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Airtel Segment Wise Analysis

In the most recent financial year Airtel had 3 business segments, namely, telemedia services, mobile services and airtel business. Maximum sales came from the mobile services at 84%, with the other two segments contributing the same to the sales at 8%.

NET SALES SEGMENT WISE 20122013

Airtel Business Mobile Services Telemedia Services

The year on year comparison of sales emphasizes the significance of the mobile services division to Airtel. In recent years, with DTH revolution Airtel has also tried to consolidate its telemedia services but has failed to create any major returns to the overall sales of the company. Hence, the mobile services division is still the major money spinner for Airtel.

YEAR ON YEAR SALES SEGMENT WISE


2013 2012 2011 2010 2009 2008 Airtel Business Enterprise Services Enterprise Services Carriers Enterprise Services Corporate Mobile Services 0 100000 200000 300000 400000 500000

Airtel profits peaked in the year 2010 with almost Rs.100000 million. But the profits have seen a sharp decline, especially in the most recent financial year. They have dipped to almost 50% of the peak at a paltry Rs. 50000 million. This can be attributed to the increased competition from other players in the mobile services division as well Airtel focus on expanding in the other geographical segments. Another important reason is the absence of enterprise services division, which had major inter division sales.

NET PROFIT
100,000.00 90,000.00 80,000.00 70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 0.00 2008 2009 2010 2011 2012 2013 NET PROFIT

Airtel PBIT as a percentage of sales has also taken a hit in recent years. From 2008 till 2011 it used to earn a handsome Rs. 23-25 per Rs. 100 of sales, but this has fallen to meager Rs. 15 per Rs. 100 in 2013. This dip in performance is mainly attributed to the highly competitive nature of the Airtel primary income center, i.e. mobile services. They have had to reduce the prices of services offered to consumers in order to retain and gain new subscribers. However, this trend should be reversing in the coming 3 years with prices of such services to rise as indicated by various players in the industry. Another cause for the dip in PBIT as a percentage of sales is the failure of Airtels telemedia services to compete with TataSky, Dish TV, SunDirect comprising almost 80% of the subscribers as per data in 2012, with Airtel struggling at 8%.

PBIT / Sales (%)


30 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 PBIT / Sales (%)

The capital employed in various division has been relatively stable in the past three years, but the most striking feature is the 100% increase in the mobile services. This is due the higher cost of spectrum in Airtel circles as well Airtel introducing 3G and 4G capabilities in many parts of the country. This has driven up capital employed but will also lead in creating value for the company in the future.

CAPITAL EMPLOYED
400000 350000 300000 250000 200000 150000 100000 50000 0 2008 2009 2010 2011 2012 2013 Telemedia Services Others Mobile Services Enterprise Services Corporate Enterprise Services Carriers Enterprise Services

Contribution of each segment to the overall sales March 31, March 31, March 31, March 31, 2013 2012 2011 2010 67.70 69.98 75.96 98.70 29.59 27.68 21.98 0.00 2.71 100.00 2.34 100.00 2.06 100.00 1.30 100.00

Particulars India Africa Rest of the world total

Airtel has focused on expanding in various developing regions in Africa to drive growth, though their Africa operation have yet to turn in a profit. Airtel has managed to become the most subscribed mobile services provider in Africa with 2.6 million subscribers. Also the contribution of the Africa operations to total sales has been steadily increasing with it being almost 30% of total sales in 2013. Airtel is also seeking expansion in parts of south east Asia, where it has made a place for itself in Bangladesh and has also bid for spectrum allocations in other countries.