2017-18 Abridged Annual Report Bharti Airtel Limited Creating a digitally connected world Board of Directors Mr. Sunil Bharti Mittal Mr. Ben Verwaayen Mr. Manish Kejriwal Chairman Independent Director Independent Director Mr. Rakesh Bharti Mittal Ms. Chua Sock Koong Mr. Craig Edward Ehrlich Non-Executive Director Non-Executive Director Independent Director Mr. Shishir Priyadarshi Ms. Tan Yong Choo Mr. D. K. Mittal Independent Director Non-Executive Director Independent Director Mr. Gopal Vittal Mr. V. K. Viswanathan MD & CEO (India & South Asia) Independent Director Chairman Member Committees Audit Committee Risk Management Committee HR & Nomination Committee Stakeholders’ Relationship Committee Corporate Social Responsibility Committee Committee of Directors Read Inside 16 Statutory 53 Reports 16 Board’s Report 25 Management Discussion and Analysis 02 Corporate 15 Overview 02 Corporate Information 54 Financial 03 Performance Highlights 123 Statements 04 Message from the Chairman 54 Abridged Standalone Financial Statements 06 Message from Managing Director & CEO (India & South Asia) 81 Abridged Consolidated Financial Statements 07 Message from Managing Director & CEO (Africa) 119 Statement Pursuant to Section 129 of the Companies Act, 2013 08 Corporate Social Responsibility Report Bharti Airtel Limited Abridged Annual Report 2017-18 Corporate Information Board of Directors Statutory Auditors Mr. Sunil Bharti Mittal, Chairman Deloitte Haskins & Sells LLP Mr. Ben Verwaayen Chartered Accountants Ms. Chua Sock Koong Mr. Craig Edward Ehrlich Internal Assurance Partners Mr. Dinesh Kumar Mittal Ernst & Young LLP Mr. Manish Kejriwal ANB & Co., Chartered Accountants Mr. Rakesh Bharti Mittal Mr. Shishir Priyadarshi Cost Auditors Ms. Tan Yong Choo R.J. Goel & Co. Mr. V. K. Viswanathan Cost Accountants Mr. Gopal Vittal, Managing Director & CEO (India & South Asia) Secretarial Auditors Managing Director & CEO (Africa) Chandrasekaran Associates Company Secretaries Bharti Airtel International (Netherlands) B.V. Mr. Raghunath Mandava Registered & Corporate Office Chief Financial Officer Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase – II, New Delhi – 110 070, India Mr. Nilanjan Roy CIN: L74899DL1995PLC070609 Company Secretary Website Mr. Pankaj Tewari http://www.airtel.com 02 Performance Highlights Financial Year Ended March 31 Units IFRS Ind AS** 2014 2015 2016 2017 2018 Operating Highlights Total Customer Base 000’s 2,95,948 3,24,368 3,57,428 3,72,354 4,13,822 Mobile Services 000’s 2,83,580 3,10,884 3,42,040 3,55,673 3,95,722 Homes Services* 000’s 1,654 1,679 1,949 2,129 2,172 Digital TV Services 000’s 9,012 10,073 11,725 12,815 14,168 Airtel Business* 000’s 1,702 1,732 1,714 1,736 1,760 Consolidated Financials (H Mn) Total revenues H Mn 8,57,461 9,20,394 9,65,321 9,54,683 8,36,879 EBITDA (before exceptional items) H Mn 2,78,430 3,14,517 3,41,682 3,56,206 3,04,479 Cash Profit from Operations before H Mn 2,41,813 2,85,280 2,89,083 2,83,668 2,27,169 Derivative and Exchange Fluctuation (before exceptional items) Earnings Before Tax H Mn 78,643 1,07,130 1,28,463 77,233 32,669 Net Profit H Mn 27,727 51,835 60,767 37,998 10,989 Consolidated Financials (H Mn) Shareholder's Equity H Mn 5,97,560 6,19,564 6,67,693 6,74,563 6,95,322 Net Debt H Mn 6,05,416 6,68,417 8,35,106 9,13,999 9,52,285 Capital Employed H Mn 12,02,976 12,87,981 15,02,799 15,88,562 16,47,607 Key Ratios Capex Productivity % 72.91 77.40 69.89 65.34 49.88 Opex Productivity % 45.05 43.63 42.75 41.38 42.88 EBITDA Margin % 32.47 34.17 35.40 37.31 36.38 EBIT Margin % 14.22 17.23 17.22 16.42 13.25 Return on Shareholder's Equity % 5.04 8.52 9.44 5.66 1.60 Return on Capital employed % 6.65 8.05 8.32 6.45 4.64 Net Debt to EBITDA Times 2.19 2.08 2.46 2.66 3.19 Interest Coverage ratio Times 7.58 8.43 7.06 5.20 4.37 Book Value Per Equity Share H 149.49 154.99 167.03 168.77 173.96 Net Debt to Shareholders’ Equity Times 1.01 1.08 1.25 1.35 1.37 Earnings Per Share (Basic) H 7.02 12.97 15.21 9.51 2.75 * 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. 03 Bharti Airtel Limited Abridged Annual Report 2017-18 Message from the Chairman “Affordable smartphones, which have become the predominant gateway to internet for customers across age groups and geographies, and rapidly proliferating 4G networks helped accelerate market transformation during the year.” Aggressive network rollout continued to be an overriding priority for us as a record 110,000 mobile sites were rolled out during the year to strengthen our 4G footprint Dear Shareholders, data analytics are likely to make these networks the primary facilitator of change in future. Affordable smartphones, Aided by strong growth in most advanced and which have become the predominant gateway to internet emerging markets, global economy stayed on for customers across age groups and geographies, and rapidly proliferating 4G networks helped accelerate course in its rebound mode during the year. market transformation during the year. It was particularly Overall, our company experienced favorable evident in India where average data consumption per user economic environments in both India and went up by nearly six times to over 6GB per month in Q4 Africa. While India recovered remarkably well (FY18) from about 1GB in Q4 (FY17). African markets too exhibited buoyancy where average usage on our networks from the prolonged dissonance caused by expanded by about 90%. demonetization, which was undertaken in The telecom industry faced an extraordinarily turbulent FY 17, and the teething troubles of Goods year in India through unprecedented disruption. Extreme and Service Tax (GST) introduced during the pricing pressure accelerated market exits and industry current year, African economies benefited consolidation, which evolved towards a 3+1 structure (3 from stability in currencies and commodity private telcos + 1 public sector telco). Even though the transition is turning out to be stressful entailing massive prices, which resulted in healthy balance of dislocation in the short run, the new industry structure will payment situation in many countries. ultimately prove beneficial for the sector. We have done well to capitalize on emergent opportunities from this Digital technologies and internet are pivotal to industry shakeup. While we completed the acquisitions transformation happening around us – social, industrial, of Tikona and Telenor, the proposed merger with the economic. Global telecommunications industry, which consumer business of Tata Teleservices Maharashtra and lies at the heart of this transformation, too is undergoing Tata Teleservices is under regulatory approval. a metamorphosis of sorts; operators are transforming from pure play telecom to being digital services providers Our strategy of growing our share of high ARPU customers – integrating connectivity and content across multiple and improving customer stickiness by offering new screens. New technologies like IOT, AI, Block chain and big products and content services helped us increase our 04 revenue market share in a rapidly consolidating market We undertook several initiatives to raise capital to support undergoing significant revenue shrinkage. It was gratifying our business plans. During the year, we divested around to see the way we held ourselves as pressure mounted on 150 million shares in our subsidiary Bharti Infratel through the topline of our mobility business. Aggressive network secondary sale for a consideration of over H 5,895 crores. rollout continued to be an overriding priority for us as a We also issued non-convertible debentures worth up to H record 110,000 mobile sites were rolled out during the 3,000 crores on a private placement basis. I am pleased year to strengthen our 4G footprint. This will help us stay to inform you that the board of Bharti Airtel International ahead of competition through enhanced data capabilities (Netherlands) B.V. has authorized the management to and better customer service. initiate non-binding exploratory discussions with various intermediaries to evaluate the possibility of listing the Africa Acceleration in non-wireless businesses remained an operations on an internationally recognized stock exchange. unmistakable bright spot for us during the year. DTH Bharti Foundation, our group philanthropic arm extended the reach of its activities significantly during the year. Sharply improved EBITDA margins in Africa to Its school education programs are today cumulatively reaching out to nearly 250,000 students across 13 states in India. I am particularly delighted to inform you % that during the year Bharti Foundation embarked upon 33.4 its most ambitious Higher education initiative till date to in FY 2017-18 from 24% last year set up Satya Bharti University, a world class institution to offer free education to deserving youth from economically weaker sections of society. The sanitation program, which is already serving over 90,000 beneficiaries, moved into and B2B business registered healthy double digit topline its second phase under which the Foundation is providing growth, thus highlighting the inherent advantages of a financial assistance to beneficiaries to construct household diversified business portfolio.