Annual Report
2015-16

Message from
Chairman

Sunil Bharti Mittal

Dear Shareholders,

The global economy went through another challenging year. Even as the US experienced sustained recovery, growth in the Euro area remained muted and China continued to slow down, dragging down global economy conspicuously.

Although India, our core market, by contrast had a reasonably good year; for Africa’s largely commodity driven economies it turned out to be extremely tumultuous, as weak growth was accompanied by a sharp depreciation of currencies. Overall, we encountered a mixed economic environment in our key markets.

19.6 % of our total customer base in Africa are data customers

Telecommunication witnessed phenomenal progress on the innovation and adoption front. As a sector, it witnessed two remarkable trends in the emerging markets – one, overall penetration of smartphones expanded rapidly, resulting in a sharp uptake in new applications and data consumption; two, regulatory issues with regard to net neutrality and OTT applications continued to be debated rather vociferously. Notwithstanding the overhang of uncertainty over these issues, operators globally have steadily come to terms with complex regulatory issues.

Early on during the year, Airtel moved past a key milestone, when it became the world’s third largest mobile operator (by subscribers). The year also witnessed a steady strengthening of our operating benchmarks in different geographies. The improvement was most conspicuous in India, where we scaled up our margins and revenue market share significantly. Although improvement in African markets remained rather subdued, following sharp currency devaluations, caused largely by macro-economic headwinds facing these markets, positive change in key metrics definitely augur well for the future. I firmly believe six years of hard work has finally started showing some results on ground.

Riding on rapid increase in smartphone penetration, data revenues continued to be a key driving force of our incremental revenues, both in India and Africa. While data customers accounted for 23.2% of our total customer base in India, the corresponding ratio for Africa stood at 19.6% at the end of the year. Similarly, the share of data revenues in total revenues stood at 23.3% and 15.6% in India and Africa, respectively. We expect these ratios to expand in an accelerated manner in the coming years.

4G as a technology is maturing at a much faster rate than earlier expected, particularly so in India. Throughout the year, we not only expanded our 4G footprint to nearly 400 cities and towns, making ours the widest 4G network in India, but also acquired new spectrum from the market under the new spectrum trading guidelines to consolidate our 4G presence with a pan-India footprint. We also embarked upon a bold network transformation initiative – ‘Project Leap’, involving a cumulative investment of ` 600,000 Mn (USD 9 Bn) over three years. During the year, we completed one of the largest site deployment initiatives in the world rolling out over 87,000 new sites.

` 600,000 Mn ‘Project Leap’, involving a cumulative investment of ` 600,000 Mn (USD 9 Bn) over three years

Airtel became the first company in India to receive a payments bank license. I strongly believe with our deep distribution network touching remote corners of the country, Airtel Payments Bank is uniquely placed to deliver a differentiated banking experience to our customers. Other businesses in India, i.e. Direct to Home (DTH) and Telemedia too, strengthened their operational parameters during the year significantly.

Asset restructuring and rationalisation remained a key guiding factor for us in Africa. We entered into definitive agreements, which will lead to Orange’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone. We also achieved closure of the Tower Cos divestment agreements in eight countries during the year. Tower Cos divestment will not only help us deleverage through debt reduction, but enable Airtel to significantly reduce its on-going capital expenditure on passive infrastructure, besides helping us to focus on our core business.

Riding on rapid increase in smartphone penetration, data revenues continued to be a key driving force of our incremental revenues, both in India and Africa.

Airtel Africa’s management structure has been redesigned to achieve a higher level of empowerment and accountability at the operating levels. Under the new cluster based organisational structure, Christian de Faria has assumed the position of Executive Chairman and Raghunath Mandava, who moved to Africa from our India and South Asia operation has assumed charge as the Chief Operating Officer.

Our philanthropic arm, Bharti Foundation expanded the ambit of its initiatives considerably during the year. Our education related initiatives are today reaching out to over 73,000 underprivileged rural children. Similarly the rural sanitation initiative Satya Bharti Abhiyan, launched in the last financial year has already constructed and delivered over 12,700 household toilets benefiting over 63,000 users in 559 villages in Punjab’s Ludhiana district. The Programme is already being hailed as one of the most successful private sector initiatives in the country in rural sanitation. Airtel Africa’s ‘Adopt a School’ initiative is today reaching out to over 27,000 students with over 700 teachers.

400 Cities and towns 4G expansion undertaken, making ours the widest 4G network in India

Technology innovations – from virtual reality and artificial intelligence to robotics are taking significant strides to open up numerous possibilities in our lives. At the heart of these exciting possibilities lie the global telecommunications networks that are upgrading themselves with equal alacrity to match the pace and scope of these innovations. As new innovations riding our networks evolve to the next stage, network operators will no longer remain the proverbial ‘dumb pipes’, but ‘smart facilitators’. It’s an exciting future waiting out there.

Sunil Bharti Mittal