Summer Internship Report

On

MARGIN IMPROVEMENT – OPEX EFFICIENCY

By

ISHA VIJ

A0101910190

MBA Class of 2012

Under the Supervision of

Dr. ROSY KALRA

Faculty Finance

Department of FINANCE

In Partial Fulfillment of Award of Master of Business Administration

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH

SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

DECLARATION

Title of Project Report: MARGIN IMPROVEMENT-OPEX EFFICIENCY

I declare

(a)That the work presented for assessment in this Summer Internship Report is my own,

that it has not previously been presented for another assessment and that my debts (for

words, data, arguments and ideas) have been appropriately acknowledged

(b)That the work conforms to the guidelines for presentation and style set out in the

relevant documentation.

Date: 30.06.2011 Isha Vij

A0101910190

MBA Class of 2012

ii

CERTIFICATE FROM INDUSTRY GUIDE

iii

CERTIFICATE FROM FACULTY GUIDE

I DR. Rosy Kalra hereby certify that Isha Vij student of Masters of Business

Administration – GENERAL at Amity Business School, Amity University Uttar Pradesh

has completed the Project Report on “Margin Improvement – OPEX Efficiency” , under

my guidance.

DR. Rosy Kalra

Assistant Professor

Department of Accounting & Finance

iv

ACKNOWLEDGMENT

I express my sincere gratitude to my esteemed guide, Dr. Rosy Kalra; Faculty Guide,

SIIB, who spent her precious time providing continuous guidance in my project work. It

was her brilliant and scholarly suggestions, profound interest and moral support which

helped me to attain project objectives efficiently and effectively.

All the words seem dwarf when I attempt to describe valuable guidance and support of

Mr. Rohit Kumar who spared his precious time for me as and when required and under

whose guidance I am able to complete the project successfully. I thank him for his

cooperation and support through out the entire period of study. I am also thankful to Mr.

Sukhwinder Gill, Ms. Payal Mittal, Mr. Manudev Bhardwaj, Mr. Gajender Singh

and Mr. Amit Garg for providing continuous guidance during the entire study.

I am earnestly grateful to Mr. Sanjay Bajaj and Ms. Samriti Dhamija for providing

me an opportunity to undertake project in their esteemed organization. I am very thankful

to all the staff members of organization for their continuous cooperation and help.

Isha Vij

.

v

TABLE OF CONTENTS

index

Title page

Declaration

Certificate from industry guide

Certificate from faculty guide

Acknowledgement

Table of contents

List of tables

Abstract

Chapter 1. Introduction to Topic…………………………………………………1

Chapter 2. Company Profile………………………………………………………6

2.1 Swot Analysis………………………………………………………...10

2.2 Description of Telecom Sites and Service Provider for Bharti Airtel

Ltd……………………………………………………………………..11

Chapter 3. Research Methodology………………………………………………...13

3.1 Objectives of Study…………………………………………………...16

3.2 Type of Study…………………………………………………………17

3.3 Source of Data…………………………………………………………18

3.4 Sample Size……………………………………………………………..19

3.5 Data Analysis Method………………………………………………....20

Chapter 4. Data Analysis & Interpretation…………………………………………22

4.1 Analysis Of Diesel Bills…………………………………………………26

4.2 Analysis Of Electricity Bills…………………………………………….32

4.3 Follow up with the Technical Department about findings of Bill

Analysis………………………………………………………………….35

4.4 Savings Expected based on Analysis…………………………………..39

vi

Chapter 5. Findings and recommendations……………………………………….42

Chapter 6. Conclusion……………………………………………………………...45

Annexure

References

LIST OF TABLES

Table no. Table Name Page No.

4(a) Distribution of Sites 21

4(b) Age of Site 22

4(c) DG Set litres per hour consumption for the site 25

4(d) Bharti Airtel’s Units of electricity per hour 33

DATE OF DIAGRAMS

Fig no. TITLE page no.

1(a) Service provider wise market share 1

1(b) Service provider’s share in net additions during the 2

month of april 2011

4(a) Showing age of sites and their EB status in a bar chart. 23

4(b) Remarks given by Technical Department 37

vii

Abstract

Project undertaken for summer internship is “MARGIN IMPROVEMENT – OPEX

EFFICIENCY”, Indian telecommunication industry is the world's fastest growing

industry with millions of mobile phone subscribers. It is also the second largest

telecommunication network in the world in terms of number of wireless connections. In a

competitive environment it is very difficult to retain as well as attract new customers to

the networks has become a difficult task. Even the average revenue per unit (ARPU) of

Airtel is decreasing as per TRAI which has become the matter of concern

affecting the margins. So the project assigned, in context of the current circumstances is

Margin Improvement – OPEX efficiency and the project aims at reducing the operating

expenditure, for this energy cost of Bharti Airtel was the main concern. After working for

two months I found out the savings which the organization can do and can increase their

revenue.

viii

CHAPTER – 1

INTRODUCTION TO TOPIC

1

The Indian telecommunication industry is the world's fastest growing industry with

826.93 million mobile phone subscribers as of April 2011. It is also the second largest

telecommunication network in the world in terms of number of wireless connections.

With the increasing competition in the Indian Telecom Industry, the market shares of the

telecom players are at continuous threat from the rival companies.

Fig1(a). Service provider wise market share as on 30.04.2011

*Source: TRAI Database

In the above figure market share of Bharti airtel is shown which is 19.91% which is

highes.

In such a competitive environment, the Government scheme of Mobile Number

Portability (MNP) has added to the need for the telecom companies to constantly stay on

watch. As per the data reported by the service providers, by the end of April 2011 about

2

85.41 lakh subscribers have submitted their requests to different service providers for

porting their mobile number. With regard to customers entering or leaving a network, the

following terms are defined in the telecom sector :

Gross Adds: Total additions into the network

Churns: Total customers leaving the network

Net adds: Net Additions =Gross Adds- Churns

Hence these are important numbers to keep track of. The graph below shows the % share

of Net Adds in the sector, as per TRAI :

FIG. 1(b) Service Providers’ share in net additions during the month of April 2011

In the above figure the net additions of Bharti Airtel during the month of 2011 is 15.71%

which is less than Reliance and Idea which means that Bharti Airtel’s churns are more

than Reliance and Idea.

In an industry with very less service differentiation , the decreasing outgoing call

rates, unlimited free incoming, free minutes of usage, free SMSs and the various

competitive plans introduced by telecom companies; to retain as well as attract new

3

customers to the networks has become a difficult task. Also as a result of this, the average

revenue per unit (ARPU) is decreasing as per TRAI.

The decreasing ARPU has become a matter of concern affecting the margins. So the

project assigned, in context of the current circumstances is Margin Improvement –

OPEX efficiency. OPEX is ongoing cost for running a product, business or system.

OPEX efficiency refers to a business goal which seeks to reduce inefficiencies and

increase quality. By increasing the OPEX efficiency, the bottom-line of a company

improves, improving the margin, hence maximizing the stakeholders’ interests.

The Margin Improvement for a company depends mainly on increasing revenue and

decreasing operating expenditure.

Increasing Revenue: This depends on the market share of the company. Though Airtel is

the market leader in terms of both revenue as well as market share, but it needs to defend

its position. Satisfied and happy customers are the only way to achieve this target.

However Greenpeace, a corporate client of Bharti Airtel has started a campaign against

Airtel, owing to the high amount of diesel being used to power telecom sites, which

affects the company’s image. Also switching from diesel to other renewable sources of

energy, is an initiative, which is a duty for a corporate leader like Airtel, to set an

example to be followed. It is not only an environmental responsibility to reduce the

carbon emissions but also a way forward to win the hearts of its customers.

Decreasing OPEX: It is crucial to decrease the operating expenditure as it directly has a

significant impact on the profit margin.

To complete the project of Margin Improvement – OPEX efficiency, it was divided into

the following subtitles :

Analysis of the Diesel Bills of Haryana Circle.

Analysis of Electricity Bills of Haryana Circle.

4

5

CHAPTER – 2

COMPANY PROFILE

6

INTRODUCTION TO THE COMPANY

On 7 July, 1995 Mr. Sunil Bharti Mittal, a graduate from Ludhiana (PUNJAB)

incorporated Bharti Airtel. Earlier he was the owner of local telecommunication

company Beetel. Afterwards he planned to expand his company at national level

and the culmination is Airtel, what we see today. Bharti Airtel Limited is India’s

largest telecommunication company by subscriber base. Bharti Airtel Limited is one

of the Asia’s leading integrated telecom services providers with operations in India,

Sri Lanka and Bangladesh. Bharti Airtel since its inception has been at the forefront

of technology and has pioneered several innovations in the telecom sector.It is

known for being the first mobile phone company in the world to outsource

everything except marketing and sales. Its network operations are provided by

Ericsson, business support by IBM and transmission towers by Bharti Infratel Ltd,

Indus Towers Ltd.

Airtel – Brand

Airtel was born free, a force unleashed into the market with a relentless and unwavering

determination to succeed. A spirit charged with energy, creativity and a team driven “to

seize the day” with an ambition to become the most globally admired telecom service.

Airtel, after just ten years, has risen to the pinnacle of achievement. As India's leading

telecommunications company Airtel brand has played the role as a major catalyst in

India's reforms, contributing to its economic resurgence. Today, Airtel touch lives of

millions of people with Telecom services, Telemedia services, Enterprise services, Retail

services etc.

Airtel – Brand Logo

7

The group has introduced a new and youthful brand logo which depicts its multi-

dimensional character and its strategy to grow with new avenues.

Bharti’s New Brand Logo and its significance

AIRTEL’S NEW LOGO

Airtel’s unique symbol is an interpretation of the ‘a’ in airtel. The

curved shape & the gentle highlights on the red color make it warm

& inviting, almost as if it were a living object. It represents a

dynamic force of unparalleled energy that brings Airtel closer to its

customers. This new specially designed logo type is modern, vibrant

& friendly.

It signals Airtel’s resolve to be accessible, while the use of all lowercase is Airtel’s

recognition for the need for humanity. Red is part of Airtel’s heritage. It is the color of

energy & passion that expresses the dynamism that has made airtel the success it is today,

in India, and now on the global stage.

VISION - By 2015 Airtel will be the most loved brand, enriching the lives of millions:

AIRTEL VALUES- The values that will help achieve Airtel’s vision:

“Alive”

“We are alive to the needs of our customers. We act with passion, energy and a can do

attitude to help our customers realize their dreams. Innovation and an entrepreneurial

spirit derive us – if it cannot be done, we will find a way.”

8

“Inclusive”

“Airtel is for everyone – we champion diversity, recognizing the breath and depth of the

communities we serve. We work with them anticipating, adapting and delivering

solutions that enrich their lives. We do this by having an open mind and embracing

change.”

“Respectful”

We live the same lives as our customers, sharing the same joys and the same pains. We

never forget that they are why we exist. We act with due humility, always open and

honest, to achieve mutual respect.

OUR BRAND PROMISE – THE PROMISE WE MAKE TO ALL OUR

STAKEHOLDERS AND THE QUALITIES WE WANT TO BE KNOWN FOR.

Enriching lives means putting the customer at the heart of everything we do. We will

meet their needs based on our deep understanding of their lives and their ambitions,

wherever they are. By having this focus we will enrich our own lives and those of our

other key stakeholders. Only then will we be thought of as exciting, innovative on their

side and a truly world class company.

OUR BRAND SCORECARD- HOW WE WILL MEASURE OUR PROGRESS

We will evaluate progress through :

maximising customer advocacy

winning in new and emerging categories

maximising employee engagement

being a benchmark for corporate responsibility

providing superior shareholder returns.

9

MISSION

• We will meet the mobile communication needs of our customers through Error- free

service delivery

• Innovative products and services

• Cost efficiency

• Unified Messaging Solutions

2.1 SWOT ANALYSIS - BHARTI AIRTEL LIMITED

Strengths:

Excellent Marketing

Good Plans and Services

Wide Customer Basis

Successful Introduction of 3G

Good Brand Equity

Good Distribution Nework

Weaknesses:

Improper Customer Service.

Customer Complaint Rates are high according to TRAI.

Improper Implementation of Rebranding Startegy : According to a Research conducted

by Bharti Airtel, more than 50% of people disliked the changed image.

10

Opportunities:

Untapped Rural Market.

Global Market.

Threats:

Introduction of Mobile Number Portability (MNP)

Price Competition from Vodafone and Idea.

2.2DESCRIPTION OF TELECOM SITES AND

SERVICE PROVIDERS FOR BHARTI AIRTE LIMITED

Operating Expenditure is the expenditure done on regular basis by the company. Site

Energy Cost is the major Operating Expenditure of the company. Hence further analysis

and evaluation is based on the Site Energy Cost of Bharti Airtel Limited : the various

Telecom Sites and the Service Providers. The Energy Cost of Site involves cost of

Electricity and Diesel, minimisation of which is the goal of research.

TELECOMMUNICATION SITE

A telecommunication site refers to the tower installed in certain piece of land with

a view to provide networking to its customers. A site includes tower along with DG Set i.

e. generator and all other necessary parts for its operations. There are three types of

towers namely Ground based towers, Roof top towers and the In-Building sites. The

Ground based towers and the Roof top towers can cover a larger area whereas the In-

Building Sites cover a limited area of a specified location in which they are set up.

11

GROUND BASED TOWERS

Ground based towers are the towers that are set up or installed on the ground. These are

40 meters in height and can cover up larger area. They can cover up a range of around

three kilometers. Usually they are set up in fields and in villages as they require more

area to be set up.

ROOF TOP TOWERS

The other type of tower is the roof top tower. They are 22 meters in height and thus

shorter as compared to

Ground based towers. These are mainly installed in cities as they can be set up at the roof

top of any building that is strong enough to bear the weight.

IN BUILT SITES (IBS)

IBS are sites which are set up inside the buildings to enhance network coverage. They

cover a smaller area close to their installation. Usually they are set up in commercial

buildings like hotels, malls etc. The basic purpose of setting up such a tower is to provide

services to the customers in the areas where signals strength from other towers (Ground

Based Towers and Roof Top Towers) is expected to be low.

Annexure 2.1 shows the picture of site

12

CHAPTER – 3

RESEARCH METHODOLOGY

13

Bharti Airtel Limited owns deploys and manages huge amount of infrastructure relating

to telecommunication operations under its subsidiary Bharti Infratel Limited. Bharti

Infratel Limited also owns 42% stake in Indus Towers Limited. GTL, WTTIL and

Tower Vision are some other infrastructure providers of the company, but Indus Towers

Limited and Bharti Infratel Limited are the major service providers in terms of tower

infrastructure.

INDUS TOWERS LIMITED

Indus Towers Limited offers services to all telecommunication operators in the wireless

space and other wireless service providers such as broadcasters and broadband service

providers. Indus Towers with a portfolio of more than 100,000 towers is one of the

largest tower companies of the world. It is undertaking sites of 16 telecom circles in

India. Bharti Infratel and Vodafone own 42% stake each while Aditya Birla owns 16%

stake in the company. Indus Towers Limited provides the services of sharing of sites

with related operators and maintenance services on the sites. It also provides customized

sites according to the desired requirements of the telecom operators in India. Bharti

Airtel Limited shares Indus sites with Vodafone and Idea. Bharti Airtel Limited entered

in strategic relation with Indus Towers Limited in July, 2008 and all the roll out site

services of BAL are provided by Indus Towers Limited.

BHARTI INFRATEL LIMITED

Bharti Infratel Limited is one of the world’s largest telecom passive infrastructure service

provider, that deploys, owns and manages telecom towers and communication structures,

for various wireless operators across the 18 states of Union of India. It has a vast

footprint of over 30,000+ towers and also has a 42% stake in Indus Towers Ltd (a Joint

Venture between Bharti Infratel, Vodafone & Idea Cellular).

14

A subsidiary of Bharti Airtel Limited – India’s largest integrated telecom services

provider; Bharti Infratel was formed with the objective of creating an independent

wireless telecom tower infrastructure company, extending its best-in-class services to all

telecom operators in India. Bharti Infratel Limited has towers in all the telecom circles of

the company including Jammu & Kashmir, Himachal Pradesh, Punjab and Haryana.

The towers of Infratel Limited in Haryana Circle are used for evaluation purposes.

This chapter is further divided into sub parts:

3.1 Objectives of study

3.2 Type of Study

3.3 Source of Data

3.4 Sample Size

3.5 Data Analysis Method

15

3.1 OBJECTIVES OF STUDY

OBJECTIVE OF THE STUDY

The objective of the project is to evaluate the operating cost incurred by BhartiAirtel

Limited in running of towers by Infratel Limited in Haryana circle. The sites used by

BHARTI AIRTEL are on OPERATING LEASE(An operating lease is a cancelable

contractual arrangement whereby the lessee agrees to make periodic payments to the

lessor )

Accounting for Operating Lease by the Lessee:

Rent paid is charged to income statement as expense

Depreciation is not charged

Asset is not capitalized

Energy expenses are to be charged by lessee.

SUB OBJECTIVES : Evaluation of Site Energy Cost

To analyze the energy cost in terms of Diesel and electricity at 1667 sites of

Infratel Limited.

To discuss with the concerned officials reasons for increase in the cost.

To determine the focus areas for cost reduction

To take steps with a view to increase efficiency and reduce cost

To take up with the concerned officials outcomes of the study in order to

improve workings.

16

3.2 TYPE OF STUDY

This section aims to understand the research methodology and research design

establishing a framework of evaluation of secondary research. The techniques and

concepts used during primary research in order to arrive at findings, which are also dealt

with and lead to a logical deduction towards analysis and results.

EXPLORATORY RESEARCH

Exploratory Research is conducted when one is seeking insights into the general

nature of a situation, the possible decision alternatives, and the relevant variables that

need to be considered.

While conducting this study, I used Exploratory Research, which was flexible and aimed

at identifying the reasons for increased Energy Cost of Telecommunication Sites of

Infratel Limited in Haryana Circle. The research includes:

SECONDARY DATA COLLECTION The study is based on minimization of OPEX

in terms of Energy Cost of Telecom Sites of Infratel Limited for which the secondary

data of 1667 sites have been collected from Technical Department. Secondary data from

Supply Chain Management Department is further used in the report.

INTERVIEW METHOD The data used in the report is also generated by the

interview method. This includes discussions with executives from Finance, Technical

and SCM Department. The information was gathered using unstructured interview

through series of open ended questions. Some of which are as follows:

Why do we need to concentrate on Telecom Sites from Haryana Circle?

How Energy Cost is a major OPEX for the company? etc

17

3.3 SOURCES OF DATA

The study includes analytics of site Energy Cost which aims at cost minimization and

secondary data for the same has been used. Hence source of data includes:

PRIMARY DATA

DISCUSSIONS WITH COMPANY OFFICIALS The data regarding analytics of

Site Energy Cost is derived with the help of discussions with company officials. The

guidelines of executives from Business Planning and Analysis Team, Technical

Department and Finance Department helped in forming the basis of entire study.

SECONDARY DATA

SECONDARY DATA The analysis of Diesel Cost is done on the Secondary data

received from the Technical Department of the company. This includes diesel cost and

electricity cost of sites of Infratel Limited.

18

3.4 SAMPLE SIZE

The analysis of Site Energy Cost of Bharti Airtel Limited aims at reducing the OPEX.

The evaluation is based on minimising the operating expenditure in terms of Energy

Cost; and for the same, energy cost of telecom sites of BHARTI INFRATEL LIMITED

– Haryana Circle is studied. The observations are made on the basis of working of sites

during period of 6 months i.e.October 2010 – March 2011. The Energy Cost of a

telecom site includes the cost of Diesel and Electricity. But as Electricity is a cheaper

source of power, Diesel Cost requires more attention and hence is regarded as the Energy

Cost of Sites.

Bharti Infratel Limited owns 1667 sites in Haryana Circle which is a large number and

involves huge energy cost. The data of 1667 sites is used for analysis purposes as the

objective of research was to minimise the cost of sites; running throughout the six

months. The sites with high diesel cost and unexpectedly high number of hours of diesel

and total hours(DIESEL + ELECTRICITY) are identified and taken into consideration

because a very high cost is alarming for the company and requires serious alterations.

The derivation of data under study is explained below with the help of following

diagram.

19

3.5 DATA ANALYSIS METHOD

The project aims at analysis of OPEX of sites of Infratel Limited. The tools used to

evaluate the Energy Cost are as follows:

MICROSOFT EXCEL: It is a spread sheet application written by Microsoft and

features calculations, graphing tools, charts, pivot tables etc. It has been used in the

analytics of Site Energy Cost.

3.6 LIMITATIONS OF STUDY

ACCESS TO LIMITED DATA: For the project, access to data was limited. The data

on which the project is made is sensitive from strategic point of view. Hence, we had to

face delay in getting the required data.

SOME OF VALUES ACCOUNTED FOR CALCULATIONS ARE BASED ON

ASSUMPTIONS: Some of the values taken in consideration are based on assumptions.

They may not hold well in the real circumstances. But still efforts have been taken to take

values nearest to the original values.

RESTRICTION TO PUBLISH DATA: Being sensitive, it is not permitted to publish

data in report, on which project is based. The internal data of the company has been

changed and hence a limited data is shown in the report.

20

UNEXPLAINED REASONS FOR INCREASE IN COST: Few concepts were

unexplained within the organization. Few reasons of increase in cost were just assumed

on the certain basis but were not tried and tested.

UNAVAILIBILITY OF DATA RELATED TO TOTAL ENERGY COST: The

Energy cost constitutes of Diesel and Electricity Cost and the invoice of Diesel and

Electricity is received by the company after one month of actually incurring the cost on

site. The diesel cost of March was used for analysis purposes but the electricity bills for

the month of March was not available. Hence, we could not perform the complete cost

analysis of the sites for this month. This narrowed the scope of study and hence Diesel

Cost is considered to be the energy cost for evaluation purposes.

21

CHAPTER 4

DATA ANALYSIS AND INTERPRETATIONS

4.1) Analysis of Diesel Bills

4.2) Analysis of Electricity Bills (EB)

22

The analysis was based on the 1667 sites of Haryana. Out of the four states that come

under the Chandigarh office,–Himachal Pradesh, Haryana, Punjab and Jammu Kashmir,

Haryana was given for analysis because of the huge bills of Haryana, in the whole of

Upper North.

EB STATUS OF 1667 SITES

The non electrified sites run only on diesel. The electrified sites run on electricity and on

diesel, when voltage is low or during electricity cutts.

Table 4(a) showing distribution of sites

In the above table the distribution of 1667- sites, 1657 are electrified and 10 are Non

Electrified are shown. The Electrified sites are the one where electricity connection is

available and sites are running partially with electricity and diesel. The Non Electrified

sites are the one which do not have supply of Electricity. The Electrified Sites constitutes

to 99.4% while remaining .6% are Non Electrified.

The electricity is cheaper source of energy as compared to diesel. Using electricity as a

source of energy, the generator can run for ‘X’ hours in Rs. 4.82 (approx); while using

diesel as a source of energy, the same generator will run in Rs. 36 (approx) giving same

23

Frequency Percent

Cumulative

Percent

Electrified 1657 99.40% 99.40%

Non

Electrified

10

0.60% 100.00%

Total 1667 100.00% 100.00%

productivity. Hence it is beneficial for the company to run its sites on Electricity rather

than on Diesel. Moreover as 99.4% of sites under study are electrified so they are

assumed to run on Electricity rather than on Diesel.

TABLE 4(b) AGE OF SITES AS ON JUNE 9, 2011

The above table shows distribution of sites in accordance to their age

24

EB Status

TotalElectrified

Non

Electrified

Age of the Site as on 9

June'11

0 years – 1 years 1 0 1

1 years - 2 years 1 0 1

2 years - 3 years 46 0 46

3 years - 4 years 688 8 696

4 years - 5 years 245 0 245

5 years - 6 years 330 0 330

6 years - 7 years 151 1 152

7 years - 8 years 205 1 206

Total 1657 10 1667

0 y

ea

rs –

1

ye

ars

2 y

ea

rs -

3

ye

ars

4 y

ea

rs -

5

ye

ars

6 y

ea

rs -

7

ye

ars

Electrified

0100200300400500600

700

Age of Site

Electrified

Non Electrified

Total

FIG. 4(a) showing age of sites and their EB status in a bar chart.

Of the 1667 sites, 10 sites are Non Electrified., 8 of which have an age of 3-4 years

while 1 site is established 6-7 and one in 7-8 years category. According to company

policies, it takes approximately 6 months for a site to be electrified, but it is found that

Non Electrified sites have an age more than 3 years. These 10 are to be taken care of as

their conversion would result in saving of energy cost.

As already explained Diesel constitutes to be major portion of Enery Cost of Bharti Airtel

Limited, the further analysis is focused towards minimising the use of diesel on

Electrified Sites. This aims at improving the operational efficiency of sites through

reduction in OPEX (Operating Expenditure) of Site Energy Cost of Infratel Limited -

Haryana Circle.

On 1667 sites, a random filter is applied and Electrified and Non Electrified Sites are

calculated. 1657 Sites are Electrified and 10 Sites are Non Electrified.

ASSUMPTIONS: As Electrified Sites have access to electricity, they must run on

electricity in order to increase efficiency and reduce the cost. Despite having electricity

connection, these sites can not use electricity for 24 hours a day. There are various

25

reasons for the same; few of which are power cuts, low voltage, unhealthy

disconnections, disputed site property etc. Hence considering all these factors it is

assumed that in order to gain cut off rate of its efficiency, a site can run on diesel for less

than equal to 8 hours. This assumption defines the basis of further research and is made

keeping power cuts and all such reasons in consideration.

4.1) ANALYSIS OF DIESEL BILLS

COMPONENTS OF DATA OF SITES UNDER STUDY

The data of 1667 sites of Infratel Limited – Haryana Circle is analyzed with a view to

minimise the diesel cost. The components of 1667 sites under study are:-

AGE OF SITE Age of a site is calculated by On Air Date. On Air Date is the date when

site becomes operational and provides networking functions. The age of site is calculated

till June 2011 (in years).

PIU HM START READING The diesel running hours in a particular month are

calculated with the help of PIU HM Meter. The PIU HM Start Reading is the closing

reading of last month which is taken as base for calculation purposes in the current

month.

PIU HM END READING This meter reading at the end of month is referred to as PIU

HM End Reading. The difference between PIU HM Start and PIU HM End Reading

gives the number of hours site runs on diesel in a particular month.

DG RUNNING HOURS The number of hours, for which site runs on diesel.

26

PER DAY DIESEL RUNNING HOURS Per day Diesel running hours is calculated by

dividing DG Hours with Number of Days in a month.

Per day Diesel Running Hours= DG Running Hours/ Number of Days in a month

DG CAPACITY DG Capacity refers to the capacity of generator used at site. The DG

Set is normally of 7.5, 10, 15 and 25 KVA.

DIESEL QUANTITY It is the quantity of Diesel used in particular month.

RATE PER LTR.

AMOUNT It is per month Energy Cost of site in terms of Diesel.

TOTAL TENANTS Setting up of Tower includes huge cost so to save the capital

expenditure, a number of mobile service providers share the site. Tenancy refers to the

number of operators sharing a particular site for networking purposes.

EB STATUS Sites are categorised into two according to EB Status – Electrified and Non

Electrified. The sites having Electricity connection are Electrified Sites. These are run on

Electricity, Diesel or Battery Banks.

Non Electrified Sites are the sites which do not have Electricity Connection. They can be

Mobility Sites.

CPH : This a technical specification of the generators installed at the site. CPH stands for

consumption per hour of diesel used in the generator.

PER HOUR CONSUMPTION ON SITE : According to the Master Service

Agreement between Bharti Airtel Limited and Bharti Infratel Limited, the energy cost is

estimated as following table

Table 4( c) . DG Set litres per hour consumption for the site

No of operators at the site DG Set litres per hour

consumption for the site

1 2.1 litres

2 3.0 litres

3 3.9 litres

4 4.4 litres

27

The table shows the per litre consumption of the site, depending upon the tenancy of the

site. This is the ideal consumption of diesel per hour which will be used to find out if

there are any discrepancies.

CALCULATION OF IDEAL COST OF DIESEL: This is found out with following

formula:

CALCULATION OF ACTUAL DIESEL COSTPER HOUR:

DIFFERENCE B/W ACTUAL AND IDEAL: This is to find out, whether the expected

and actual cost of diesel is within acceptable limits or not.

TOTAL DIESEL COST: This is taken from the bills given by the Network department.

HOURS OF DIESEL USAGE: This is found out by dividing the total diesel cost by

actual diesel cost per hour.

The data for analysis has been taken from the bills of respective months, which were

provided by the SCM Department. A snapshot of the same, for the month of January

2011 is shown in annexure 4.1.1

The details from these bills were then taken forward to perform the analysis of bills. The

various analysis performed are explained next.

28

per litre consumption on site * Rate per litre.

Rate per litre * CPH

4.1.2 TREND ANALYSIS

Calculation of Monthly usage of diesel :

To perform a trend analysis, the hours of diesel usage is find out for all the 6 months,

which gives the monthly usage of diesel at a site, and was observed for any discrepancy.

The analysis was to find out any unusual trend in the consumption of diesel for six

months. The min, max and average functions are used to find out discrepancies in an

easier manner. The abnormal hours have been highlighted with yellow colour which is

shown properly in annexure 4.1.2

4.1.3 PER DAY RUNNING HOURS ANALYSIS

Calculation of Per day running hours:

To perform the per day running hours analysis, the total DG Running hours is

divided by the number of days in the month. The per day running hours are found out for

all the sites for the six months. The cells with no of hours more than 20 hours a day are

highlighted with red colour which is shown in annexure 4.1.3

An unobvious observation found out during this analysis was that in certain

months, on certain sites per day running hours exceeded 24 hours, which clearly shows

29

* This has been calculated by dividing;

total diesel cost actual diesel cost per hour

manipulated bills, were sent for processing. For such entries a credit note is provided to

the company and the amount paid in excess is adjusted in the following months. Like the

amount for 26 hours paid in Feb. will be adjusted in the month of April or May.

4.1.4 METER READING CHECK

The meter reading check is used to confirm whether the opening reading of a

month matches with the closing reading of the previous month. The observation is coded

as:

0: The opening reading of this month matches with the closing reading of

previous month.

1: The opening reading of this month does not match with the closing reading of

previous month, which is clearly shown in annexure 4.1.4

After this analysis, the reasons for the mismatch of readings were investigated and

it came out to be due to the following reasons:

At certain sites - there was an installation of a new meter at the site

- the meter had turned faulty

- There was some diesel theft (.i.e. Tapping) leading to manipulated

entries

4.1.5 MAXIMUM CONSUMPTION ANALYSIS

The Maximum Consumption Analysis is an extreme case analysis. The maximum

diesel consumption is a hypothetical situation as it assumes that the site runs on diesel for

24 hours a day, on all days of the month, which is a rare possibility in electrified sites.

Hence, it is calculated by taking the product of CPH with 24 hrs a day multiplied with the

no of days in the month. It is then compared with actual Bill Diesel Quantity used at that

site.

30

The excess Diesel quantity is then calculated by taking the difference of Bill

Diesel Quantity from the maximum Diesel Consumption.

The observations during this analysis were:

At a number of sites, there were negative numbers in the excess diesel column

which was creeping due to a 0 CPH at certain sites. However, this is a flawed case

because the CPH at a site can not be 0. However at certain other sites, even with a valid

CPH value of the DG Set, there was a negative difference, which surely is a point of

concern. The excess diesel quantity is highlighted with red colour and is clearly shown in

annexure 4.1.5

4.1.6 Some sites were identified on which diesel running hours were more than 20per

day. Only those sites have been identified for which per day running hours of diesel were

more than 20 hours, in at least four out of six months and this has been shown in

annexure 4.1.6

4.1.7 After investigation, we found out that out of these 13 approx. 8 sites used less

electricity as they were in remote areas or there were a lot of voltage fluctuations due to

which electricity could not be used as a major source of energy in these sites.

Then the results were compared for electrified and non electrified sites and is properly

shown in annexure 4.1.7

Similar analysis was done for all the five months being analysed. Though different

number of sites were identified ,every month, the factors of which were due to

seasonality, weather changes, electricity cutts etc. On performing the various trend

31

analyses, ( as explained earlier) a total of 55 sites were found out, beacause of a

consistency of unusually high usage.

FINDINGS: For non electrified sites, the sites where diesel running hours in a day are

around 20+ hours, should be electrified. However, there are certain sites which are non

electrified and still run for lesser no of hours are the sites which operate for that no of

hours only. However a matter of concern is the sites that are electtrified and still run for

around 20+ hours. The no of sites is 55, which should be checked.

Hence, after completing the site wise analysis, the results were combined, district

wise and it is shown in annexure 4.1.8

Here since the grand total was identified, so a district with higher number of sites

would definitely have higher costs. So we divided the total cost with the number of sites,

to see the per unit cost of each district.

After completing the analysis, the findings were taken forward to the higher authorities

and then detailed investigation was to be carried out to know the reasons of anomalies, at

the sites so identified.

4.2) ANALYSIS OF ELECTRICITY BILLS

While dealing with the electricity bills, the cost of the bills had to be proportioned

according to the no of days in the month, because a combined electricity bill comes for

more than 1 month.These details were further used to allocate the cost of electricity to

their months.

32

Hence, the bills were divided depending upon the number of days in the period

for which the bill was received and the electricity cost were taken from electricity bills of

the sites. A snapshot of bill is there in annexure 4.2.1

After this the sum of electricity bills was taken for every site, for every month and hence,

the total

bill of each month for each site was obtained as shown in annexure 4.2.2

After allocating cost of electricity to their respective months, per day running hours of

electricity were calculated with the help of total units of electricity used in a month.

The formula for calculating total units of electricity used in a month is as follows:

CALCULATION OF PER DAY RUNNING HOURS OF ELECTRICITY:

33

In this screen shot, the column G depicts the Period Check which is the number of days for which the bill has been received. Then Cost Per Day is calculated (column H) by employing following formula:

Total Bill of that period the number of days ( Period Check)

TOTAL COST PER UNIT COST (4.82)

Total units of electricity used in a month consumption per hour/ no. of days in a month

CONSUMPTION PER HOUR OF ELECTRICITY HAS BEEN ALREADY FIXED

ON THE BASIS OF TENANCY :

Table 4(d) Bharti Airtel’s units of Electricity used per hour.

No. of tenants Total units of electricity

used per hour

Bharti Airtel’s Units of

electricity

1 5.2 5.2

2 7.2 3.6

3 9.2 3.1

4 11.2 2.8

5 14.0 2.8

6 16.8 2.8

CALCULATION OF MONTHLY UNITS OF EB CONSUMED PER MONTH

FOR BHARTI AIRTEL LTD. Is calculated by the given formula :

From the monthly units of EB consumed, per day running hours were calculated by

dividing the monthly units of EB as calculated above, with the number of days in that

month. A snapshot for the above calculation for the month of October is shown in

annexure 3.2.3

Similar calculations were carried out for the months of November, December,

January and February. The data for March was not available, as the Electricity Bill of

March was not yet obtained.

CALCULATION OF THE TOTAL HOURS A SITE RUNS

(DIESEL + ELECTRICITY)

34

Sum of bills for that month per hour EB units according to tenancy

After these calculations, Diesel hours which were calculated earlier, were plotted in the

sheet, so that the total hours of diesel plus electricity could be calculated.

The sites with hours greater than 24 hours for the sum of EB hours and diesel hours are

highlighted with red colour and a snapshot of this is shown in annexure 4.2.4

Further discussion was done with the Technical team to find out the reasons for these.

INTERPRETATIONS: 13 Sites using diesel for more than 21 hours per day require

serious evaluations. Despite being Electrified Sites, they are running on electricity for

less than 4 hours a day which should be ideally 16 hours per day. Further 76 sites are

running on diesel for 13 – 21 hours per day. This constitutes to be a large number of sites,

the usage of which when converted could result in saving of huge amount of operating

expenditure in terms of diesel cost.

4.3 FOLLOW UP WITH THE TECHNICAL

DEPARTMENT ABOUT FINDINGS OF BILL ANALYSIS

The remarks obtained from the Technical Department brought into light the following

points :

1. DISPLAY FAULTY: Numerics of the display of metre are not clear.

35

2. PDCO: Permanent Disconnection

3. TDCO: Temporary Disconnection

4. FIRST BILL ISSUE : Bill comes after a year. So the amount is higher.

5. 30 kVA DG REQUIRED: Backup insufficient, so it takes longer time to restart

after electricity connection resumes. Also known as DG Automation fault.

6. VILLAGER ISSUE: Due to certain local issues, owner’s dissatisfaction with the

company officials, they may switch off the electricity connection to the tower.

7. IPMS: PIU equipment faulty. So IPMS may be used.

8. CABLE: Cable may fluctuate, due to which power connection may become

loose. If the cable is shorter it has to be replaced, due to which diesel consumption

increases.

9. ESTATE: Issues with the owner where the site is located.

10. METER BURNT

11. POLE: Pole is at an inappropriate place. Meters of towers are placed on poles.

12. UNHEALTHY: This is due to EB Fluctuation, when EB connectivity varies.

Sites with lesser voltage available are known as unhealthy areas.

13. RENTAL DG SET : The generator set used by the company was acquired on

rent. It was giving incorrect diesel utilisation quantity. The change of DG Set

showed a decrease in diesel consumption along with per day diesel consumption

hours.

36

14. TAPPING CASES Inflating the diesel consumption hours and stealing the diesel

by site owner in order to earn money is known as Tapping. The cases showed

tapping of diesel by the site owner with a view to earn money by selling stolen

diesel. The 5 tapping cases were identified which lead to decrease in per day

diesel consumption hours.

15. BATTERY BANKS Additional battery banks were maintained for the month of

May at 30 sites in order to avoid site running on diesel during electricity cuts.

This lead to reduction in per day diesel running hours in May as compared to

April.

16. REPAIRS OF DG SET 11 DG Sets were repaired with a view to give more

productivity in the same amount of diesel. As a result diesel consumption reduced

along with reduction in per day diesel consumption hours. The sites were used

more on Electricity in May as compared to that in April. 22% of the sites showing

decrease in per day diesel consumption hours were because of efficiency build up.

17. POWER CUTTS : Due to excessive power cutts in the area, dependency on

diesel increases.

18. FLOODS: Due to floods, the towers could not be run on electricity .

Reasons No. of sites

30 Kva DG Req 2

Cable 6

display 14

Estate 2

IPMS 14

Meter Burnt 42

37

PDCO 17

Pole 4

TDCO 5

Theft cases 1

TX Faulty 10

Unhealthy 1

Villager issue 19

Power Cutts 10

Battery Banks 4

Floods 2

05

101520

253035

4045

30 K

va D

G Req

Cable

displa

y

Estate

IPM

S

Met

er B

urnt

PDCOPole

TDCO

Theft

case

s

TX Fau

lty

Unhealt

hy

Village

r iss

ue

Power C

utts

Batter

y Ban

ks

Floods

Series1

Fig. 4(b) Remarks given by technical department

In the above figure the reasons for the high operating cost on different sites are shown

and it is evident from the bar graph that large number of sites are having meter burnt i.e.

42 sites.

A snapshot of the remarks is shown in annexure 4.2.5 and picture of Dg is shown in

annexure 4.2.6

38

4.4 SAVINGS EXPECTED BASED ON ANALYSIS

Although 55 sites showing 20+ hours per day diesel consumption is critical for the

company as it is the major reason of augmenting Site Energy Cost in Haryana Circle, the

sites with per day diesel consumption of more than or equal to 20 hours are evaluated

The Electrified Sites despite having electricity connection can’t be run on Electricity

because of few unavoidable factors such as power cuts, default in DG Set, owner issues

etc. Hence keeping all these factors in consideration, it is assumed that a particular site

operates for maximum of 8 hours using electricity in order to attain comparatively greater

efficiency. The site showing more than 8 hours per day diesel running signifies the

requirement of further evaluations and scope of cost reduction.

COMPONENTS OF DIESEL COST

Diesel cost of a site is computed on the basis of amount of Diesel Consumed, Rate of

Diesel and Tenancy (number of mobile operators sharing a particular site). Hence the

basic formula for computation of Diesel Cost is as bellow:-

COST = Diesel Running Hours X Consumption per Hour X Diesel Rate

Tenancy

.e.g. if an electrified site runs on diesel for approx. 21 hours, considering two tenants on

the site, the cost for a month will be

DIESEL COST = 630 (Diesel running hours) x 3 (Consumption per hour) x 36(approx.

Diesel rate)

2 (Tenancy)

DIESEL COST = 34020

39

In order to gain the efficiency and minimize the energy cost, it is assumed that an

electrified site runs on diesel for less than equal to 8 hours. This assumption is made

taking all the unfavorable factors such as power cuts, low voltage, and unhealthy

disconnections in consideration. Had this site been running using diesel for 8 hours per

day, the cost would have been:

DIESEL COST = 240 (Diesel Running Hours) x 3 (Consumption per hour) x 36 (Diesel

Rate)

2 (Tenancy)

DIESEL COST = 12960

The cost saved in terms of Diesel by bringing down the diesel running hours to 8 per day

from 21 per day will be 21060 (34020 – 12960).

Assumming CPH =3, diesel cost = Rs.36 per unit and tenancy =2, on all the sites, an

estimate of cost is taken . The actual data could not be shown because of confidentiality

reasons.

40

FINDINGS:

Hence we found out that the total per day saving is Rs. 40392. Multiplied with the

number of days in a month, a total savings of Rs. 12,52,152 can be achieved , thereby

increasing bottom line.

41

CHAPTER – 5

FINDINGS AND RECOMMENDATIONS

42

The various recommendations in order to gain efficiency in the system are:

DIESEL RUNNING

Less than equal to 8 hours per day The Electrified sites constitutes major proportion of

sites under study. The Electrified sites have electricity connection and hence the ability to

run DG Set on electricity. Taking all the unavoidable circumstances viz power cuts,

unhealthy disconnections, disputed property etc, it is recommended that an electrified site

should not run for more than equal to 8 hours on Diesel in order to gain least possible rate

of efficiency. It is suggested to keep a check on Diesel consumption in order to minimize

the cost and gain efficiency. This can be done through:-

TAPPING CASES

The Tapping Cases must be reduced in order to minimise the cost. This can be done by:-

a) Surprise visits: Surprise checks throws light on the real operational conditions on

sites. This helps in checking the manipulations done by the site owner and fear of

check leads to promotion of authenticity.

b) Legal actions: The tapping cases can also be minimised by taking the legal

actions and hence saving the cost of company.

BATTERY BANKS

The power cuts is a major reason of increase in diesel consumption and hence the energy

cost of site. It is advised to maintain adequate amount of battery banks such that diesel

running hours donot exceed 8 hours per day. This helps in savings of huge amount of

OPEX.

REPAIRS OF DG SET

Proper repair and maintenance of DG Set is required in order to gain the efficiency non

fulfilment of which can lead to increased diesel consumption. Hence it is recommended

to make regular visits to the site for maintenance purposes.

43

FOCUS ON USAGE OF SOLAR ENERGY

Huge energy savings is possible by use of Solar Diesel hybrid (65% savings) as

compared to relatively less savings by use of biomass power (29% savings). Also there is

a possible 40% reduction in site maintenance expenditure for the companies who install

solar as compared to the use of diesel genset. With the use of batteries it is even possible

to power the towers during the night time and effective diesel usage hours can be reduced

to as low as 8 hours per day.The newer telephone towers are being installed based on a

new technology that will consume less power and also do away with the air conditioning

so critical to the telephone towers. For the newer towers, where air conditioning is not a

requisite, it makes more sense to use solar power, especially where the EB electricity is

not available for considerable duration.

44

CHAPTER – 6

CONCLUSION

45

The project consisted of:

Analysis of Diesel Bills of Haryana Cirlce

Analysis of Electricity Bills of Haryana Circle

Shifting to solar energy

The study for the analysis of diesel and electricity bills in Haryana concludes that

building up of efficiency would lead to savings of Rs.12,52,152. It will also reduce the

carbon emissions by Bharti Airtel.

.The analysis of energy bills at Bharti was a way forward to reduce the environmental

impact and contributing towards providing a better and cleaner environment to our

consumers, without comprising on services.

46

ANNEXURE

47

2.1

48

4.1.1

49

4.1.2

50

4.1.3

51

4.1.4

52

4.1.5

53

4.1.6

54

4.1.7

PER DAY DIESEL RUNNING HOUR OF ELECTRIFIED AND NON

ELECTRIFIED SITES:

55

4.1.8

56

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

Ap

r-1

0

Ma

y-1

0

Ju

n-1

0

Ju

l-1

0

Au

g-1

0

Se

p-1

0

Oct-

10

No

v-1

0

De

c-1

0

Ja

n-1

1

Fe

b-1

1

Ma

r-1

1AmbalaBhiwaniFaridabadFatehabadGurgaonHisarJhajjarjindKaithalKarnalKurukshetraMahendragarhMewatPanchkulapanipatRewari

4.2.1

57

4.2.2

58

4.2.3

59

4.2.4

60

4.2.5

61

62

63

4.2.6

64

REFERENCES

TRAI

www.airtel.in

http://en.wikipedia.org/wiki/Bharti_Airtel

www.google.com

65