Nirmala Khyati Bharti Airtel

7/27/2019 Nirmala Khyati Bharti Airtel

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A

SUMMER TRAINING

REPORT

OnROI analysis

Bharti-Airtel ltd.

SUBMITTED BY:

NIRMALA VERMA

&

KHYATI GADHIA

ACADEMIC YEAR: 2005-2006

SUBMITTED TO:

AES POST GRADUATION INSTITUTE OF BUSINESS

MANAGEMENT

GUJARAT UNIVERSITY

AHMEDABAD


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Acknowledgement:

We take this opportunity to express our heartfelt gratitude to one and all that have helped

us make this project a reality. Practical training is of utmost importance to students like

us who have no work experience prior MBA. It not just gives one the opportunity to learn

things first hand, but also a chance to experience and apply the theoretical knowledge one

acquires through the first year.

At the onset, we would like to thank Airtel for giving us an opportunity to do summer

training with them. It is a company of huge stature and spread and we value our

association with it.

We express our gratitude to Mrs. Aloka verma, Budgeting & control manager, Finance

department Airtel, Ahmedabad for her continued support. She gave some valuable

insights and suggestions, which helped to shape the project. She also provided necessary

resources and her valuable time and attention. We would like to thank Mr. PramodBhandari, the Executive, Ahmadabad. We would also like to thank Mr.Ram Rathi and

Mr.Parth Mehta for their valuable insights and support.

We would also like to thank Prof. Mayank Joshipura and the entire faculty for providing

us the theoretical base and inputs throughout the first year, which helped us in our

summer training.

L t b t t th l t W ld lik t th k M R Bh t d M Vi l i


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Executive Summery:

Telecommunication today, is one of the fastest growing sectors in todays world. It has got

an important role to play in connecting people turning a world into a global village. Seeing

to past twenty years there has been tremendous growth in this sector. The trend of a phone

per family is turning to phone per person. This has happened with the increasing growth of

mobile sector because of its time and convenience. Mobile has changed the life style of

people.

Competition has increased and hence the demand of customers. As a result of which

mobile as well as its usage is getting less costly day by day. The main reason is that

companies are ready to give the best available services at the lowest price. If you now see

the industry it can be noted that all the competitors are giving same services at

approximately same tariffs.

Every company intends to earn maximum profit. Bharti-Airtel limited is one of profit

making entity in telecom sector. So in order to identify profit center of each and every

tower/sites, they called upon us to assist them in executing their project for Return on

investment.

Our study highlights many facts about:

The current scenario of return on sites.

Analysis of expenses related to towers & how to minimize excessive expenses.

Analytical study of prepaid & postpaid revenue of one month.

Average payback period of investment.


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After the study we gave them certain recommendations for improving negative ROI,

among which many were known to department. Still we gave them detailed list of

recommendations from our side in which there were some recommendations, which are

not been taken seriously before.

Finally, we have successfully converted 70 DG sites in electricity. So there is

remarkable saving of Rs. 13, 00,000.

Above all it was nice learning and exposure for us to work with Bharti-Airtel, which is

one of best in telecom industry.


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CONTENTS

Sr. No. Particulars Page no.

1. Indian telecom sector 11.1 Cellular services 2

2. Organization profile 5

2.1 Organization history in brief 6

2.2 Vision 7

2.3 Business Strategy 7

2.4 Business 8

2.5 Achievement & Awards 92.6 Board of director 12

2.7 Management Structure 14

2.8 Corporate Structure 16

2.9 SWOT analysis 17

2.10 Bharti-Airtel growth paradigm 22

2.11 Business solution 23

3. Return on Investment 25

3.1 Introduction 273.2 Methodology 28

3.3 Site details 30

3.4 Process of calculation ROI 31

3.5 Expense analysis 35

3.6 Revenue analysis 42

3.7 ROI analysis 44

4. Project of converting DG sites into Electricity 46

4.1 Process of site utilization 47

4.2 Working 48

5. Learning & contribution to the company 50

5.1 Application 50

5.2 Tools & techniques 50


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PART A

Indian Telecom sector


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1. The Indian Telecom Sector

India is the fourth largest telecom market in Asia after China, Japan and South Korea.

The Indian telecom network is the eighth largest in the world and the second largest

among emerging economies. At current levels, telecom intensiveness of Indian economy

measured as the ratio of telecom revenues to GDP is 2.1 percent as compared with over

2.8 percent in developed economies (CRISIL, www.ibef.com).

Indian telecom sector has undergone a major process of transformation through

significant policy reforms. The reforms began in 1980s with telecom equipment

manufacturing being opened for private sector and were later followed by National

Telecom Policy (NTP) in 1994andNTP'1999.

Historically, the telecom network in India was owned and managed by the Government

considering it to be a natural monopoly and strategic service, best under state's control.

However, in 1990's, examples of telecom revolution in many other countries, which

resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a

change process finally resulting in opening up of telecom services sector for the private

sector.

Policy reforms can be broadly classified in three distinct phases

The Decade of 1980's saw private sector being allowed in telecommunications

equipment manufacturing. Mahanagar Telephone Nigam Limited (MTNL) and

Videsh Sanchar Nigam Limited (VSNL) were formed and a Telecom Commission

was set up to give focus to telecommunications policy formation.

I 1990 t l i ti t l b fit d f th l i
http://www.iimahd.ernet.in/pdf/ntp1994.pdfhttp://www.iimahd.ernet.in/pdf/ntp1994.pdfhttp://www.iimahd.ernet.in/ctps/Templates/pdf/NTP1999.pdfhttp://www.iimahd.ernet.in/ctps/Templates/pdf/NTP1999.pdfhttp://www.iimahd.ernet.in/pdf/ntp1994.pdfhttp://www.iimahd.ernet.in/pdf/ntp1994.pdf


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o

Telecom services at affordable and reasonable priceso World standard quality of services

NTP 1999 brought in the third generations of reforms in the Indian

telecommunications sector.

1.1 Cellular Services

There are 25 private companies providing mobile Services in 19 Telecom Circles and 4

Metro cities, covering 1500 towns across the country. Presently, there are five private

service operators in each area, and an incumbent state operator. Almost 80% of thecellular subscriber base belongs to the pre-paid segment.

Total Subscribers.No. Group Company (as on 31st May 2006)

1 Airtel 21860212

3 Hutch 18060225

2 BSNL 18000908

4 IDEA 8062961

5 Aircel 3024871

6 Reliance 2155886


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Spice

3%

MTNL

3%Aircel

4%

IDEA

11%

BSNL

24% Hutch

24%

Airtel

28%

Reliance

3%

Airtel

Hutch

BSNL

IDEA

Aircel

Reliance

MTNL

Spice

Airtel has highest GSM subscribers in India. It is 28% of total market share.


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PART B

Organization Profile


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2. ORGANIZATION PROFILE:

As we spread wings to expand our

capabilities and explore new

horizons, the fundamental focus

remains unchanged: seek out the

best technology in the world and

put it at the service of our


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2.1 ORGANIZATION HISTORY IN BRIEF:

Bharti Tele-Ventures (BTVL) was incorporated on 7th July, 1995, for promoting

investments in diversified telecom service projects. The company was formed as a 80:20

joint venture between the Bharti Group through its subsidiary Bharti Telecom and STET

International Netherlands NV, a company promoted by Telecom Italia, Italy.

Sunil Bharti Mittal, the founder-chairman of Bharti Enterprises (which owns Airtel), is

today, the most celebrated face of the telecom sector in India. He symbolizes the adage

that success comes to those who dream big and then work assiduously to deliver it. Sunil

Bharti Mittal began his journey manufacturing spare parts for bicycles in the late 1970s.His strong entrepreneurial instincts gave him a unique flair for sensing new business

opportunities. In the early years, Bharti established itself as a supplier of basic telecom

equipment. His true calling came in the mid 1990s when the government opened up the

sector and allowed private players to provide telecom services.

Bharti is a leading provider of telecom services with more than 12 million customers in

India. The company is structured into two main groups, Mobile Services which offers

GSM Mobiles Services and Infotel Services which provides broadband & Telephone,

long distance and enterprise services. The company was first GSM Operator to have more

than ten million customers and also the first telecom company to cover all the 23 telecom

circles of India, which this coverage facility the company became the first operator to

have an All-India footprint. All the services of company is been provided under brand

name AIRTEL


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2.2 VISION:

To be responsive to the needs of our customers

To trust and respect our employee

To continuously improve our services- innovatively and expeditiously

To be transparent and sensitive in our dealings with all stake holders.

2.3 BUSINESS STRATEGY:

To achieve the strategic objective company has developed following strategies.

Focus on maximizing revenues and margins.

Capture maximum telecommunications revenue potential with minimum

geographical coverage.

Offer multiple telecommunications services to provide customers with a "one-stop

shop" solution.

Position itself to tap data transmission opportunities and offer advanced mobile

data services.

Focus on satisfying and retaining customers by ensuring high level of customer

satisfaction.

Leverage strengths of its strategic and financial partners.

E h i h d l hi i l ffi i i


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2.4 BUSINESS:Bharti Tele-Ventures current business includes

Mobile services

Fixed-line

National and international long distance services

VSAT, Internet services and network solutions


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2.5 Achievement & Awards:

In last 10 years, Bharti-Airtel limited has achieved many first & unique records:

It was first to launch nationwide roaming operation

It was first across the 1 million and 5 million customers marks.

It was also the first to launch service overseas.

It was first to launch life time validity card of Rs. 999. To have lifetime validity in

12 installments of Rs. 99 only, is also available.

The company was awarded the Indian mobile operator of the year 2005 by Asian

mobile News.

The company received 2 awards at the prestigious Advertising Agencies Association

of India (AAAI):

The companys flagship brand Airtel was awarded with a silver for the

brand campaign of the year. The companys flagship brand Airtel was awarded with a silver for the

best advertising Film.


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The company was awarded with the world Communication Best Brand Award of

the Year by London based Emap Communication group in October, 2004.

The company was awarded the emerging company of the year by the Economic

Times in October 2004.

The company was amongst the worlds top ten companies on share price gain given

its 276% change in price per share over last year according to the Business Week.

Airtel won the AVAYA GLOBAL CONNECT CUSTOMER

RESPONSIVENESS AWRAD, 2005for best customer service in the telecom

sector.

Airtel won the prestigious WORLD COMMUNICATION AWARDfor being best

operator in the world on project management.

Bharti- Airtel bagged the FIRST POSITION FOR QUALITYamongst all service

companies and overall silver trophy at the CII NATIONAL SIXSIGMA AWARDS.

Airtel enterprise services won the FROST & SULLIVAN MARKET LEADERSHIP

AWARD for managed WAN services market, 2005.

Bharti Airtel has become the first Indian company to win the prestigious MIS ASIA

IT EXCELLENCE AWARD 2005.BHARTI won the award in the best change


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Brand Airtel continued to create buzz. Airtel reigned supreme as the buzziest brand

of the yearin a survey conducted by agencyfaqs.

Airtel won the Readers digest trusted brands gold award for the mobile service

provider category in India.

Bharti telesoft has been ranked amongst Asias top 100 technology companies by red

herring, a technology and innovation magazine. The company has also made it to

Deloitte Technologys India fast 50 programmers that rank the 50 fastest growing

technology companies by regions.


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2.6BOARD OF DIRECTORSThe Company is headed by Chairman & Group Managing

Director- Sunil Bharti Mittal who is assisted by two Joint

Managing Directors- Akhil Gupta and Rajan Bharti Mittal.

The Company also has two Presidents- Mobile Services and Infotel

Services; this responsibility includes Fixed-line, Long Distance

and Broadband Services.

The company also has two corporate directors-CMDs office and

HR. The Presidents have to report to the Chairman and Managing

Directors. The head of units and SBUs report to the respective

business's President.

The above details are shown in below chart:


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2.7 MANAGEMENT STRUCTURE

An apex team of Corporate Directors has been constituted. The Corporate Directors have

supervisory and strategic responsibilities for functional areas across business lines. The

Directors oversee functional areas including Business Development, Human Resources,

Marketing, Corporate Communication, IT & Technology, Finance, Legal, Corporate

Affairs, Corporate Strategy & Planning and Supervisory Director cum Chief Mentor -

mobility.

The organization structure is designed to ensure that identical businesses are run along

similar lines and best resources in any functional field, be tapped to serve the best

interests of the entire group.

The structures also defines the role of the Head of the units who are totally empowered to

manage their respective companies and are fully responsible for business operations to

build world-class organizations with a high degree of customer focus.


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2.8 CORPORATE STRUCTURE


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2.9 SWOT analysis:

Competitive Strengths

Bharti Tele-Ventures believes that the following elements will contribute to the

Company's success as an integrated telecommunication services provider in India and

will provide the Company with a solid foundation to execute its business strategy:

Nationwide Footprint - As of April 30, 2005, 100% of India's total mobile

subscribers resided in the Company's twenty-three mobile circles. These 23

circles collectively accounted for approximately 100% of India's land mass;

Focus on telecommunications to enable the Company to better anticipate industry

trends and capitalize on new telecommunications-related business opportunities;

The strong brand name recognition and a reputation for offering high quality

service to its customers;

Quality management team with vision and proven execution skills; and

The Company's strong relationships with international strategic and financial

investors such as SingTel, Warburg Pincus, International Finance Corporation,

Asian Infrastructure Fund Group and New York Life Insurance.

Airtel is offering a slew of innovative and customized products and services for

its customers Some of these include:


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accessed through voice (by dialing 646), SMS (sending keyword to 646),

GPRS (Airtel Live mobile portal) or the web (www.airtelworld.com).

Hello Tunes Airtels Ring back tone service, Hello Tunes, is an

exclusive and personalized mobile music service where the caller hears

songs and other sound clips instead of the traditional switchboard ring-

ring tone. Customers can choose from a collection of Bengali, English

and Hindi amongst others.

Missed call alert - 'Never Miss a Call on your Airtel' - An innovative

service from Airtel, the customer is informed about the calls that he or she

missed when their phone was either switched off or not reachable.

Widest roaming coverage nationally and internationally - As a result

of the largest spread across 21 circles in India, Airtel offers its customers

of staying connected with their near and dear in one of the largest number

of locations in India. Airtel also offers the largest international roaming

coverage across 125 countries and 250 networks across the globe.

Easy Bill 1sttime in Bengal, Airtels state-of-the-art billing system not

only makes sure bills are easy to read but also ensures error free billing.

Choice of Number Only Airtel offers its customers the freedom to

choose their own lucky number for a connection for oneself or even for

another member within the family.

GPRS and MMS Customers can receive instant access to the Internet

from their mobile phones through their Airtel GPRS services or sendcolored picture messages with sound clips via the Airtel Multimedia

Messaging service. With the launch of GPRS services, Airtel will be the

1stoperator to offer GPRS services on GSM in the state. Airtel is targeting
http://www.airtelworld.com/http://www.airtelworld.com/


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customers to save up to 250 numbers in the phone book and up to 30

messages in the inbox.

World class customer care Airtel believes in delighting customers at

every step of their mobile phone experience Only Airtel provides a

national call center number 121and sate-of-the-art customer care facility.

Weakness:

Bharti-Airtel ltd. faces significant competition from private operators and government

controlled companies. These government controlled companies may have

significantly greater recourses than Bharti-Airtel ltd.

High competitive intensity results in higher churn rates, higher customer acquisition

cost and an increased pressure on the margins.

It is highly capital intensive and has long gestation period. So Bharti-Airtel ltd. will

require additional financing at diminishing rate in the form of debt or equity to meet

further capital requirement.

Changes in technology may render current technology obsolete or require making

substantial capital investment to upgrade existing infrastructure.

In order to provide high quality telecommunication services, Bharti-Airtel ltd. has to

depend on the quality of the networks maintained by other operators and their

willingness to cooperate with Bharti.


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Opportunities:

Growing market :

The Indian telecom industry has shown robust growth in 2004-05 and is poised to

be the fastest growing and the most competitive wireless market in the world. As

on 31stmarch, 2005 wireless penetration in India was 5% as against countries like

china 27%, Philippines 42% and US 64%.

Number portability:

Number portability would allow customer to retain their telephone number even

after switching service provider or network. The system would give us high churn

of customer of other telecom operators.

Broad band & data market :

The growth potential of broadband & data market is believed to be immense. The

penetration level of broad band services is currently low in India. Our strategy has

been to provide broadband services through DSL along with regular fixed line

telephone services.

Integrated solution:With the creation of the enterprise services business, we have positioned

ourselves well to tape the high-end

Corporate market and our ability to provide an entire range of services make us the


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With the emergence of newer technologies in the future like 3G, WiMax, Triple

play etc., we believed that we are in favorable position to benefit from the current

and new technologies which would result in strengthening our market leadership.

Threats:

Number portability :

Just as number portability is an opportunity to us; it is also a threat to the extent

that it will allow other operators to take customers from our network. How ever

we believe that we should stand to gain from the introduction of number

portability in the country.

New entrants:

The Indian economy is growing at a tremendous pace making it an attractive

destination for many foreign telecom players. The government recently

announced their plan to hike the foreign direct investment levels in the

telecommunications sector to 74% from the current 49%. According to various

media reports, this announcement has given a remarkable boost to the sector with

foreign majors announcing their interest to enter the Indian telecommunications

market.

Skilled manpower & talent:


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2.10 BHARTIs GROWTH PARADIGM:


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Information Broadcast is a means of simultaneously disseminating information to

multiple employees/customers over SMS. It also gives the flexibility of sending messages

at a predefined time and pre-defined date. The user logs on to the solution through

internet, types the message, selects the group he wants to send the message to and after

defining the date and time just clicks on the send' button.

Call Centers

,

Business today is run for the customers. To manage customer queries (pre sales and post

sales), clients require setting up small call centers with minimum expenses. To help out

clients with such requirement Airtel proposes the call center solution. This solution helps

the clients to start up a local call center with facilities to receive 4-5 simultaneous calls.

These call centers can be in a single location or multi location.

Audio Conferencing by Airtel

Instead of traveling to meet with customers and suppliers many Enterprises are saving on

travel costs by using Airtel's Audio Conferencing facility. Audio Conferencing is an easy

way to have multiple people participates in the same phone call together. To avail of

audio conferencing one does not need to install any expensive devices, one's landline or

mobile phone will suffice. The user has an option of either giving out a list of numbers to

be dialed out, or he can be provided with a dial in number to which people call into.


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locations in an Airtel Server. These users can then access their numbers by using the

SMS facility on their phones. AirTel provides space to its clients to upload their

directories onto its servers.

These numbers need not be just AirTel Mobile numbers. These can even be your fixed

line numbers. Two or more numbers can be given for the same person. Now customers

need not to call up your reception to enquire about numbers. Store as many personal

numbers in your address book as you want.


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PART C

Return on Investment


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3. RETURN ON INVENSMENT

What is Return on Investment?

ROI is an accounting valuation method. The ROI is a return ratio that compares the net

benefits of a project, versus its total costs. For example, if a project has an ROI of 300%,

the net benefits derived from that project are three times those of the expected total costs

to implement the project. As such, the ROI calculation represents the relative value of the

project's cumulative net benefits (benefits minus costs) over the analysis period, divided

by the project's cumulative total costs, and expressed as a percentage.

Because the numerator (Net Income) is an unreliable corporate performance

measurement, the outcome of the formula for ROI must also be unreliable to determine

success or corporate value. However the ROI formula still shows up in many annual

reports...

Return on Investment overstates economic value

The degree to which ROI overstates the economic value depends on at least 5 factors.

1. Length of project life. If this is longer, the overstatement will be bigger.

2. Capitalization policy. If the fraction of total investment capitalized in the

books is smaller, the overstatement will be bigger.

3. Rate at which depreciation is taken in the books. Depreciation rates that


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Calculation of Return on Investment.

Formula:

Net Income / Book Value of Assets = ROI

A better alternative is:

Net Income+Interest (1-Tax Rate) / Book value of Assets = ROI


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3.1INTRODUCTION:

Bharti-Airtel ltd. has maintained its strong position at financial level as well as market

level. It is largest mobile service provide in India, both in terms of revenue as well as

subscribers. So in order to identify profit center of each and every tower/sites, they called

upon us to assist them in executing their project for Return on investment.

Objectiveof study:

Analyze returns on each tower and sites in terms of revenue and expenses for themonth of May, 2006.

Analytical study of payback period.

Recommend how to minimize excessive expenses, so that company would be

benefited.

Utility of study:

With the help of this study, the company will be able to know profitable sites in each

zone. It also helps to identify sites which generate more expenses. Management will be

able to get initiatives for non-profitable sites.


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3.2 METHODOLOGY:

The major investment of telecom sector is in towers. Bharti-Airtel makes two types of

investment one is in towers & second is infrastructure investment.

The followingdetails requiredfor calculating ROI at bharti-Airtel:

Investment (fixed assets)

a. infrastructure

b. tower/sites

Revenue

a. Prepaid Revenue

b. Postpaid Revenue

Expenses

a. security

b. caretaker

c. water charges

d. rent

e. diesel

f. electricity

g. depreciation

h. variable cost


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Sources of data:

Management has provided essential data for our project. For

further information, we have gone through the annual report of the

company.

Tool for analysis:

We have taken Return on investment as a tool for our project.


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3.3 SITE DETAILS:

There are total 1400 sites divided in 4 different zones. The following table provides detail

about on air sites as on 31stmay, 2006:

Sites on air

A bad, 425

Baroda, 270Surat, 325

Rajkot, 380 A bad

Baroda

Surat

Rajkot

Zone

A bad Baroda Surat RajkotTOTAL

Sites

No. 425 270 325 380 1400


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3.4 PROCESS OF CALCULATING ROI :

STEP-1:

We calculated expenses of each tower/site. We made list of on air site as on 31stmay,

2006. Then we plotted expenses like security, rent, diesel, electricity, depreciation etc.

Site name Diesel Security Water

charge

Care

taker

R 3557 4751 300 4751

A 2436 9292 300 4751

S 6213 9292 300 4751

B 1063 9292 300 4751

Site name Rent Depn Variable

cost

Electricity

R 6000 292240 35273 11000

A 8924 299084 40439 11000

S 15097 303927 123110 8740

B 7500 312988 44526 11000


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Outgoing rate:

a. Postpaid rate: 1.50

b. Prepaid rate: 1.75

Site

name

Prepaid

MOU

Postpaid

MOU

Prepaid

Revenue

Postpaid

Revenue

Total

Revenue

R 124270 165104 217472 247650 465128

A 128167 110615 224292 165922 390214

S 115432 188680 202006 283020 485026

B 163815 152259 286676 228384 515064

STEP-3:

The major investment of Bharti-Airtel is in towers and infrastructure. So total investment

included

a. Infrastructure investment

b. Investment in different types of tower.

We took information of above data from management.

Site name Infrastructure Investment Total invest.

R 2106731 2000000 4106731

A 2048952 600000 2648952

S 1494777 1000000 2494777

B 1119027 1000000 2119027


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STEP-4:

Then expenses compared with revenue generated by sites in terms of prepaid & postpaid

revenue. So we calculate net revenue by following formula:

Net revenue = total revenue total expenses.

(We take net revenue as annual bases)

Site

name

Total

Revenue

Total

Expenses

Net

Revenue

Annualized

Revenue

R 465128 359872 105256 1263072

A 390214 376226 13988 167856

S 485026 471430 13596 163152

B 515064 391420 123644 1483728

STEP-5:

We calculated ROI by following formula:

Annualized Revenue

ROI =--- ----------------------------- * 100

Book value of Assets

Site name Annualized

Revenue

Total

Investment

ROI


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STEP-6:

Finally payback period calculated. Average payback period of all the sites is 6 years. It is

calculated for further analysis by following formula:

Site Cash

Expense

Cash

Revenue

Annualize

Cash Inflow

Total

Invest.

Payback

Period

R 67632 465128 4769952 4106731 10

A 77142 390214 3756864 2648952 9

S 167503 485026 3810276 2494777 8

B 78432 515064 5239584 2119027 5

So, by this way we have calculated Payback period. In above table, we kept paybackperiod in months.


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3.5 EXPENSE ANALYSIS:

1. Rent:

Rent is paid on all sites on monthly bases. There might be more than one landlord for the

same site. We have prepared one database which facilitates management to map rent

expenses. We plotted technical sign off id for all sites. This database is very helpful tocompany. It solved many problems related with basic mapping.

This databaseinclude following:

Site name

Tech. site id

Name of landlord

Landlord address

Location

Zone

Date of agreement

Period of agreement

Bank name

A/c. number


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rent

0

500000

1000000

1500000

2000000

2500000

3000000

A'bad Baroda Surat Rajkot

zone

Expenses(Rs.)

rent

The above chart shows that highest rent goes to Rajkot zone.

2. Electricity:

Electricity is required for running any tower. Bharti-Airtel paid electricity bill after 2

months. They always try to convert all sites into permanent electricity sites, because if

sites run on diesel caused high expenditure.

electricity

0

500000

1000000

15000002000000

2500000

3000000

3500000

4000000

Expense

s(Rs.)

electricity


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3. Security:

All sites required security guard. Bharti-Airtel paid also caretaker and water charges as

per requirement. Water charges paid mostly in Rajkot zone.

Security Expenses:

security

0

200000

400000600000

800000

1000000

1200000

1400000


zone

Expenses(Rs.)

security

The above graph represented that security expenses high in Rajkot zone.


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Water charge:

watercharges

0

5000

10000

15000

20000

25000

30000

35000

40000

45000


zone

Expenses(Rs.)

watercharges

The above chart shows that water charges high in Rajkot zone.

Caretaker:

caretaker

0

50000

100000

150000

200000

250000

A'b d B d S t R jk t

Expenses(Rs.)

caretaker


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4. Diesel:

Diesel required for that sites where,

no connection of electricity &

Power cut.

Mostly expenses occurred in Ahmedabad zone. Management wants to reduce expenses so

that they try to convert 268 DG sites into electricity as prior project.

diesel

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000


zone

Expenses

(Rs.)

diesel


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5. Depreciation:

Bharti-Airtel implemented SLM [straight line method] for depreciation. Depreciation is

written off into 10 years.

depriciation

0

20000000

40000000

60000000

80000000

100000000


zone

Expenses(Rs.)

depriciation

The above graph represented that depreciation is high in Rajkot zone.


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6. Variable cost:

It included administrative, advertising, personnel expenses. We take 30 % of total

revenue generated from each sites.

variable cost

0

5000000

10000000

15000000

20000000

25000000


zone

E

xpenses(Rs.)

variable cost

The above graph represented that variable cost is high in Baroda zone.


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3.6 REVENUE ANALYSIS:

1. Postpaid Revenue:

Postpaid Revenue

0

5000000

10000000

15000000

20000000

25000000


Zone

Revenue

(Rs.)

Postpaid Revenue

As per analysis, highest postpaid revenue comes from Ahmedabad zone. We evaluate thatsites in Ahmedabad utilized effective postpaid MOU, so those generates better revenue

compare to other zone.


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2. Prepaid Revenue:

Prepaid Revenue

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000


Zone

Revenue

(Rs.)

Prepaid Revenue

As per analysis, highest postpaid revenue comes from Ahmedabad

zone. Similar to postpaid revenue, Ahmedabad zone generates

maximum revenue in prepaid. Surat and Rajkot zones are follower

in terms of revenues. Management should make efforts to increase

revenue in Baroda zone.


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3.7 ROI ANALYSIS:

After calculating annual revenue our next step is to find out Return on Investment.

1. Positive ROI:

Positive ROI

54%

15%

25%

6%

A'badBaroda

Surat

Rajkot

We analyzed that mostly revenue comes from Ahmedabad zone so that there are 54%

positive returns on sites in Ahmedabad. There are high security, water charges, and rent

depreciation expenses, so that only 6% positive ROI in Rajkot zone.


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2. Negative ROI:

Nagative ROI

27%

20%24%

29%

A'bad

Baroda

Surat

Rajkot

Reasons for Negative ROI:

280 sites have launched recently. So their revenue growth is very less. It is one of

main reason of negative ROI.

Bharti-Airtel ltd. charged depreciation by using SLM. So the value of assets

written off in 10 years. So there is huge amount of depreciation per site. It caused

negative ROI.

We can say that ,Diesel required for that sites where,

no connection of electricity &

Power cut.

It is possible to reduce diesel expenses by converting DG site into electricity sites.

Variable cost is also very high


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PART- D

Project on converting Dgsites into Electricity


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4. PROJECT OF CONVERTING DG SITES INTO

ELECTRICITY:

One of the reasons of negative ROI is high diesel expenses. So it would be beneficial for

company to convert 268 DG sites into electricity.

Around 1000 sites have negative ROI. So it is essential to take necessary steps for

improvement.

Airtel-bharti divided all sites into main 4 zones.

1. Ahmedabad

2. Baroda

3. Rajkot

4. Surat.

The following diagram shows DG sites in each zone:

SITES ON DG

A'bad

zone, 83Surat, 65

Rajkot, 28


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4.1 PROCESS OF SITE UTILISATION:

Requirement of sites from marketing people

Planning & site survey

Acquisition & set priorities

Prepare agreement

Selection of vendor

Demand note from vendor

Payment of DD/ cash

Application to EB


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4.2 WORKING ON DG PROJECT:

First of all, we have prepared MIS [management information system] to verify power

status of all sites including WIP, hold & on air sites. The following table presents EB

status of all sites as on 31stmay, 2006:

EB STATUS

PERMANENT TEMPARORY TAPPED

ON

DG TOTAL

SITES

NO. 942 50 140 268 1400

We updated our database by making conversation with vendors on daily bases. We

analyzed following reasons for delay:

Lack of proper communication

Lack of co-ordination

No follow-up

Delay in DD


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As per MIS,

Consumption (per site) Diesel rate Expense (per day) Total Expense(per

month)

36 liter.

[1 hour = 2 liter.]

Rs.40 Rs.1440 Rs.43,200

The above table shows huge expenditures spend on DG sites. We concluded, it is very

essential task for management to convert DG sites into electricity as soon as possible. It

also helps to improve negative ROI.

We tried to fill communication gap between vendors and management, so there will be

proper follow up. We signified requirements of vendors to management. They accepted

our suggestions. So we succeed to convert 70 DG sites into electricity.

Saving of one month:

Expense [per month] Sites Total saving

Rs.43200 70 Rs.12,96,000


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PART E

Learning and contribution


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5. LEARNING & CONTRIBUTION TO THE COMPANY

Working with Airtel was indeed an enriching experience where each day was a good

learning experience in itself. Like everyone we had a lot of expectations from our

summer project. We are glad to say that we have truly benefited from it.

5.1 Application of concepts, tools, techniques and skills learnt at AESPG

IBM:

The learning from the first year of our course of study was of immense help in successful

completion of the project. It was a wonderful experience applying what we had learnt and

in a way the project helped re-enforce these concepts. These concepts were the

foundation on which we worked.

5.2 Tools and Techniques

The tools and techniques of data analysis and presentation learnt at AES PGIBM in thevariety of projects and reports done were very useful. I had a good idea about effective

presentation skills. This helped bring a sense of professionalism in my approach as a

whole


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5.3 Knowledge and skills acquired from the company

The corporate exposure that we received by working with Airtel was a great learning

opportunity for us. It gave us a hand on practical experience of the theories we had

studied which in a way helped us understand the theoretical concepts better.

We are basically commerce student; hence it took time to understand technical terms in

telecom industry. But with the help of staff, we learnt a lot.

We are placed as coordinator in DG project, at that time we learnt how to plan, how to

coordinate with vendors and the skill which is required to get information from different

vendors.

In the project of ROI, we got practical experience by applying theoretical knowledge. We

experienced that it is very difficult to deal with financial tools in practical life. But it was

good learning for us.


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5.4 Contribution to the company:

We have prepared one database which facilitates management to map rent expenses. We

plotted technical sign off id for all sites. This database is very helpful to company. It

solved many problems related with basic mapping.

We have prepared MIS [management information system] to verify power status of all

sites including WIP, hold & on air sites. We updated our database by making

conversation with vendors on daily bases. We signified requirements of vendors to

management. They accepted our suggestions. So we succeed to convert 70 DG sites into

electricity.

We gave them detailed list of recommendation for improving ROI from our side. There

were some recommendation, which are not been taken seriously before.


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5.5 Recommendations:

Following are recommendations given by us to Bharti-Airtel ltd.:

There are 10 - 15 sites which have been cancelled; still Bharti-Airtel ltd. has topay rent due to legal or other issues. Management should focus on these sites and

try to take serious action.

There is lack of coordination among all departments. Management should try to

make effective communication among all.

Bharti-Airtel ltd. has to pay high diesel expenses, which should be minimized by

converting DG sites into electricity.

Variable cost is also high; it must be reduced in Baroda zone. Management should

reduce sites which have lower utilization rate & higher expenses.

As we say earlier, 130 sites utilize less than 20% of their capacity. These sites do

not generate revenue compare to other sites. Management should concentrate on

these sites & try to get better utilization rate.


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5.6 Limitation:

It is very good experience to work with Bharti-Airtel ltd. & we have learnt many practical

skills in financial area, but there are following limitations:

We have studied real data during 2 months, but we cant publish real data into our

project. According to companys policy, management does not reveal real financial

information to outside world.

ROI is based on net income. Net income is an unreliable corporate performance

measurement; the outcome of the formula for ROI must also be unreliable to

determine success or corporate value. So we are unable to measure efficiency of the

company by this single tool.

We have assigned 2 projects at the same time, so it was very difficult for us to

concentrate on ROI project.

Management is ready to give project for further analysis but Training period is only

2 months, so we cant take other financial tool for further analysis.


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6. BIBLOGRAPHY:

www.coai.org

www.indiacelluar.com

www.airtel.in

www.gsm.com

www.bhartilive.touchindia.com

www.airtelworld.in

Annual report of Bharti-Airtel ltd.

Bharti today [In-house magazine]

7 GLOSSARY
http://www.coai.org/http://www.indiacelluar.com/http://www.airtel.in/http://www.gsm.com/http://www.bhartilive.touchindia.com/http://www.airtelworld.in/http://www.airtelworld.in/http://www.bhartilive.touchindia.com/http://www.gsm.com/http://www.airtel.in/http://www.indiacelluar.com/http://www.coai.org/


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7. GLOSSARY:

DSL = Digital subscriber line

RTT = Roof Transmission Tower

RTP = Roof Transmission Pole

GBT = Ground Based Tower

IBS = In build Services

GPRS = General Packet Radio Service

MMS = Multi Media Services

MOU = Minute Over Usage

DG = Diesel Generator

GSM = Global services for mobile operators

CDMA = Code Divisional Multiple Access


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PART -F

Annexure


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Sitename

Security

Water

charg

e

Caretaker

Rent Diesel Electricity Depreciation

Variablecost

Total

Expense

s

Postpaidrevenue

Prepaidrevenue

Totalrevenue

A 6,700 11,000 316,943 164,179 498,822 112166.95 435095.5 547262.42

B 10,600 11,000 272,653 186,356 480,609 152454.9 468732.3 621187.22

C 6,700 29,776 295,466 180,689 512,631 337644.21 264651.9 602296.06

D 6,000 11,000 283,512 158,560 459,072 114967.71 413565.4 528533.11

E 7,500 11,000 306,963 143,254 468,717 308027.38 169486.6 477514.02


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F 6,000 11,000 316,943 164,179 498,122 112166.95 435095.5 547262.42

G 5,000 11,000 220,070 128,156 364,226 130659.85 296528.4 427188.21

H 5,500 11,000 312,711 229,575 558,786 475279.48 289970.4 765249.91

J 8,000 11,000 295,466 235,797 550,263 604551.90 181439.3 785991.17

K 6,000 11,000 289,717 189,831 496,548 334394.00 298375.3 632769.26

L 6,000 7,920 266,723 150,257 430,900 254475.43 246381.1 500856.52


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M 6,000 11,460 271,558 141,262 430,280 51171.79 419702.7 470874.51

N 5,500 11,000 265,352 151,413 433,265 81180.77 423529.2 504710.02

O

9,292

6,000 11,000 270,179 154,541 451,012 150448.48 364689.6 515138.04

P 9,292 300 4,751 12,274 11,000 183,927 119,375 340,919 66309.85 331608.3 397918.17

Q 9,292 7,000 9207 100,000 132,869 258,368 204607.40 238289 442896.42

R 9,292 300 4,751 5,500 8,395 6,000 292,356 178,973 505,567 93990.85 502586.2 596577.09


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S 9,292 6,000 11,000 100,000 55,690 181,982 73073.79 112559.6 185633.40

T 9,292 6,500 11,000 100,000 144,481 271,273 152466.54 329137 481603.50

U 9,292 300 6,000 1,400 11,000 100,000 72,330 200,322 53545.29 187554.1 241099.40

V 300 4,751 6,000 11,000 100,000 56,705 178,756 56943.01 132073.2 189016.26

W 9,292 300 6,000 11,000 100,000 66,767 193,359 32504.09 190052 222556.09

X 9,292 9,900 26,060 272,472 173,918 491,642 161894.68 417832.5 579727.18


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Y 9,292 8,480 11,000 211,903 137,566 378,241 88021.36 370532.9 458554.23

Z 9,292 300 4,751 11,418 14,600 298,625 168,561 507,547 102303.61 459565 561868.60

AA 9,292 8,250 2,114 12,116 183,927 159,508 375,207 152921.72 378772.5 531694.19

AB 9,292 6,000 11,000 270,179 154,541 451,012 150448.48 364689.6 515138.04

AC 9,292 300 5,000 11,000 220,070 216,546 462,208 82705.61 639114.4 721820.01

NOTE:This annexure shows our working on Expenses and revenues, but data is not real one. We have submitted real datasheet and working

to the company.


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Site

name

Net

revenue %Utilization

net annual

cash revenue

Annual

revenue Infrastructure Investment

Total

invest ROI Cash-ROI payback period

A 48,441 57.40 4,384,604 581,290 2,169,429 1000000 3,169,429 18.34 138.34 0.72

B 140,578 101.38 4,958,773 1,686,939 1,726,528 1000000 2,726,528 61.87 181.87 0.55

C 89,666 76.25 4,621,575 1,075,986 1,954,657 1000000 2,954,657 36.42 156.42 0.64

D 69,462 77.83 4,235,678 833,539 1,835,116 1000000 2,835,116 29.40 149.40 0.67

E 8,797 62.46 3,789,118 105,565 2,069,627 1000000 3,069,627 3.44 123.44 0.81


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F 49,141 57.40 4,393,004 589,690 2,169,429 1000000 3,169,429 18.61 138.61 0.72

G 62,962 80.62 3,396,381 755,542 1,200,699 1000000 2,200,699 34.33 154.33 0.65

H 206,464 75.40 6,230,099 2,477,565 2,127,112 1000000 3,127,112 79.23 199.23 0.50

J 235,728 102.59 6,374,326 2,828,737 1,954,657 1000000 2,954,657 95.74 215.74 0.46

K 136,221 74.21 5,111,262 1,634,655 1,897,172 1000000 2,897,172 56.42 176.42 0.57

L 69,956 66.90 4,040,155 839,476 1,667,232 1000000 2,667,232 31.47 151.47 0.66


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M 40,595 56.40 3,745,826 487,136 1,715,575 1000000 2,715,575 17.94 137.94 0.72

N 71,445 66.19 4,041,564 857,341 1,653,519 1000000 2,653,519 32.31 152.31 0.66

O 64,126 69.65 4,011,656 769,511 1,701,787 1000000 2,701,787 28.48 148.48 0.67

P 56,999 99.72 2,891,109 683,985 839,270 1000000 1,839,270 37.19 157.19 0.64

Q 184,528 3,414,342 2,214,342 1000000 1,000,000 221.43 341.43 0.29

R 91,010 59.46 4,600,389 1,092,122 1,923,556 1000000 2,923,556 37.36 157.36 0.64


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S 3,651 1,243,817 43,817 1000000 1,000,000 4.38 124.38 0.80

T 210,330 3,723,965 2,523,965 1000000 1,000,000 252.40 372.40 0.27

U 40,778 1,689,331 489,331 1000000 1,000,000 48.93 168.93 0.59

V 10,260 1,323,125 123,125 1000000 1,000,000 12.31 132.31 0.76

W 29,197 1,550,367 350,367 1000000 1,000,000 35.04 155.04 0.65

X 88,085 97.65 4,326,684 1,057,024 1,724,717 1000000 2,724,717 38.79 158.79 0.63


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Y 80,313 80.36 3,506,592 963,760 1,119,027 1000000 2,119,027 45.48 165.48 0.60

Z 54,322 60.50 4,235,364 651,859 1,986,254 1000000 2,986,254 21.83 141.83 0.71

AA 156,487 161.78 4,084,967 1,877,843 839,270 1000000 1,839,270 102.10 222.10 0.45

AB 64,126 69.65 4,011,656 769,511 1,701,787 1000000 2,701,787 28.48 148.48 0.67

AC 259,612 93.50 5,756,184 3,115,346 1,200,699 1000000 2,200,699 141.56 261.56 0.38

NOTE:This annexure shows our working on ROI and payback, but data is not real one. We have submitted real datasheet and working to

the company.

Nirmala Khyati Bharti Airtel

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