce the operating expenses, specifically marketing expenses, resulting in improved OPEX productivity.
6. To optimise employee expenses, deploy RPA (Robotic Process Automation) for human-intensive routine and back-end operations in a phased manner. By doing so, human capital can now focus on strategic and developmental tasks.
7. The use of analytics to review a portfolio of capital investments and their respective returns enables decision-making for the CAPEX planning that goes beyond the idea of allocating capital on an annual basis.

#2. Scope for improvement in loyalty programs to enhance CX

1. Airtel can adopt some of the best-in-class loyalty programs, especially for its premium customers. Collaborations with lifestyle and event partners can create a sustainable and differentiated customer experience. This initiative would also help in lowering the churn rate.

2. Endeavour to resolve complaints in a single call. For example, the LG Uplus first-call resolution and Ask-once services promise to close customer concerns in the first call itself.

3. Inculcate effective customer service through third-party platforms like WhatsApp and Facebook by improving the response time.

#3. Improve employee experience by adopting some of the best EX practices

1. Airtel offers several L&D apps and platforms to its employees for easy accessibility to the learning resources. Additionally, Airtel can also develop an internal social media platform for its employees across different countries to allow skill sharing and discovering other things about their colleagues.

2. Work-life balance remains an area of concern at BAL. Fostering new ways of flexibility in work hours and incorporating recreational activities can help employees cope with the ever-increasing mental and physical concerns. Here is an example of how SK telecom is winning through its flexible work policy.

3. Overall, women representation and board member representation at Airtel is 8.89% and 18%, respectively. Hence Airtel should strive to diversify its workforce.

#4. AI would play a vital role in accelerating digital transformation

1. Minimising human interaction is the new normal. It has created an opportunity for operators to make their operations more efficient while creating a seamless experience for the customers. One of the potential investments Airtel could make is to accelerate the usage of AI-enabled chatbots.

2. Empower customers at homes to do minor repairs independently without the help of technicians by adopting technology that enables the technician to see a device from the customer’s place itself. Remote call counselling adopted by LG U+ is one of them.

3. AI is a powerful tool that aid in developing advanced self-service capabilities, like the installation of devices by customers on their own.

4. Technology today is more powerful than human actions and could examine the minutest of defects. Wide-coverage video devices such as drones coupled with AI effectively automate network optimisation, thereby improving CX and ROI simultaneously.

# 5. Society and planet impact

We note that the operator’s network expenses are at the highest and forms 40% of its total expenses, out of which 18% are incured on power and fuel.

1. An initiative towards funding research studies revolving around the effects of electromagnetic would be a CSR initiative aligned with the operator’s safety goals for its stakeholders.

2. Accelerate the usage of renewable energy by collaborating with renewable energy producers in different countries and take advantage of the price.

Organisation structure: leadership

Executive profile

Sunil Bharti Mittal, Founder & Chairman, Bharti Enterprises

Sunil Bharti Mittal holds the position as the Founder and Chairman of Bharti Enterprises since 1994. He has led the group with diversified interests in telecom, insurance, real estate, agriculture, and food. Mittal also witnessed the mobile revolution in India. In addition, Mittal holds the award Padma Bhushan, one of India’s highest civilian honours, bestowed to individuals that demonstrate distinguished services of the highest order. Apart from this, Mittal was also a part of various associations and international bodies.

He believes that a responsible corporate must give back to the community in which it operates. This vision resulted in Bharti Foundation, which operates nearly 200 Satya Bharti Schools and supports over 800 government schools under the Quality Support Program. The program aims to ensure holistic education for over 275,000 underprivileged children in rural India. Mittal is one of the Top 25 Philanthropists in the World in 2009 by the Barron’s Magazine.

Quotes

Digital Transformation – Annual Report 2020

“Digital Transformation has been a big agenda for Airtel and today virtually every process of the company is leveraging the power of digital. We remain ahead of the curve when it comes to bringing in the latest technologies and thereby serve our customers better through digital platforms.”

Employee experience – Annual Report 2020

“True to our DNA of innovation and agility, Airtel’s team of over 15,000 people was able to transition to remote working and stay obsessed with delighting customers.”

Customer experience -– Annual Report 2020

“From building digital channels for customer services to rolling our innovative peer to peer mobile recharges, Airtel stepped up the game when it mattered the most.”

Gopal Vittal, MD and CEO (India and South Asia)

Gopal Vittal currently serves as the Managing Director (MD) & Chief Executive Officer (CEO) – India & South Asia. In his role as MD & CEO, Vittal is responsible for defining and delivering the business strategy. He also provides overall leadership for the telco’s India & South Asia operations.

Prior to Bharti, Gopal has also worked with Hindustan Unilever. He headed the USD 3.5billion home and personal care divisions. Gopal is an alumnus of the Madras Christian College. He has graduated with his MBA from IIM, Kolkata.

Quotes

Thoughts around the company’s vision- Earnings Conference Call for the FY2021

“A relentless obsession with the customer experience and a razor-sharp focus on quality customers. There are four additional enablers to these choices. The first is digitising the core to improve the experience and eliminate waste. Second, modularising these capabilities to drive new revenue streams through products and partnerships. Third, bringing together the power of Airtel through a unified customer view and integrated channel approach. And fourth, doing all of this with financial discipline while waging a war on waste. This strategy is the thread that ties all our businesses together and creates alignment and cohesion across teams.”

Airtel Business – Earnings Conference Call for March FY 2021

“The fact is that only 20 per cent of our customers contribute to 80 per cent of our business (B2B). So there is a massive opportunity to go both wide to grow share to tap into the 80 percent. There is also a big opportunity to go deep with the 20 percent to gain a higher share of the wallet. So wide through hunting and deep through farming.”

Harjeet Kohli – Group Director, Strategy & Business Development

Harjeet Kohli started his career as a corporate and investment banker. The financial professional now has a total of 22 years of work experience. He is a group director for strategy and business development. Additionally, he takes care of the corporate finance function for Airtel & Bharti Group.

Quotes

Deleveraging its balance sheet – Earnings Con Call for FY 2020

“Debt should go down. No non-routine event happening. Some monetisation is coming in. There is a natural path to deleverage. And the last piece, I think, which I mentioned earlier is, most important, about 75%, 80% of our debt portfolio is about finance lease obligation and deferred spectrum liability. Only the balance piece, which is dominantly funded by global bonds, domestic bonds is what is the market debt, very safely manageable. That’s the overall profile. We feel very comfortable around these events that on these counts, nothing to worry.”

Appendix

We define growth as a telco’s ability to lead on the following five pillars succesfully. For the comprehensive evaluation of an operator’s performance, we have further identified metrics for each pillar.

End Notes

Bharti Airtel Limited, (2020, March 31). Annual report.

https://assets.airtel.in/teams/simplycms/web/docs/Airtel-Integrated_Report_and_Annual_Financial_Statements_2019-20.pdf

Bharti Airtel Limited, (2020, June 30). Quarterly report and transcripts.

https://www.airtel.in/about-bharti/equity/results

Bharti Airtel Limited, (2020, Sept 30). Quarterly report and transcripts

https://www.airtel.in/about-bharti/equity/results

Bharti Airtel Limited, (2020, Oct 31). Quarterly report and transcripts.

https://www.airtel.in/about-bharti/equity/results

Bharti Airtel Limited, (2020, Dec 31). Quarterly report and transcripts.

https://www.airtel.in/about-bharti/equity/results

Bharti Airtel Limited, (2020, March 31). Customer experience report.

https://assets.airtel.in/teams/simplycms/web/docs/CUSTOMER_EXPERIENCE_060120.PDF

Bharti Airtel Limited, (2020, Dec 31). Airtel press release.

https://www.airtel.in/press-release

Open signal (2020, Sept 30). Mobile network experience report.

https://www.opensignal.com/reports/2020/09/india/mobile-network-experience