Abridged Annual Report 2018-19 Bharti Airtel Limited The Future of Digital Experiences Board of Directors Mr. Sunil Bharti Mittal Ms. Chua Sock Koong Mr. Craig Edward Ehrlich Mr. D. K. Mittal Chairman Non-Executive Director Independent Director Independent Director Mr. Gopal Vittal Ms. Kimsuka Narasimhan Mr. Manish Kejriwal Mr. Rakesh Bharti Mittal MD & CEO (India & South Asia) Independent Director Independent Director Non-Executive Director Mr. Shishir Priyadarshi Ms. Tan Yong Choo Mr. V. K. Viswanathan Independent Director Non-Executive Director Independent Director Chairman Member Committees Audit Committee Risk Management Committee HR & Nomination Committee Stakeholders’ Relationship Committee CSR Committee Committee of Directors Read Inside 02-15 16-55 Page Page Corporate Overview Statutory Reports 02 Corporate Information 16 Board’s Report 03 Performance Highlights 26 Management Discussion and Analysis 04 Message from the Chairman 06 Message from Managing Director & CEO (India & South Asia) 56-121 07 Message from CEO (Africa) Page 08 Corporate Social Responsibility Report Financial Statements 56 Abridged Standalone Financial Statements 96 Abridged Consolidated Financial Statements 121 Statement Pursuant to Section 129 of the Companies Act, 2013 Bharti Airtel Limited Abridged Annual Report 2018-19 Corporate Information Board of Directors Statutory Auditors Mr. Sunil Bharti Mittal, Chairman Deloitte Haskins & Sells LLP Ms. Chua Sock Koong Chartered Accountants Mr. Craig Edward Ehrlich Mr. Dinesh Kumar Mittal Internal Assurance Partners Mr. Gopal Vittal, Managing Director & CEO Ernst & Young LLP (India & South Asia) ANB & Co., Chartered Accountants Ms. Kimsuka Narasimhan Mr. Manish Kejriwal Cost Auditors Mr. Rakesh Bharti Mittal Sanjay Gupta & Associates Mr. Shishir Priyadarshi Cost Accountants Ms. Tan Yong Choo Mr. V. K. Viswanathan Secretarial Auditors Chandrasekaran Associates CEO (Africa) Company Secretaries Airtel Africa Plc Mr. Raghunath Mandava Registered & Corporate Office Bharti Crescent, 1, Nelson Mandela Road, Chief Financial Officer Vasant Kunj, Phase – II, New Delhi – 110 070, India CIN: L74899DL1995PLC070609 Mr. Badal Bagri Website Company Secretary http://www.airtel.com Mr. Pankaj Tewari 02 Performance Highlights Financial Year Ended March 31 Units IFRS Ind AS** 2015 2016 2017 2018 2019 Operating Highlights Total Customer Base 000’s 324,368 357,428 372,354 413,822 403,645 Mobile Services 000’s 310,884 342,040 355,673 395,722 384,078 Homes Services* 000’s 1,679 1,949 2,129 2,172 2,270 Digital TV Services 000’s 10,073 11,725 12,815 14,168 15,392 Airtel Business* 000’s 1,732 1,714 1,736 1,760 1,904 Consolidated Financials (H Mn) Total revenues H Mn 920,394 965,321 942,506 826,388 807,802 EBITDA (before exceptional items) H Mn 314,517 341,682 356,208 304,479 262,937 Cash Profit from Operations before H Mn 285,280 289,083 283,668 227,169 167,777 derivative and exchange fluctuation (before exceptional items) Earnings Before Tax H Mn 107,130 128,463 77,232 32,669 (17,318) Net Profit H Mn 51,835 60,767 37,997 10,990 4,095 Consolidated Financials (H Mn) Shareholder's Equity H Mn 619,564 667,693 674,563 695,344 714,222 Net Debt H Mn 668,417 835,106 913,999 952,285 1,082,346 Capital Employed H Mn 1,287,981 1,502,799 1,588,562 1,647,629 1,796,568 Key Ratios Capex Productivity % 77.40 69.89 64.51 49.26 40.65 Opex Productivity % 43.63 42.75 40.62 42.16 46.30 EBITDA Margin % 34.17 35.40 37.79 36.84 32.55 EBIT Margin % 17.23 17.22 16.63 13.41 5.90 Return on Shareholder's Equity % 8.52 9.44 5.66 1.60 0.58 Return on Capital employed % 8.05 8.32 6.45 4.64 5.06 Net Debt to EBITDA Times 2.08 2.46 2.73 3.19 4.32 Interest Coverage ratio Times 8.43 7.06 5.20 4.37 2.84 Book Value Per Equity Share H 154.99 167.03 168.8 174.0 178.7 Net Debt to Shareholders’ Equity Times 1.08 1.25 1.35 1.37 1.52 Earnings Per Share (Basic) H 12.97 15.21 9.51 2.75 1.02 Note: * Effective FY 2016-17, the Company has realigned the reporting of its corporate fixed line voice and fixed line data business with Airtel Business and accordingly Telemedia Services renamed to Homes Services. Hence, the customer base of ‘Broadband and Telephone Services’ is now represented as ‘Homes’ and ‘Airtel Business’. ** With effect from April 01, 2016, the Company has applied Ind AS for the preparation of its financial statements. The transition is carried out from accounting principles generally accepted in India with the transition date being April 01, 2015. All figures are based on Consolidated Financial Statements. Previous year(s) figures are restated / reclassified, wherever necessary. 03 Bharti Airtel Limited Abridged Annual Report 2018-19 Message from the Chairman “#airtelThanks turned out to be an extremely successful initiative in this regard helping us deliver greater value to customers in terms of content and services.” Dear Shareholders, Indian mobile Global economic growth moderated during different markets. Massive surge in video market firmly the year in the midst of several developments consumption continued to be the mainstay consolidated into a like the US-China trade confrontation of galloping data usage. While per capita and the overhang of uncertainty around data consumption nearly doubled in India, 3+1 Brexit in Europe. While US remained an usage expanded by over 40% in Africa. exception exhibiting sustained momentum, industry structure China continued to slowdown. India – our We witnessed varying business dynamics primary market, with initial implementation during the year in the two regions - India and Africa continued challenges of its historic federal tax reform Africa - given different market conditions. its upward trend of GST recovered well during the year While the Indian mobile market firmly and robust registering over 7% GDP expansion. Our consolidated into a 3+1 industry structure, revenue growth African markets witnessed healthy recovery revenues for the sector did not see any uptick and profitability in GDP growth led by a rebound in the during the year and continued to witness an to register a Nigerian economy. Overall, the Company ultra-low tariff regime. High overall industry healthy year experienced moderate economic condition debt continues to be a major concern. Africa in both the geographies. on the contrary, continued its upward trend and robust revenue growth and profitability Global industry evolution gained rapid to register a healthy year. Overall, the initiatives traction during the year as 4G networks are today benefiting expanded at great pace and the emerging In India, amidst conspicuous pricing over markets moved forward towards high pressure, we did well to retain our market 250,000 speed mobile broadband for all. Exponential share by focusing on ‘revenue paying growth in smartphone penetration and customers’ and orienting ourselves students in India’s far low tariff sharply accelerated growth towards mid to high end of the market. The flung villages in data consumption. We witnessed introduction of the minimum commitment significant changes in usage behavior in plans helped us register significant recovery in ARPU towards the end of the year. 04 In the face of rapidly changing our reinforced balance sheet we we thank him for his service to the customer needs and consumption, are ready to take the lead subject Company and also welcome Kimsuka we remained focused on digital to enabling regulatory environment, Narasimhan who has joined the Board innovations to remain the network a complementary technology as an Additional Independent Director. of choice. #airtelThanks has been an ecosystem- network and device, and Airtel Africa Board was constituted extremely successful initiative helping overall market dynamics. during the year having a great mix of us deliver greater value to customers competence and experience. in terms of content and services. We During the year, Airtel completed the believe content partnerships will play acquisition of Telenor (India) following The Group philanthropic arm Bharti a major role in customer acquisition all regulatory and statutory approvals. Foundation extended the reach of and retention in the coming days and We also completed the merger of the its school education programmes to the industry will increasingly gravitate Consumer Mobile Businesses of Tata newer regions. Overall, the initiatives towards collaborating with producers Teleservices (Maharashtra) and Tata are today benefiting over 2,50,000 of content. Teleservices with Bharti Airtel and Bharti students in India’s far flung villages, Hexacom. Bharti Infratel and Indus and being widely acclaimed as one of Airtel Africa had a robust year on all Towers and their respective shareholders the largest privately run initiatives in parameters. With the addition of 10 and creditors entered into the final school education in India. The Satya million new customers, the count phase of scheme of amalgamation Bharti Abhiyan, our rural sanitation reached 99 million. Total revenues and arrangement to create a pan India initiative, operational in the State of witnessed strong growth aided by Tower Co, the largest tower company Punjab has a total beneficiary count significant expansion in data revenue in the world outside China. We also of over 1,75,000 today. Airtel Africa’s (31%) and Airtel Money (60%). entered into an agreement to merge CSR initiatives are oriented towards EBITDA margin expanded by 4% Airtel Kenya with Telekom, subject to local priorities in the countries we underlining the efficacy of our efforts regulatory approvals. operate in. Our initiatives in Africa in operational efficiency. Exponential are largely driven by our belief that increase in 3G and 4G sites in different The year witnessed multiple rounds our interventions in the areas of markets further strengthened our of successful fund raising through spreading digital awareness among network coverage and quality.