Bharti Airtel Ltd Management Discussions.

Overview

The telecom sector provided key essential services to the nation during testing times, becoming a lifeline for the economy. This was despite the industry battling its own challenges, with regulatory dues on back of unfavourable judiciary outcome adding pressure on an already consolidated industry. Additionally, Indian telecom pricing remains among the lowest globally even post one round of tariff hikes and having amongst the highest data usage globally.

The industry continues to be hopeful that going forward the health of the sector will be protected through much-needed support from each of the stakeholder, thus keeping the interest of the operators intact.

Bharti Airtel Limited ensured that even during the stringent lockdown and later during the unlock phases, it kept its customers and millions of people, homes and businesses connected. The Company announced special measures for its customers in form of extending pre-paid plans validity, providing additional talktime, facilitating digital recharges and adding alternate offline recharge channels. Network investments and broadband installation machinery were accelerated to cater to the increased pandemic led surge in data demand. Similarly, the Company progressed in achieving a 5G ready network and became India’s first telecom player to successfully test, demonstrate and orchestrate a live 5G service over a commercial network in Hyderabad city.

Alongside serving the nation, Bharti Airtel accelerated the transition from just customer service to customer obsession. Given the exceptional execution capabilities and unrelenting customer focus, the Company saw very sharp traction across all lines of business and geographies. Post a year of industry repair initiative in form of tariff hikes, in FY 2020-21, the Company consolidated on the business momentum with a focus on winning quality customers through an exceptional experience while building an aspirational brand and wrapping everything through digital omni-channel.

Building on key underlying strengths (Data, Distribution,

Payments and Network), during the year, the Company launched multiple digital services. Digital flywheel comprising digital services is enabling the Company to be more efficient, create new revenue streams and build a powerful ecosystem of strong partners. The announcement of the new corporate structure has been another key step towards sharpening focus on digital opportunity and value creation.

Economic Review1

Current Year 2020 saw the world economy being impacted by the COVID-19 pandemic, with the global GDP recording a de-growth of 3.3%. The impact was more severe in the first of the year as most countries went into lockdown to combat the spread of the virus. As people and businesses adapted to new ways of working and restrictions eased gradually, the global economy started to recover in the latter part of the year. A slew of policy measures undertaken by governments and central banks in most nations across the globe reduced the magnitude of pandemic impact, which saw millions of jobs being lost, particularly in contact-intensive services and the informal sector, leading to a sharp rise in inequality. The COVID-19 pandemic impacted individual economies in multiple ways and over different periods of time. The advanced economies were more impacted and witnessed a de-growth of 4.7% vs a growth of 1.6% in the previous year. On the other hand, the Emerging Market and Developing Economies (EMDEs) de-grew only by 2.2% during the year, mainly supported by China’s 2.3% growth. Regions with a higher dependence on tourism and commodity exports took a comparatively bigger hit than other regions. The impact also varied across sectors.

While the restrictions negatively affected travel and tourism, art and entertainment, sports and brick-and-mortar retail, there was a surge in demand for consumer durables and sectors providing ancillary support to work-from-home.

Outlook

After the pandemic led contraction in 2020, the International Monetary Fund (IMF) projects the global economy to grow at 6% in 2021, moderating to 4.4% in 2022. Actual growth, however, is contingent on vaccine response to new COVID-19 strains, policy actions, containment of supply chain disruptions, commodity prices and, ultimately, the capacity of individual economies to adjust to the changes. As the vaccination drive across the world picks up, economic activity is expected to normalise, bringing global economy back on a growth trajectory. Beyond 2022, global growth is projected at around 3.3%, given medium-term damage to supply potentials, ageing population and stabilising growth in China.

Indian Economy

As per the IMF, the Indian economy de-grew by 8% in 2020 vis-a-vis a growth of 4% in 2019. It was already witnessing deceleration due to the stress in the non-banking financial sector when the COVID-19 pandemic struck. Approximately 1.3 billion Indians were put under one of the most stringent lockdowns in the world as India focused on ‘Lives over Livelihoods’, that is, saving lives at the cost of short-term pain. The lockdown provided much needed time to ramp up the testing capacity and healthcare infrastructure, create greater awareness on health and safety measures and the adoption of a new way of life, which in turn flatten the infection curve, thereby cushioning the pandemic’s impact on the economy. Supported by the structural and demand-side reforms undertaken by the government and central bank, along with the easing of restrictions from June 2020 onwards, the economy witnessed early signs of recovery. India saw a V-shaped recovery post the first quarter, which saw a contraction of 22.4%, one of the worst ever in India’s recorded history. The July-September quarter witnessed a 7.3% degrowth, while the last two quarters of FY 2020-21 saw a positive growth rate of 1% and 3.7% respectively.

Outlook

In 2021, the IMF expects India’s GDP to grow at 12.5% on the back of a low base of 2020, although the downside risk of a more virulent mutated strain remains. An accelerated vaccination drive, along with targeted fiscal and monetary policy responses, is expected to bring the economy back to the growth trajectory over the remaining part of the year.

African Economy

The Sub-Saharan Africa economy de-grew by 1.9% in 2021 vis-a-vis growth of 3.2% in the previous year. Economic activity was disrupted by the pandemic mainly in tourism and commodity dependent nations, including Ghana, Nigeria,

Kenya and South Africa. Rapidly increasing food price and headline inflation added to this disruption. The silver lining is that the spread of the virus has not been as widespread and as rapid as was initially feared in Africa. Experiences from past epidemics helped in the timely implementation of restrictions and adherence to COVID-19 appropriate behaviour, which contributed towards the slowing down of the spread of the virus in the region.

Outlook

Economic growth is expected to resume in 2021 at an estimated growth rate of 3.4% as per the IMF. The recovery is expected to be slower and elongated as the roll-out of vaccines in the region is expected to lag behind that in major economies and in many other emerging markets. However, potential acceleration in exports to partner nations and a rebound in oil prices can act as big upsides for economic growth in the region.

Industry Overview

Indian Telecom Sector

India’s total telecom customer base stood at 1,187.90 million as on February 28, 2021. The Indian telecom industry has recently witnessed consolidation into three large private players, which has led to the accelerated absorption of multiple SIM users, leading, in turn, to a slowdown in growth of the customer base. In the current financial year, total customer base grew marginally by 80 bps from 1,177.97 million as on March 31, 2020, while the tele-density remained nearly unchanged at 87.26% as on February 28, 2021 compared to 87.37% as on March 31, 2020.

Telecom Penetration India

Among the service areas excluding metros, Himachal Pradesh has the highest tele-density (151.67%), followed by Kerala (129.99%), Punjab (124.28%), Tamil Nadu (106.58%), Andhra Pradesh (98.84%), Gujarat (98.16%), Haryana (94.54%), Jammu & Kashmir (88.39%). Among the metros, Delhi tops with 277.27% tele-density. On the other hand, service areas, such as Bihar (52.98%), Uttar Pradesh (67.51%), Madhya Pradesh (67.82%) and Assam (70.11%), have comparatively low tele-density. The wireline customer base stood at 20.19 million at the end of February 28, 2021 vis-a-vis 20.22 million at the end of March 31, 2020.

Africa’s Telecom Industry

The COVID-19 pandemic has contributed to a rapid acceleration of already existing macro trends across the 14 countries where it operates, with people, businesses and governments seeking access to more and better connectivity and improved financial inclusion. These challenging times have shown that the telecom industry is a key and essential service for these economies, allowing customers to work remotely, reduce their travel, keep connected and have access to affordable entertainment and financial services. Further, notwithstanding the possible impacts of COVID-19, the industry continues to benefit from population growth and the need for increased connectivity and financial inclusion in the medium to long term in the countries where it operates.

Development in Regulations

The year saw several regulatory changes and developments. The significant regulatory changes were:

India

Pursuant to the judgement of the Hon’ble Supreme Court of India on October 24, 2019 (‘Court Judgement’) including subsequent supplementary judgements, and in the absence of any potential reliefs, the Group provided for Rs.368,322 Mn for the periods upto March 31, 2020 on the basis of demands received and the period for which demands have not been received having regard to assessments carried out in earlier years and the guidelines / clarifications in respect of License Fees and Spectrum Usage Charges (‘AGR Provision’).

On July 20, 2020, the Hon’ble Supreme Court, after hearing all parties, observed that the amounts of AGR dues given by DoT in their modification application is to be treated as final (‘DoT Demand’) and there can be no scope of re-assessment or recalculation. Consequently, without prejudice and on prudence, during the quarter ended June 30, 2020 the Group had further recorded an incremental provision of Rs.107,444 Mn (including net interest on total provision created considering interest rate as per the affidavit filed by DoT on March 16, 2020 with effect from the date of Court Judgement) to give effect of the differential amount between the AGR Provision and the DoT

Demand along with provision for subsequent periods for which demands have not been received, computed on the basis of the License Agreement read with the guidelines / clarifications and the Court Judgement, which had been presented as exceptional item. As on March 31, 2021, the

Company has continued to recognise its AGR obligations based on Court Judgement and guidelines / clarifications received from DoT in respect of License Fees and Spectrum Usage Charges.

Further, in its judgement dated, September 1, 2020 the Hon’ble Supreme Court reaffirmed that the demand raised by the DoT stated in its modification application as final and no dispute or re-assessment shall be undertaken. In addition, Hon’ble Supreme Court directed that the Telecom Operators shall make a payment of 10% of the total dues as demanded by DoT, by March 31, 2021 and remaining dues in yearly instalments commencing

April 1, 2021 till March 31, 2031, payable by March 31 of every succeeding financial year. The Group has represented to DoT that it has already paid more than 10% of the total dues as demanded by DoT and will ensure ongoing compliance with the Hon’ble Supreme Court’s orders.

The Group has filed an application before the Hon’ble Supreme Court inter-alia highlighting basic arithmetical, clerical and computational errors in the DOT demand.

The application is pending adjudication.

The Company, after considering its current business plans, likely adoption of lower income tax rate permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019, future projections and timing of taxable income, has re-assessed the carrying amounts of its deferred tax balances, including the Minimum Alternate Tax (MAT) credit available.

Simultaneously, the Company has opted for ‘Vivad se Vishwas Scheme 2020’’, an income tax amnesty scheme to settle tax related litigations/disputes. The Company has decided to settle its disputes pertaining from Assessment Years 2010-11 to Assessment Years 2016-17 and accordingly, filed the necessary application and related documents on April 24, 2020 with the Income Tax Authorities. Subsequent to the quarter ended June 30, 2020, the Income Tax Authorities on July 21, 2020, have approved the Company’s application for all the assessment years and all required formalities in relation to this have been duly completed.

As a result of the above, tax expense for the quarter ended June 30, 2020 includes the impact of reversal of current tax liability relating to earlier years of Rs.1,312 Mn, and net deferred tax charge of Rs.69,490 Mn (including provision against MAT credit Rs.48,083 Mn) aggregate to Rs.68,178 Mn.

On April 7, 2020, TRAI has released the Telecommunication

Interconnection Usage Charges (Sixteenth Amendment)

Regulations, 2020 ("Amended TRAI Regulation"). May 1, 2020, the International Termination rate has changed from existing fixed Rs.0.30 per minute to forbearance with a range of Rs.0.35 to Rs.0.65 per minute.

On August 17, 2020, TRAI issued recommendations on "Methodology of applying Spectrum Usage Charges (SUC) under the weighted average method of SUC assessment, in cases of Spectrum Sharing" clarifying that an increment of 0.5% on SUC rate should apply on the spectrum holding in specific band in which sharing is taking place, and not on the entire spectrum holding.

On August 27, 2020, TRAI issued direction granting the clearance for generating Unique Porting Code (UPC) if the outstanding payment due from post-paid subscriber in the previous bill is Rs.10 or less and non-payment disconnection request should not be raised if the amount is Rs.10 or less.

On November 12, 2020, DoT has issued clarifications on MRO. The salient points include:-

The coverage criteria already fullfilled by the licensee for a DHQ/ BHQ/ Rural SDCA utilising the spectrum acquired in 2010, 2012, 2013, 2014 and 2015 auctions in any band may be counted towards roll-out obligations of spectrum acquired in NIA-2016 as per DoT circular dated November 3, 2017. This would be applicable for metro service areas too.

It is proposed that in the event of shortfall in number of required DHQs/ BHQs/ R-SDCAs after considering the above, the same can be fulfilled either through their respective bands acquired through 2016 auction for which roll-out obligation are being considered or by revalidating the STRCs issued in respect of spectrum acquired in 2016 auction by the use of any technology in any band.

On November 25, 2020, DoT issued circular stating that Effective a period of 3 months is granted to regularise all COCP/ Bulk connections acquired using GST certificate as PoA. After the expiry of this period, un-regularised connections charge of acquired before November 21, 2020 shall be treated as non-compliant.

On December 17, 2019, TRAI issued its regulation on "The Telecommunication Interconnection Usage Charges (Fifteenth Amendment) Regulations" wherein the IUC for calls terminated on mobile has to be changed from

Rs.0.06 per MOU to Rs.0.00 per MOU effective January 1, 2021 and the same has been implemented.

The auction for sale of spectrum in different bands conducted by DoT began on March 1, 2021 and concluded on March 2, 2021. Airtel acquired 355.45 MHz spectrum across Sub GHz, mid-band and 2300 MHz bands for a total consideration of Rs.187,034 Mn. for a period of 20 years and has duly paid the upfront amounts and the FBGs under the deferred payment option to DoT. With this, Airtel has secured Pan India foot print of Sub

GHz spectrum that will help improve its deep indoor and in building coverage in every urban town. In addition, this precious spectrum will also help improve its coverage in villages by offering the superior Airtel experience to an additional 90 million customers in India.

Africa

New SIM Registration Rules in Nigeria

Following a directive issued by the Nigerian Communications Commission (NCC) on December 15, 2020 to all Nigerian telecom operators, Airtel Nigeria has been working with the government to ensure that all its customers provide their valid National Identification Numbers (NINs) to update SIM registration records.

Initially, new customer acquisitions were barred until significant progress had been made on linking the active customer base with verified NINs. Natural churn in the customer base led to a loss of 2.5 million active mobile customers in the final quarter of the year. However the financial impact has been minimal, with continued revenue growth in Nigeria, largely due to the significantly lower ARPU of the churned base and increased usage by the active base. In April, the NCC announced that it would allow new customer enrolment to recommence from certified outlets. Airtel Nigeria has, so far, received interim approvals for 800 outlets and new customer registrations have recommenced in those outlets accordingly.

The directive set an initial deadline of December 30, 2020, for customers to register their NIN with their SIM. This was subsequently moved several times with the latest deadline set for June 30, 2021.

New Shareholding Requirements in Kenya

On April 9, 2021, the Minister for ICT published an amendment to the National Information Communications and Technology

(ICT) Policy Guidelines, 2020 ("ICT Policy"). The ICT Policy amendment will affect Airtel Africa’s Kenya business as follows:

Airtel Networks Kenya Limited, which currently holds an indefinite exemption from the Minister for ICT, dated March 20, 2013, has three years with effect from April 9, 2021, to comply with the requirement to have a 30% local shareholding.

Airtel Money Kenya Limited, which holds a Content Service

Provider Licence from the Communications Authority of

Kenya, with effect from November 2020, has three years from the date of the licence to comply with the requirement to have a 30% local shareholding.

Under the amended ICT policy, a licensee may apply to the

Minister for ICT for an extension of time to comply with the requirement, or to obtain an exemption.

New Licence in Uganda

In December, Airtel Uganda Limited (Airtel Uganda) was issued a National Telecom Operator (NTO) Licence following a period of negotiation and transition to a new licensing regime. The new licence is in effect from July 1, 2020, for a period of 20 years until June 30, 2040. Airtel Uganda will retain all its current spectrum subject to the law and terms of assignment. The scope of services is the provision of basic telecommunication services, infrastructure services, and value-added telecommunication services. In addition, Airtel

Uganda commits to achieving a coverage of 90% of the geographical boundary of Uganda within five years of the effective date of the licence, with a minimum obligation of providing voice and data services.

Under the terms of the licence, Airtel Uganda has paid $74.6 million for the first ten years of the licence, which includes VAT of $11.4 million. After the first 10 years, Airtel will be invoiced for the licence fee for the remaining 10 years. Under Article 16 of the NTO, Airtel Uganda is obliged to comply with the sector policy, regulations and guidelines requiring the listing of part of its shares on the Uganda Stock Exchange. The current Uganda Communications (Fees & Fines) (Amendment) Regulations 2020, create a public listing obligation for all NTO licensees, and specifies that 20% be listed within two years of the date of the effective date of the licence.

Licence Renewal in Nigeria

In January 2021, Airtel Networks Limited ("Airtel Nigeria") announced that its application for renewal of the spectrum licences in the 900 MHz and 1800 MHz bands had been approved by the Nigerian Communications Commission ("NCC"). Pursuant to Section 43 of the Nigerian Communications Act, 2003 and Condition 20 of the Unified Access Service Licence (UASL), Airtel Nigeria applied to renew the UASL (operations licence) and spectrum licences in the 900 MHz and 1800 MHz bands, which would otherwise expire on November 30, 2021. Following the application, the NCC offered Airtel Nigeria the opportunity to renew its spectrum licences in the 900 MHz and 1800 MHz bands for a period of ten years, with effect from December 1, until November 30, 2031, which Airtel Nigeria accepted. Under the terms of the spectrum licences, Airtel

Nigeria paid 71.61 billion naira ($182 million) in respect of the licence renewal fees.

The UASL is still under consideration by the NCC, and formal confirmation of renewal is expected before the expiry date of November 30, 2021.

Financial Review

Standalone Figures

FY 2020-21

FY 2019-20

Particulars Rs. in Mn US$ Mn* Rs. in Mn US$ Mn* y-o-y % Change in Rs. terms
Gross revenue 643,259 8,655 543,171 7,680 18%
EBITDA before exceptional items 286,502 3,855 206,319 2,917 39%
Interest, depreciation and others before exceptional items 320,924 4,318 301,110 4,257 7%
Profit before exceptional items and tax -34,422 -463 -94,791 -1,340 64%
Profit before tax -184,652 -2,484 -510,209 -7,214 64%
Tax expense 67,324 906 -149,327 -2,111 145%
Profit for the year -251,976 -3,390 -360,882 -5,103 30%
Earnings per share (in Rs./US$)* -46.18 -0.62 -71.08 -1.00 35%

*1 USD = Rs.74.32 Exchange Rate for financial year ended March 31, 2021 (1 USD = Rs. 70.73 for financial year ended March 31, 2020)

Consolidated Figures

FY 2020-21

FY 2019-20

Particulars Y-o-Y%Change
Rs. in Mn US$ Mn* Rs. in Mn US$ Mn* in Rs. terms
Gross Revenue 1,006,158 13,538 846,765 11,972 19%
EBITDA before exceptional items 461,387 6,208 347,696 4,916 33%
Interest, Depreciation & others before Exceptional items 438,799 5,904 392,514 5,550 12%
Profit before exceptional items & tax 22,586 304 -44,819 -634 150%
Profit before tax -42,063 -566 -445,711 -6,302 91%
Tax expense 89,325 1,202 -125,124 -1,769 171%
Profit for the year -150,835 -2,029 -321,832 -4,550 53%
Earnings per share from continuing and discontinued operations (in Rs./US $)* -27.65 -0.37 -63.41 -0.90 56%

*1 USD = Rs.74.32 Exchange Rate for Rs. 70.73 for financial year ended March 31, 2020) yearendedMarch 31,2021 (1 USD =

Key Highlights

Recasting of Consolidated Financial statement on account of demerger of

Bharti Infratel Limited

The Indus Merger, which combined our former subsidiary Bharti Infratel with Indus Towers, was completed effective November 19, 2020. Following the Indus Merger, the 53.5% shareholding in Bharti Infratel was reduced to 36.7% in the merged Indus Towers entity. On December 2, 2020 and December 28, 2020, the company acquired an additional stake of 4.93% and 0.06%, respectively, in the merged Indus Towers entity, increasing its equity stake from 36.7% to 41.73% and hence Airtel no longer holds a controlling stake. Accordingly, all the financial and non-financial numbers for the past periods for

India, India SA and Consolidated operations have been recast to exclude the impact of Bharti Infratel Ltd.

Highest Consolidated Revenue

The Company witnessed the highest ever consolidated revenues of Rs.1,006,158 million (recasted revenue* Rs.969,992 million) for the year ended March 31, 2021, as compared to Rs.846,765 million (recasted revenue Rs.798,999 million) in the previous year, an increase of 18.8% (an increase of 21.4% on a recasted basis). Full year revenues of

India and South Asia stood at Rs.726,980 million as compared to

Rs.614,973 million in the previous year, an increase of 18.2% (up 21.8% on a recasted basis). Revenues across the 14 countries of Africa, in constant currency terms, grew by 19.4%. Increase in revenue is majorly led by customer addition on the back of strong demand for connectivity and solutions.

Operating Expense

The Company incurred an operating expenditure (excluding access charges, cost of goods sold, license fees and CSR costs) of Rs.338,482 million, representing an increase of 9.6% over the previous year.

Earnings Before Interest, Taxes,

Depreciation and Amortisation

Consolidated EBITDA at Rs.461,387 million increased by 32.7% over the previous year on reported basis. The Company’s

EBITDA margin for the year increased to 45.9% as compared to 41.1% in the previous year. Structural cost containment through our flagship "War on Waste" program helped in driving operational efficiencies and improving EBITDA margin.

Depreciation and Amortisation

Depreciation and amortisation costs for the year were higher by 8.5% to Rs.294,044 million as the Company continues to invest in the best of emerging technologies to create a future-ready network.

Earnings Before Interest and Taxes

Consequently, EBIT for the year was at Rs.166,177 million, increase by 119.7%, resulting in a margin of 16.5% vis-a-vis 8.9% in the previous year.

Earning After Tax

After accounting for exceptional items, the resultant consolidated net loss for the year ended March 31, 2021 stood at Rs.150,835 million as compared to net loss of Rs.321,832 million in the previous year.

CAPEX

The capital expenditure for the financial year ending March 31, 2021 was Rs.241,685 million.

Liquidity and Funding

As on March 31, 2021, the Company had cash and cash equivalents of Rs.80,859 million and short-term investments of Rs.40,781 million. During the year ended March 31, 2021, the Company generated operating free cash flow of Rs.219,702 million.

Net Finance Cost

Net finance costs at Rs.148,019 million were higher by Rs.19,868 million compared to previous year, mainly due to higher average borrowings during the year.

Earnings Before Taxes and Exceptional Items

Consequently, the consolidated Profit before taxes and exceptional items stood at Rs.22,586 million, compared to loss of Rs.44,819 million during the previous year.

Exceptional Items

Exceptional items during the year accounted for impact of

Rs.139,332 million, majorly comprising additional hit on account of license fees and SUC including interest thereon (AGR

Matter), adoption of new tax regime, partlyoffset by gain on deemed disposal of subsidiary.

The consolidated net debt excluding lease obligations for the Company stood at Rs.1,155,124 million as on March 31, 2021, compared to Rs.914,181 million as on March 31, 2020.

Consolidated net debt for the Company, including the impact of leases stood at Rs.1,485,076 million as on March 31, 2021. The net debt-EBITDA ratio (US$ terms LTM), including the impact of leases as on March 31, 2021, was at 3.26x as compared to 3.35x as on March 31, 2020. The net debt-equity ratio was at 2.52x as on March 31, 2021, as compared to 1.61x as on March 31, 2020.

Bonds Offering

Airtel completed its US$1.25 billion Dual-Tranche Senior 10.25 Year and Perpetual 144a/Regs US$ Bond offering. This was the largest issuance by any Indian Investment Grade issuer since January 2019. Airtel has priced US$750 million of senior 10.25 Year bonds at a yield of US 10 Year Treasury + 187.5 bps for an implied coupon of 3.25%. Simultaneously, Network i2i Limited, a wholly owned subsidiary of the Company, priced US$500 million in guaranteed subordinated perpetual NC 5.25 year bonds with a coupon of 3.975%. This is a lowest ever yield on 10 year and perpetual bonds for Airtel.

Key Ratios

The following table shows a summary of sector-specific key ratios:

Key Ratios Units FY 2020-21 FY 2019-20 Y-o-Y
Capex Productivity % 47.25 43.77 3 p.p.
Opex Productivity % 33.64 36.48 -3 p.p.
Interest Coverage Ratio Times 3.62 3.16 15%
Net Debt to Shareholders Equity Times 2.52 1.61 56%
EBITDA Margin % 45.86 41.06 5 p.p.
Net Profit Margin % -15.0 -38.0 23 p.p.
Return on Shareholders Equity % -22.17 -35.47 13 p.p.

Business Overview

Mobile Services

Overview

Airtel fortified its strong spectrum portfolio with the acquisition of 355.45 MHz spectrum across

Sub GHz, mid-band, and 2300 MHz bands for a total consideration of Rs.187,034 Mn in the latest spectrum auctions to serve the evolving needs of millions of customers in the rapidly digitising economy.

The Company continued to re-farm its 3G spectrum for 4G and modernise it for increasing 4G coverage and capacities, thereby providing its customers with an industry-leading network experience. As of March 31, 2021, the Company had 321.4 million customers in India. Customer churn decreased to 2.0% for the current year, compared to 2.5% during the previous year. The minutes on the network have increased by 18.7% to 3,603 billion. The Company had 188.6 million data customers at the end of March 31, 2021, of which 179.3 million were mobile 4G customers. The increased penetration through bundles with high inbuilt data has also led to the total MBs on the network growing by 54.8% to 32,541 billion MBs.

The Company continues to expand its reach within the digital space. Wynk Music remains one of the top 3 music streaming services in India. The performance metric underlines the massive user preference for Wynk Music when it comes to consuming music on smartphones it crossed 72.5 million monthly active users (MAU). Airtel Xstream, the video and LIVE TV streaming app from Airtel, crossed 37.5 million MAU, underlining its growing popularity amongst smartphone users as the go-to destination for digital content.

During the year, revenues increased by 20.9% to Rs.555,677 million as compared to Rs.459,663 million in the previous year. On a recast basis, revenues increased by 26.1% to Rs.519,510 million as compared to Rs.411,898 million in the previous year. The segment witnessed an increase in the EBITDA margin to 43.7% during the year, compared to 36.9% in the last year. The EBIT margin for the year increased to 5.9%, compared to (negative) 6.9% in the previous year.

The Company had 216,901 network towers, compared to 194,409 network towers in the last year. Mobile broadband (MBB) base stations numbered 606,783 at the end of the year, compared to 503,883 at the end of last year.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 555,676 459,663 21
EBIT 32,990 (31,853) 204

Data and Voice usage

Key Highlights

Strategic Alliances and Partnerships

Airtel continues to forge business partnerships with an aim to provide a seamless customer experience with a greater value proposition to end users.

Airtel and Qualcomm announced their partnership for 5G in India. Airtel’s network vendors and device partners will utilise the QualcommR 5G RAN Platforms to roll out virtualised and Open RAN-based 5G networks.

Aspart itsstrategyto to customers in India, Airtel announced a partnership with

VOOT to bring more premium digital content onto its Airtel Xstream platform.

Airtel partnered with the Government of Tamil Nadu to bring quality online learning classes to students in the state through Airtels digital platforms.

Continuing on its long-standing relationship, Airtel announced a strategic partnership with Nokia’s CloudBand-based software products that are powering Bharti Airtel’s VoLTE network in India, which supports over 110 million customers, making it the largest cloud-based VoLTE network in India and largest Nokia-run VoLTE in the world.

As a first in India, Airtel announced an agreement to deploy Altiostar’s open virtual radio access network (vRAN) solution The solution has 5G ready software and would provide seamless evolution to 5G using the same architecture.

Bharti Airtel selected Ceragon’s (Ceragon Networks Ltd.) products and services for additional 4G network expansions to address the growing demand for broadband amidst a sharp rise in data consumption across India.

First operator in India to deploy avRan based 4G network with 5G ready software

Mergers, Acquisitions and Disinvestments

Airtel concluded a host of M&A transactions as a part of its growth and diversification strategy and to harness economies of scale resulting from consolidations:

Bharti Airtel acquired a strategic stake in EdTech startup Lattu Media Pvt Ltd ("Lattu Kids"), AI focused startup

Voicezen and cloud technology startup, Waybeo as part of the Airtel Startup Accelerator Program.

Airtel via its wholly-owned subsidiary, Nettle Infrastructure Investments Limited, acquired 100% stake in OneWeb

India Communications Private Limited ("OneWeb"). OneWeb was incorporated on February 4, 2020 to provide satellite services and has applied for the necessary regulatory approvals to commence operations. UK-based Network

Access Associates Ltd, a OneWeb group company, is in the process of seeking foreign direct investment (FDI) approval for investment in OneWeb India Communications Private Ltd.

Network Expansion and Transformation

Airtel remains committed to delivering a world-class network experience to the high value customer through its various initiatives:

In March 2021 Spectrum Auctions, Airtel acquired 355.45 MHz spectrum across Sub GHz, mid band and 2300 MHz bands. With this, Airtel secured pan India foot print for Sub GHz spectrum that will help improve its deep indoor and in building coverage in every urban town.

Airtel achieved a major landmark, by becoming India’s, first telecom player to successfully test, demonstrate and orchestrate a live 5G service over a commercial network in Hyderabad city over its existing liberalised spectrum in the 1800 MHz band through the NSA (Non-Stand Alone network technology).

As part of its strategy to offer high speed 4G across the country, the Company has phased out its 3G services completely, for re-farming of 3G spectrum for 4G to ensure wider availability of Airtel 4G.

Digital Innovations and Customer Delight

In the face of rapidly changing customer demands, Airtel consistently remained on the path of digital innovations to nurture its customer journey across all touch points and to have a highly engaged customer force by providing exceptional customer experience:

Launched Airtel Ads, a brand engagement solution that uses deep data science capabilities to allow brands to curate consent based and privacy safe campaigns to

Airtel customers.

In a worldwide first, Amazon partnered with Airtel to launch its mobile-only video plan in India. Prime Video Mobile Edition makes high quality OTT entertainment accessible to hundreds of millions of Airtel prepaid customers.

Wynk Music India’s #1 music streaming app hosted LIVE online concerts on Navratri, Diwali, and New Year over its new platform Wynk Stage. The concerts set a new industry benchmark with 100,000 plus concurrent users.

In order to further increase penetration of our digital offerings, the Thanks app was launched in 11 vernacular languages.

Homes Services

Overview

The Company provides fixed-line telephone and broadband services for homes in 291 cities across India.

There has been an unprecedented surge in demand for home broadband in the last 12 months. Due to the ongoing pandemic, home broadband has become a necessity to enable work-from-home, e-learning, online entertainment, digital payments, and various other online services. The need for a robust and reliable fiber network is key to addressing the growth in demand for home broadband. During the year, the

Company continued to increase its coverage by rolling out a new fiber network through a combination of own infrastructure and local cable operator partnership model. Further, it continued to overhaul the network from Copper to FTTH to ensure that its customers enjoy higher speed and seamless connectivity.

The Homes business had 3.07 million customers as of March 31, 2021, representing a growth of 27.0% as compared to 2.41 million at the end of the previous year.

Revenues from Homes services stood at Rs.23,342 million for the year ended March 31, 2021, as compared to Rs.22,451 million in the previous year, witnessing an increase of 4%. EBITDA margin grew during the year to 57.6% as compared to 50.4% in the previous year. Over the same period of time, data traffic increased by 80% to reach 5,159 Mn GBs.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 23,342 22,451 4
EBIT 5,203 5,129 1

Key Highlights

Airtel launched it’s truly unlimited proposition in September,

2020, with simplified offerings, all home broadband plans are available with unlimited data under five plans in all markets starting from Rs.499 to Rs.3,999/month offering speed up to 1 Gbps. offering has been launched in close AirtelIntegratedhome to 400 cities Customers under this scheme are eligible for the following benefits one bill and one call centre, complimentary service visits, Wi-Fi router at no extra cost, Airtel Xstream box at discount, and extended warranty on DTH box.

Airtel not only offered unlimited data with reliably fast speeds but also bundled propositions. Users on basic and entry level plans got complementary subscriptions to Wynk Music and Airtel Xstream App. Users on entertainment and professional plans additionally got

OTT subscription for one year at no extra cost.

Airtel launched a unique proposition called ‘secure internet’ exclusively for its broadband users which offers a link level protection to all devices connected on a Wi-Fi and protect the users from any kind of online virus and malicious cyber-attacks.

Digital TV Services

Overview

Airtel Digital TV continues to expand its customer base, which crossed the 17 million mark during the year.

The Company has witnessed a step up in customer additions on the back of its premium HD content. Airtel Digital TV has 17.7 million customers on its Direct-To-Home (DTH) platform as of March 31, 2021. Airtel DTH is a pioneer in launching innovative products for its customers along with best-in-class customer service making it one of the fastest growing DTH operators with operations in 639 districts across the country. The Company currently offers 650 channels including 85 HD channels (including 3 HD SVOD services), 60 SVOD services, 6 international channels, and 2 interactive services. There was a key regulatory development in the television broadcast industry wherein TRAI notified the New Tariff Order -2 (NTO-2) w.e.f March 1, 2020. The Company has complied with the deadline set for implementation and has welcomed the move as it has the potential to usher in the next wave of digitised broadcasting across the country and is in line with its ethos of putting customers first.

To deliver modern-day entertainment services to its customers, Airtel Digital TV launched the Airtel Xstream 4K Android Box (Connected Box) in September 2019. During the year, the Company saw very strong demand for this first-of-its-kind android box and currently has 700,000+ active users. The Company also launched Airtel Xstream Bundle, which provides access to Linear Pay TV and OTT streaming Apps such as

Disney+ Hotstar, Amazon Prime Video, and ZEE5.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 30,562 29,238 5
EBIT 11,011 11,330 -3

Key Highlights

Airtel announced a partnership with Aakash EduTV and Vedantu to bring educational coaching direct at home, which will help millions of aspiring students to have easy access to high-quality educational content.

During the year, the Company collaborated with ZEEPlex, ZEE’s new Cinema2Home Service for showcasing new films on TV and digital platforms on pay-per-view (PPV) basis directly at home.

Airtel collaborated with TV panel makers, Samsung and MI, to bundle TV and DTH sales.

Airtel acquired 20% stake in Bharti Telemedia Limited from Warburg Pincus to increase its shareholding to 100%. This was discharged primarily by issuance of 36,469,913 equity shares of the Company on a preferential basis (face value of Rs.5 each fully paid share including a premium of Rs.595 per equity share) and a cash consideration of Rs.9,378 million, resulting in total consideration of Rs.31,260 million. Additionally, there will be mutually agreed pricing adjustments (not exceeding Rs.1,000 million) based on audited financial statements of Bharti Telemedia Limited for the year ended

March 31, 2021. The transaction was part of Airtel’s strategy to align the shareholding of its customer facing products, services and businesses under the same holding group. A full control and ownership over Bharti Telemedia allows Airtel to offer differentiated and converged solutions to customers so as to promote ‘One Home’ strategy.

Airtel Business

Overview

Airtel Business is India’s leading and most trusted ICT services provider offering a diverse portfolio of services to enterprises, governments, global carriers, OTT players and small and medium businesses. Revenue in this segment comprises a) Enterprise and Corporates Fixed Line, Data and Voice businesses, and b) Global Business, which includes wholesale voice and data.

Global Business, the international arm of Airtel Business, an integrated suite of global and local connectivity solutions, spanning voice and data to the carriers, Telcos, OTTs, large multinationals and content owners globally.

Airtel’s international infrastructure includes seven owned subsea cables and capacity on 33 other cables across various geographies.

Its global network runs across 365,000+ Rkms (including IRU) with over 1,200 customers, covering 50 countries and five continents and 65 global PoPs (Point of presence). This is further interconnected to its domestic network in India and direct terrestrial cables to SAARC countries, Myanmar and

China helping accelerate India’s emergence as a preferred transit hub.

Leveraging the direct presence of Airtel Mobile operations in 16 countries across Asia and Africa, the Global Business also offers mobile solutions (ITFS, signalling hubs, messaging), along with managed services and SatCom solutions. Global

Business is also providing advanced consumers solutions like IOT to global customers.

During the year, the Company launched many new product offerings to expand its portfolio 5G-ready IoT platform to drive the enterprise business, Airtel Secure, Airtel Work@Home to enable employees to operate efficiently and securely from their homes with a range of connectivity options, Verizon and Airtel Partnership to bring secure Enterprise-Grade BlueJeans Video Conferencing to India, Airtel and AWS partnership to offer customers a range of AWS services, and Airtel IQ.

Airtel Business launched Customer Advisory Board with the objective of making its customers equal stakeholders in its product development journey. The Board will have representation from Airtel’s top enterprise customers cutting across a diverse set of industries/sectors.

This business vertical witnessed a year of growth led by a surge in global and domestic data revenues. Revenues for the year grew by 9% as compared to the previous year. The Company continued to focus on winning in the core business while building upon new revenue streams and emerging businesses in the areas of IoT, Security and data centres.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 144,075 132,331 9
EBIT 39,750 31,754 25

Key Highlights

Airtel and National Small Industries Corporation (NSIC) joined hands to accelerate the digital transformation of MSMEs by providing access to Airtel’s Connectivity, Conferencing, Cloud, Security, and Go-to-Market solutions.

Airtel joined a select group of companies to be empanelled by Computer Emergency Response Team (CERT-IN) India’s

National Incident Response Center for cyber incidents to offer its cyber security solutions to Union and State governments as well as public sector entities.

Nxtra by Airtel signed an MoU with the Maharashtra Industrial Development Corporation for setting up two new data centre campuses in Mumbai and Pune to serve the growing demand for secure data centre services.

Airtel and IBM completed the first phase of Airtel’s open hybrid cloud network built with IBM and Red Hats portfolio of hybrid cloud and cognitive enterprise capabilities.

With this deployment, Airtel’s ecosystem partners will have a flexible foundation to build and deploy innovative applications on the cloud network.

Airtel announced a multi-year, Strategic Collaboration Agreement (SCA) with Amazon Web Services (AWS) to deliver a comprehensive set of innovative cloud solutions to large enterprise and small and medium enterprise (SME) customers in India.

On July 1, 2020, Airtel signed an agreement with Carlyle whereby Carlyle acquired approximately 25% stake in Airtel’s Data Centre business at a post-money enterprise valuation of US$1.2 billion, with Airtel continuing to hold the remaining stake of approximately 75%. This will help Nxtra to capture growing demand as data usage continues to surge.

To ensure B2B customers have superior experiences through digital channels, Airtel launched Airtel IQ a cloud based omnichannel communications platform that enables voice, SMS, IVR and more through a unified channel. Airtel IQ positions Airtel to becoming a major player in the fast-growing India cloud communications market that is already close to a billion dollars.

Airtel announced the launch of Airtel Secure - a comprehensive suite of advanced cyber security solutions to help businesses tide over potential cyber threats. Airtel also announced strategic partnerships with Cisco and Radware to bring world leading security solutions to the businesses.

Airtel Cloud, a partnership between Airtel and AWS will enable Airtel to develop differentiated Airtel Cloud products by leveraging its existing data centre capabilities, its network and telecom offerings.

Africa

Overview

The COVID-19 pandemic has contributed to a rapid acceleration of already existing macro trends across the countries where the Company operates, with people, businesses and governments seeking access to more and better connectivity and improved financial inclusion.

The unique circumstances of the year presented significant challenges to the business, particularly during the initial phase of the pandemic when growth in mobile money and services slowed. However, the actions taken by the Board in Q1FY21 enabled the continued execution of the Company’s strategy, including meeting increased customer demand for data, mobile money and mobile services. During the initial phase of the pandemic, mobile money revenue growth slowed to 26.3% as the business was impacted by social distancing measures and non-essential service closures, reducing customers’ ability to deposit and withdraw cash. Additionally, several governments asked mobile money operators to waive fees on certain transactions, including person-to-person and merchant payments. Afterward, as lockdown restrictions were generally eased and nearly all fees on transactions reinstated, revenue growth for the full year rebounded to 35.5%, reaching 38.7% in Q4, with mobile money contributing over 10.6% of Airtel Africa’s revenue in the quarter.

Financial and Operational Review

As on March 31, 2021, the Company had 118.2 million customers in Africa across 14 countries as compared to 110.6 million customers in the previous year, marking an increase of 6.9%. Customer churn for the year remained flat at 5.0% as compared to the previous year. Total minutes on the network during the year increased by 29.1% to 322.9 billion. Data customers increased by 5.1 million to 40.6 million accounting for 34.3% of the total customer base as compared to 32.0% in the previous year. The total MBs on the network has increased by 74.8% to 1,242.3 billion MBs with usage per customer increasing from 1,863 MBs to 2,686 MBs. Total sites in Africa as on March 31, 2021 were 25,368 of which 23,826 were mobile broadband towers, representing 93.9% of the total sites.

In INR reported currency, Airtel Africa revenues grew by 19.2% to Rs.288,633 million as compared to Rs.242,171 million in the previous year. The Company’s continued focus on running operations efficiently and cost effectively has resulted in EBITDA of Rs.132,980 million for the year as compared to Rs.107,259 million the previous year, leading to an increment of 24%. Consequently, EBITDA margin improved by 1.8 p.p. to 46.1% compared to 44.3% in the previous year. Depreciation and amortisation charges were at Rs.50,561 million as compared to Rs.42,786 million in the previous year. EBIT for the year was at Rs.81,957 million as compared to Rs.64,131 million in the previous year. PBT for the full year was at Rs.50,289 million as compared to Rs.37,439 million in the previous year. The full year capex was at Rs.45,429 million as compared to Rs.45,838 million in the previous year.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 288,633 242,171 19
EBIT 81,957 64,131 28

Mergers, Acquisitions and Licenses

In March 2021, Airtel Africa signed agreements with both TPG’s The Rise Fund and Mastercard who will invest $200 million and $100 million respectively into Airtel Mobile Commerce BV ("AMC BV"), a wholly owned subsidiary of

Airtel Africa plc. These transactions value Airtel Africas mobile money business at $2.65 billion on a cash and debt free basis.

In May 2020, Airtel Africa announced a partnership with UNICEF aimed at providing children with access to remote learning and enabling access to cash assistance for their families via mobile cash transfers benefiting an estimated by school closures 133millionschoolagechildren across sub-Saharan Africa.

Airtel Africa entered into several strategic partnerships with MoneyGram, Mukuru and WorldRemit. Through these partnerships, more than 20 million Airtel Money customers in 12 countries can transfer and receive funds across the globe directly from and into their mobile money wallets on their phone.

In September 2020, Airtel Africa announced an expansion of its partnership with Mastercard by launching a Pay-on-Demand payments platform and drive the digital economy across Africa. The partnership facilitates usage-based payments and builds creditworthiness.

In August 2020, Airtel Africa announced a strategic partnership with Standard Chartered Bank, a leading internationalbankinggroup,todrive across key markets in Africa by providing customers increased access to mobile financial services.

Network Transformation and Digital Innovations

In June 2020, Airtel Malawi plc was allocated 10 MHz of spectrum in the 2600 band. In October, additional spectrum of 10 MHz in the 2600 band and 5 MHz in the 1800 band was allocated to Airtel Uganda. In December, Airtel Chad received 5 MHz of spectrum in the 900 band and Airtel Zambia received 10 MHz in the 800 band.

In early March 2021, the Group signed agreements to sell its telecommunications tower companies in Madagascar and Malawi to Helios Towers plc ("Helios Towers"), a leading independent telecommunications infrastructure company in Africa. The Groups tower portfolios in these two markets together comprise 1,229 towers, which form part of the Groups wireless telecommunications infrastructure network. The aggregate gross consideration for the transactions is expected to be approximately $108 million.

South Asia

Overview

Full year revenue for South Asia was at Rs.4,247 million as compared to Rs.4,552 million in the previous year. EBITDA for the year was at Rs.131 million as compared to Rs.430 million in the previous year. EBIT losses for the year stood at Rs.1,321 million as compared to loss of Rs.1,055 million in the previous year. Capex for the year was Rs.3,686 million as compared to Rs.1,025 million in the previous year.

Particulars FY 2020-21 FY 2019-20 Y-o-Y Growth
Rs. Mn Rs. Mn %
Gross Revenues 4,247 4,552 -7
EBIT (1,321) (1,055) -25

Share of Associates/Joint Ventures

Quarter Ended

Bangladesh Unit Dec-2020 Sep-2020 Jun-2020 Mar-2020
Operational Performance
Customer Base 000s 50,901 50,126 47,977 49,718
Data Customer as % of Customer Base % 69.2 69.2 67 64.9
ARPU* BDT 121 124 115 124
Financial Highlights (proportionate share of Airtel)
Total revenues Rs. Mn 5,122 5,304 4,272 4,139
EBITDA Rs. Mn 2,037 2,162 2,170 1,673
EBITDA / Total revenues % 39.8 40.8 50.8 40.4
Net Income Rs. Mn 103 107 146 40

*As per Axiata published financials.

Key Operational and Financial Performance

Quarter Ended

Ghana Unit Mar-2021 Dec-2020 Sep-2020 Jun-2020
Operational Performance
Customer Base 000s 4,935 4,925 5,106 4,769
Data Customer as % of Customer Base % 54.5 55.9 56.2 59.4
ARPU GHS 12.4 12.4 12.4 12.7
Financial Highlights (proportionate share of Airtel)
Total revenues Rs. Mn 1,159 1,182 1,183 1,182
EBITDA Rs. Mn 189 217 88 99
EBITDA / Total revenues % 16.3 18.4 7.5 8.4
Net Income* Rs. Mn - (2,872) (1,841) -

*The share of loss in JV has been restricted to the remaining value of the investment.

Key Operational and Financial Performance

Quarter Ended

Airtel Payments Bank Limited Unit Mar-2021 Dec-2020 Sep-2020 Jun-2020
Operational Performance
Active Users 000s 29,090 22,152 19,430 15,759
Financial Highlights (proportionate share of Airtel)
Total revenues Rs. Mn 1,753 1,581 1,053 634
EBITDA Rs. Mn (538) (767) (1,036) (1,022)
EBITDA / Total revenues % -30.7 -48.5 -98.4 -161.1
Net Income Rs. Mn (567) (794) (1,062) (1,057)

Key Highlights

Airtel Payments Bank has partnered with Mastercard to develop customised products catering to customers across the under-banked spectrum including farmers, small and medium enterprises, and retail customers.

To protect Airtel customers from the growing incidents of online payment frauds, Airtel Payments Bank launched ‘Airtel Safe Pay’ – India’s safest mode for making digital payments. With ‘Airtel Safe Pay’, Airtel customers making UPI or netbanking based payments through Airtel Payments

Bank, no longer have to worry about money leaving their accounts without their explicit consent.

Airtel Payments Bank announced 6% p.a. interest on deposits over Rs.1 Lakh. This follows Airtel Payments Bank becoming the first payments bank to implement the enhanced day-end savings limit of Rs.2 lakh as per the

Reserve Bank of India (RBI) guidelines.

Key Operational and Financial Performance

Quarter Ended

Indus Towers Limited Unit Mar-2021 Dec-2020 Sep-2020 Jun-2020
Operational Performance
Total Towers Nos 179,225 175,510 172,094 169,630
Total Co-locations Nos 322,438 318,310 314,106 310,627
Average Sharing Factor Times 1.81 1.82 1.83 1.84
Financial Highlights
Total revenues Rs. Mn 64,918 67,361 63,591 60,859
EBITDA Rs. Mn 34,129 36,080 31,179 31,187
EBITDA / Total revenues % 52.6 53.6 49.0 51.2
Net Income Rs. Mn 5,691 4,137 3,210 3,250
(Proportionate share of Airtel)

*Operational and financial performance represents recasted numbers of the

Outlook

The global economy, including that of India, will see some short-term impact of the pandemic due to multiple mutations of the COVID-19 virus and new waves of infection. However, the success of the vaccination drive in India and elsewhere offers a ray of hope.

Flattening of the infection curve and easing of restrictions will, in turn, lead to the revival of economic activity across the globe. Even if the pandemic’s direct impact of public health is mitigated, its long-term effect in the form of the paradigm shift in behavioural pattern, such as acceptance of remote working, increased content consumption and higher dependence on digital payments, is undeniable. Telecom services, which acted as the key enabler of economic activities during the pandemic, will also be the foundation on which these new trends will be built. Additionally, increasing smartphone penetration will fuel the 2G to 4G uptrading, opening up higher revenue opportunities for the telecom service providers in terms of data subscribers. Supplementing plain vanilla connectivity services, additional digital services will gain traction going forward. On the B2C front, acceptance and usage of OTT content services, music streaming and e-commerce is expected to witness growth. As for B2B, enterprises are expected to witness increased demand for new age services including data centres, cloud, digital advertising and security solutions.

The telecom sector in Africa continues to have a positive outlook with increasing purchasing power, rapid urbanisation, rising middle class and growing smartphone penetration. Increasing adoption of data services with enhanced high speed 3G/4G connectivity in the region is fuelling the growth of the mobile broadband segment. Also, the focus on improving financial inclusion in the region is creating opportunities for mobile money services.

With Airtel’s emergence as a premier digital communications company with its suite of services including mobile wireless, home broadband, DTH, enterprise connectivity, data centres, security, clouds and cloud communication, video conferencing,

AdTech and many more the Company is well-positioned to capture a much bigger pie in the market opportunity across different segments. The ability to offer digital services, one-home solutions through quad play (mobile, landline, broadband, DTH) and bundled offerings to enterprises, puts Airtel in a sweet spot to participate in and accelerate the digital wave in the country.

Strengths

Prominent Player: One of the leading telecom players in India and #2 globally in terms of consolidated mobile connections; ranking 1 & 2 in 12 out of 14 African countries.

Brand Recognition: Strong, well-recognised and unified brand across all geographies where present. Services at Scale: Serving over 471 million customers across 18 countries in multiple segments including mobile services, home broadband, digital TV, enterprise business, digital services and mobile money; more than 200 mn MAUs on digital assets in India.

Expanding Digital Platform: Robust digital services comprising Wynk Music, Airtel Xstream, Airtel Thanks, Airtel IQ, Airtel Ads, Airtel Secure.

One Home: offer full Onlyoperatorwithpotentialto fixed voice, gamutofservicestohighvaluehomes:mobile, broadband and DTH.

Robust Network: Future proof and 5G ready network. Strengthened network even further with acquisition of over 355 Mhz of additional spectrum. Rated as the network with the India’s best video, gaming and voice app experience (Opensignal Awards India: Mobile Network Experience Report March 2021).

Strong Partnerships: Forged strategic partnerships with hundreds of companies across the world to enable delivery of an array of consumer and enterprise services through the Airtel platform.

Omni-Channel Capabilities: Strong network of stores and a digital layers over has enabled a well stitched omni-channel delivery model where a customer orders online and has it delivered straight at the home. With

COVID-19-related restrictions, this has become even more important enabling the business to serve the customers in a safe and contactless manner.

Challenges

Operation integration: Integrating operations and leveraging common platform across geographically and demographically diverse regions such as India, South Asia and Africa.

Evolving Customer Requirements: Understanding evolving customer perceptions in a fast-changing multi-cultural and multi-lingual environment.

Opportunities

Smartphone Penetration: India’s wireless mobile broadband penetration at ~64% is still low; as customers uptrade from feature phone to smartphones, demand is expected to increase.

Digital Flywheel: Creating an ecosystem for additional digital services including music, and content by leveraging data, network, payment and distribution assets to deliver the services and capture future growth.

Strategic Collaborations: Exploring the multitude of business partnership opportunities for enhancing customer experience and winning new customers. Remote Working: With work from home gaining traction along with habit changes, the existing home broadband footprint can be leveraged to capture new opportunities.

Digital payments: Indias digital payment space is expected to grow at 25%+ CAGR over FY 2020-25 to reach 7,092 lakh crores (as per India Trend Book Report 2021). The African market, which is currently underpenetrated, also holds a lot of opportunity in the space.

Content Demand: On an average, a person spends more than four hours a day on the mobile, with video consumption contributing majority of the data consumption. As per MPA report, Indias overall online video market is expected to grow at 26% CAGR to reach $4.5 billion by 2025.

Non-mobile Businesses: India currently has less than

10% fixed broadband penetration and only 40% homes have DTH connectivity. Along with pure connectivity solution opportunities with large enterprises and SMEs, new age businesses are also gaining momentum in the B2B space.

Improved Industry Dynamics: Consolidation through mergers and exits of various telcos along with tariff hike improved industry dynamics.

Threats

Increased Competition: Probability of future pressure on Average Revenue Per User (ARPU) due to increased price competition or entry of new players in the markets where the Company operates.

Regulatory Changes: Possible political instability and uncertainties in the economic environment across regions along with any adverse litigation verdict.

Currency Exposures: Volatility in currencies due to global macro-economic uncertainties, global trade tensions and the ongoing pandemic.

Pandemic/Disaster: Any pandemic or natural disaster like the current COVID-19 health crisis in the geographies where the Company runs operations.

Material Developments in HR

Last year was filled with unprecedented challenges and the people function at Airtel evolved with the ever-changing dimensions of the crisis by showcasing agility, creativity and flexibility. As employees started logging in remotely, the HR team stepped in to facilitate the functioning of the virtual workplaces. Guidelines to ensure that employees could manage WFH seamlessly and securely were quickly defined and disseminated. Employees had to be supported with infrastructure — laptops, data cards – to ensure business continuity. A slew of measures was undertaken to accelerate digitalisation of HR functions in order to continue enriching the talent pool for the Company.

Internal Controls

The Company’s principles of internal control is based on the principle of sustainable growth and proactive risk management. A robust framework of internal controls has been implemented across the circles and business jurisdiction to facilitate efficient conduct of business operations in accordance with the Company policy.

This includes consistent, impartial, easy to decipher and complete representation of the financial results, adherence to all regulatory and statutory compliances and preservation of investor interest by ensuring the most stringent governance protocols. The framework regularly evaluates the performance of circles and countries as measured in accordance with the predefined objective metrics and scorecards.

Accounting sterility and audit scores are maintained by the central financial reporting team and Airtel Centre of

Excellence (ACE). Both the teams are responsible for ensuring the accuracy of books of accounts, preparation of financial statements and reporting the same in line with the Company’s accounting policies. Regulatory and legal requirements, accounting standards, and other pronouncements are evaluated regularly to assess applicability and impact on financial reporting. The relevant financial reporting requirements, as documented in the Group Accounting Manuals, are communicated to pertinent units and enforced throughout the Group. This, together with the reporting calendar that lays down the tasks and timelines, forms the basis of the financial reporting process. Deloitte Haskins & Sells LLP, the Statutory Auditors, have done an independent evaluation of key internal controls over financial reporting (ICOFR) and expressed its opinion that the Company has, in all material respects, adequate internal control over financial reporting; and such internal controls over financial reporting were operating effectively as on March 31, 2021.

The Company has in place an Internal Assurance (IA) function headed by the Chief Internal Auditor. EY and ANB & Co (ANB) are the Assurance Partners of the Company, and conduct financial, compliance and process improvement audits on a periodic basis. The internal assurance plan for the year is derived on the basis of a bottom-up risk assessment and the directional inputs from the Audit Committee. The Committee oversees the scope and coverage of the IA plan, and evaluates the overall results of these audits during the quarterly Audit Committee meetings. Additionally, separate quarterly Audit financial Committee meetings are also held to review the progress made on previous gaps identified by Internal Assurance. The functional Directors join the meeting as and when necessary to provide updates on developments regarding the status of controls and compliance within their respective functions and progress of any transformational projects undertaken.

Internal Assurance also assesses the effectiveness of Internal Financial Controls (IFC). No material weaknesses in the design or operation were observed for the current financial year. A certificate from the CEO and CFO form part of the Report on Corporate Governance Report, confirming the existence and effectiveness of internal controls, and reiterating their responsibilities to report deficiencies to the Audit Committee and rectify the same. The Company’s Code of Conduct requires compliance with the law and all Company policies, and also covers matters such as financial integrity, avoiding verification have shown conflicts of interest, workplace behaviour, dealings with external parties and responsibility to the community.

The Airtel Centre of Excellence (ACE) based in Gurugram and Bengaluru is the in-house shared service for financial accounting, Revenue Assurance, SCM and HR processes.

Digitisation of ACE is being aimed as a part of the transformation agenda and includes initiatives such as system-based reconciliation, reporting processes with vividly defined segregation of duties. The Company operates on a single instance of Oracle across all operating units, thereby ensuring uniformity and standardisation in ERP configurations, chart of accounts,finance and SCM processes across countries. Airtel continuously examines its governance practices to enhance investor trust and improve the Board’s overall effectiveness. Initiatives such as virtual desktop interface for ultimate data security, self-validation checks, desktopreviewsandregularphysical substantial improvement in control scores across India and Africa. Further, Oracle Governance Risk & Compliance

(GRC) module has been implemented for India and Africa to strengthen existing controls pertaining to access rights for various ERPs, ensuring segregation of duties and preventing possibilities of access conflicts.

Risk and Mitigation Framework

Airtel explores new markets and business models across the world; evolves new ways of customer and stakeholder engagement; enters into new strategic partnerships; adopts new technologies; and builds exponential efficiencies in existing systems.

While these initiatives unveil a universe of possibilities, they also spawn potential risks and uncertainties. The distress signals need to be picked up and addressed with urgency for smooth operations. Therefore, the Company has created a robust risk management framework in its operating landscape that caters to strategic, legal, financial, operational and climate risks. The Company has a sound practice to identify key risks across the Group and prioritise relevant action plans for mitigation. The key risks that may impact the Company and mitigating actions undertaken by the Company comprise:

Key risks that may impact Airtel

Potential risks Risk definition
1 Regulatory and political uncertainties Volatility and uncertainty in macro environment with geo-political tensions in India, Sri Lanka and 14 African countries.
2 Economic uncertainties Business operations might be impacted with instability in economies in its countries of operations erest rates, capital controls and currency fluctuations. int duetofactorslikeinflation,
3 Poor network infrastructure Risks in network infrastructure cost due to technical failures, human errors and natural disasters. Dynamic changes in IT landscape require constant upgradation of technologies.
4 Fiercely competitive battleground Unprecedented disruption and unfair pricing may lead to competition and may lead to erosion of revenue with loss of customers. Further, evolving customer expectations in terms of quality, variety, features and pricing pose threat to business sustainability.
5 Data loss prevention Risk of data loss can lead to accidental exposure of confidential information across all endpoint devices.
6 Operating expenses Increase in business operating expenses (new site rollouts, capacity) and/or rate increases (inflation, forex impacts, wage hikes, energy, etc.).
7 Network experience Telecom companies are required to invest in innovation to match with changes in industrial landscape to provide high-quality customer experience and meet the increased customer demand for a stronger and better network connectivity.
8 Internal controls and processes Any gaps in internal controls and/or process compliances not only lead to wastages, frauds and losses, but can also adversely impact the Airtel brand.
9 Digitisation and innovations Rapid technology evolution may impact the business functionality and lead to slowdown in business.
10 Climate change Increasing carbon footprint is a serious concern which raises questions on business credibility and sustainability in the long term.

Regulatory and Political Uncertainties (Legal & Compliance) Outlook from last year > Emerging

Definition

Airtel operates in India, Sri Lanka and 14 African countries. Some of these countries (or regions within countries) are affected by political instability, civil unrest, pandemic and other social tensions. Due to the COVID-19 outbreak, some of these countries have implemented social distancing norms, imposed other restrictions and issued lockdown orders in many areas, thereby restricting movement of people and mandating closure of offices, shops and commercial establishments, among others. Uncertainties with respect to duration of such restrictive orders still loom large. Besides, the political systems in a few countries are also fragile, resulting in regime uncertainties. Such conditions tend to affect the overall business scenario. In addition, regulatory uncertainties and changes, like escalating spectrum prices, subscriber verification norms and penalties, and EMF norms are potential risks to the business.

Mitigation actions

As a responsible corporate citizen, the Company engages proactively with key stakeholders in the countries in which it operates; and continuously assesses the impact of the changing political and social scenario. The Company contributes to the socioeconomic growth of these countries through high-quality services to customers, improved connectivity, direct and indirect employment, and contribution to the exchequer. It also maintains cordial relationships with governments and other stakeholders. The Country MDs and Circle CEOs carry direct accountability for maintaining neutral government relations. Through its CSR initiatives (Bharti Foundation), it contributes to the social and economic development of community, especially in the field of education.

The Company actively works with industry bodies like the Cellular Operators Association of India (COAI), the Confederation of Indian Industry (CII), the Associated

Chambers of Commerce of India (ASSOCHAM), GSMA, the

Internet Service Providers Association of India (ISPAI) and the Federation of Indian Chambers of Commerce & Industry

(FICCI) on espousing industry issues, e.g., penalties, right of way, tower sealing, among others.

The regulatory team along with legal and networks keeps a close watch on compliances with regulations and laws and ensures the operations of the Company are within the prescribed framework.

The Company has proactively implemented business continuity plans and has effectively enabled a ‘work from home’ facility for all the employees by providing necessary

IT infrastructure and network security. Further, considering that the Company is engaged in the business of providing telecommunications services, which are recognised as ‘essential’, the Company engages with government authorities and ensures that requisite support by way of permissions for movement of employees or engineers, network equipment, supply chain, etc., is extended by the government to facilitate uninterrupted operations and maintenance of telecom network. The Company has devised effective communication plan and support mechanism for the safety and security of its employees.

Economic Uncertainties (Operational) Outlook from last year > Stable

Definition

The Company strategically focuses on growth opportunities in emerging and developing markets. These markets are characterised by low to medium mobile penetration, low internet penetration and relatively low per capita income, thus offering more growth potential. However, these markets fall under countries which are more prone to economic uncertainties, such as capital controls, inflation, interest rates and currency fluctuations. As the Company has borrowed in foreign currencies, and many loans carry floating interest terms, it is exposed to market risks, which might impact its earnings and cash flows. These countries are also affected by economic downturns, primarily due to commodity price fluctuations, reduced financial aid, capital inflows and remittances. Slowing down of economic growth tends to affect consumer spending and might cause a slowdown in the telecom sector.

Mitigation actions

As a global player with presence across 18 countries (including Ghana & Bangladesh), the Company has

wide services portfolio including voice, data, payments, digital and value-added services helps widen its customer base.

To mitigate currency risks, the Company has hedging mechanisms in place to protect cash flows. No speculative positions are created; all foreign currency hedges are taken on the back of operational exposures. A prudent cash management policy ensures that surplus cash is up-streamed regularly to minimise the risks of blockages at times of capital controls. It has specifically many foreign currency-denominated operating expenditure and capex contracts in Africa and converted them to local currencies, thereby reducing foreign currency exposure.

To mitigate interest rate risks, the Company is further spreading its debt profile across local and overseas sources of funds and to create natural hedges. It also enters in interest rate swaps to reduce interest rate risk.

The Company adopts a pricing strategy that is based on the principles of mark to market, profitability and affordability, which ensures that the margins are protected at times of inflation, and market shares at times of market contraction.

Poor quality of networks and information technology including redundancies and disaster recoveries (Operational) Outlook from last year > Stable

Definition

The Company’s operations and assets are spread across geographies. Telecom networks are subject to risks of technical failures, partner failures, human errors, or wilful acts or natural disasters. Equipment delays and failures, spare shortages, energy or fuel shortages, software errors, fiber cuts, lack of redundancy paths, weak disaster recovery fallback, and partner staff absenteeism are a few probable causes of network.

The Company’s IT systems are critical to run customer-facing and market-facing operations, besides running internal systems. In many geographies or states, the quality of IT connectivity is sometimes erratic or unreliable, which affects service delivery, e.g., recharges, customer query, distributor servicing, customer activation, billing, among others. In several developing countries, the quality of IT staff is not adequate, leading to instances of failures of IT systems and/or delays in recoveries. The systems landscape is ever changing due to newer versions, upgrades and ‘patches’ for innovations, price changes, among others. Hence, the dependence on IT staff for turnaround of such projects is huge.

Mitigation actions

The Company has state-of-the-art Network Operations Centre for India as well as Africa to monitor real-time network activity, and to take proactive and immediate action to ensure maximum uptime.

Network Planning is increasingly being done in-house, to ensure that intellectual control on architecture is retained within the Company. It continuously seeks to address issues (congestion, indoor coverage, call drops, modernisation and upgrade of data speeds, among others) to ensure better quality of network. Recent efforts also include transformation of the microwave transmission, fiber networks, secondary rings/links and submarine cable networks. The Company consistently eliminates systemic congestion in the network, and removes causes of technical failures through a quality improvement programme, as well as embedding redundancies and carry out internal checks to ensure all preventive and corrective actions as per process are in place to ensure network availability and quality to end users.

Tighter SLAs are reinforced upon network partners for their delivery. The Company’s Network Team performance is measured, based on network stability, customer experience and competitor benchmarking. The Company follows a conservative insurance cover policy that provides a value cover, equal to the replacement values of assets against risks such as fire, floods and other natural disasters. Disaster management guidelines have been shared with all stakeholders to ensure that all actions are in place covering identification of risk, preparedness for disaster, resource allocation, emergency response and reporting, and disaster recovery. Network recovery plan (NRP) is being followed by all circles as per the BCP guidelines.

The Company shares infrastructure with other operators and enters into SLA-based outsourcing arrangements.

It has been proactively seeking sharing relationships on towers, fiber, VSAT, data centres and other infrastructure. The disposal of towers in Africa to independent and well-established tower companies and long-term lease arrangements with them will ensure high quality of assets and maintenance on the passive infrastructure. The

Company has put in place redundancy plans for power outages, fiber cuts, VSAT breakdowns, etc., through appropriate backups such as generators, secondary links, among others. Similar approaches are deployed for IT hardware and software capacities; and internal IT architecture teams continuously reassess the effectiveness of IT systems.

Operational process such as alarm management, preventive maintenance and acceptance testing are being constantly automated with a vision to move towards zero-touch operations. Airtel works with its partners to enhance network availability and reduce failures. Spare management and repair processes are streamlined to ensure no spare shortages.

Continuous removal of single point of failure (SPOF) on fiber routes and equipment level is being done. To improve transport resiliency, BSC, Core nodes Interconnectivity and signalling links are being shifted on the MPLS network.

Digitisation of operations using automation and machine learning tools and methodologies would help improve customer experience through proactive identification of congested spots which could result in complaints, faster root-cause analysis and resolution.

Fiercely competitive battleground (Operational) Outlook from last year > Stable

Definition

The Prepaid market continues to be highly competitive and price sensitive. With consolidation in the industry, simplicity has kicked in, offering lesser number of plans, and the industry is moving towards offering tech-enabled solutions to the trade and customers.

Customer mindsets and habits are shifting rapidly, reflected in their ever-rising expectations in terms of quality, variety, features and pricing. The competitive landscape is also changing dramatically, as operators vie for customers and revenue market shares. This is not only accelerating customer migration from legacy 2G/3G networks to high-speed 4G networks, but is also driving the shift from the offline mode of recharge to an online one.

Competition for 4G share is seen through a high push for device upgrades by operators, in order to retain maximum customers on their 4G networks. This may give rise to subsidies for new 4G device purchase on top-selling smartphone brands, which would sustain or get more aggressive.

The same driving factor of acquiring 4G share has compelled competitors to pour in huge amounts of money for MNP acquisition programmes. The push is expected to get even stronger with the increasing adoption of 4G phones, and a good and affordable network experience on those becoming a key factor for customers.

Further, with an increased number of customers using the online mode Airtel’s app as well as third-party apps the importance of giving a push through these channels may go up.

The Company might see heightened competitive intensity in its non-wireless businesses on account of aggressive pricing by other competitors leading to erosion of revenue and customers. In the mobility business, the Company may face a risk of deeply discounted VoLTE feature phone pricing from new entrant. Content is becoming a major deciding factor for a customer to choose the operator.

The continued focus of the Company remains on the upgrade of the customers from the existing 2G technology to the data rich 4G technology. To this effect, the recent announcement of low-price smartphones by one of the competitors may put a risk on customer upgrades from this segment.

Mitigation action

In a major step towards simplification of customer journey, the Company had envisioned the task to streamline the product portfolio. Over the years, lot of redundancies which got created in the product portfolio were simplified by eliminating over 60% of unused products.

The simplification drive was initiated with the introduction of Smart Combo recharges, with price range starting from Rs.50. These all-in-one packs provide the benefits of data, tariff and talk time to the customers in a single denomination.

Now customers do not need to purchase different packs; rather one pack will provide all the benefits.

In order to derive higher extraction and enhance ARPUs from the dormant base that enjoyed free services, the

Company introduced plans with minimum recharge commitment, which required customers to do a monthly recharge to use the services. It was done keeping the affordability factor in mind.

The acquisition processes were further strengthened by launching mandatory first recharge. Emphasis was laid on acquiring customers on unlimited bundle packs. The continued monitoring of customer acquisition process like new customer acquisition churn, high acquisition recharge denominations, direct distribution, trade margins structures have yielded good results.

Further, with an increased number of customers using the online mode Airtel app as well as third-party apps, the

Company must stay competitive and ahead of the curve in this space. Technology will play the role of a huge enabler.

In order to mitigate the recent announcement of a low-price smartphone by one of the competitors, Airtel is evaluating multiple options to stay competitive in this segment.

Data Loss Prevention (Operational) Outlook from last year > Stable

Definition

Personal data is any information relating to a customer, whether it relates to their private, professional, or public life. In the online environment, where vast amounts of personal data are shared and transferred around the globe instantaneously, it is increasingly difficult for people to maintain control of their personal information. This is where data protection comes in.

Data protection refers to the practices, safeguards, and binding rules put in place to protect personal information and ensure that the person concerned remains in control of it. In short, a person should be able to decide whether or not to share some information, who has access to it, for how long, for what reason, and be able to modify some of this information, and more. Data protection must strike a balance between individual privacy rights, while still allowing data to be used for business purposes while adhering to data privacy norms and regulations. Efforts to update regulations regarding privacy and personal data protection are underway in several countries and regions, most notably the European Union, which has introduced the General Data Protection Regulation (GDPR) package.

Compliance requirements for operators are in flux, particularly as regulators seek to strike a balance between consumer protection and national security needs. India is also close to having its own data protection law.

Mitigation actions

Airtel’s customer base has been expanding at a tremendous rate. The Company also collects and processes a large amount of personal information belonging to employees, temporary staff and third-party personnel. These facts, coupled with the introduction of innovative value-added services, have led to an increase in personal information handled by Airtel. The Company is committed to ensuring that privacy of personal information is maintained during its entire lifecycle, through the implementation of stringent processes and relevant technologies.

Bharti Airtel Information Privacy Policy (BIPP) is in alignment with the Information Technology (IT) Rules 2011 and best practices of industry and GDPR. Airtel’s privacy policy provides management direction and support to ensure privacy of the personal information collected, to allow collection, processing, retention, dissemination and destruction of the personal information in accordance with the appropriate laws, regulations and contractual obligations.

Bharti Airtel Information Privacy Policy (BIPP) is applicable to all employees of Airtel and that of third parties (including strategic partners) who have access to personal information of customers, employees and vendors. The BIPP is applicable across all business functions and across all geographies including Airtel centres, all circles and other Airtel locations.

Data leakage protection (DLP) is a strategy for making sure that those in possession of sensitive information do not advertently or inadvertently share that information outside the virtual boundaries of the corporate network. The term is also used to describe software products that help organisations control what data end users can transfer. The data leakage prevention strategy at Airtel has been designed to protect information at their most vulnerable points, i.e., at the endpoint, at the web layer, and at the email layer. All Airtel endpoints are equipped with specialised software.

This helps monitor various channels for potential data leak.

Should a violation be detected, an alert is generated and/or the data transfer request is blocked in real time. Similar solutions are deployed on the central email gateway and web gateway, to monitor emails and internet bound traffic, respectively. A centralised team reviews the alerts and raises an incident for investigation and consequent actions. All incidents are tracked to closure in a time-bound manner. Additionally, a monthly review of all incidents and their closure is conducted, to enable the organisation to regularly refine the existing policies.

Increase in cost structures ahead of revenues thereby impacting liquidity (Operational/Strategic) Outlook from last year > Stable

Definition

Across markets, costs structures have been increasing both from volumes (new site rollouts, capacity) and/or rate increases (inflation, foreign exchange impacts, wage hikes, energy prices, etc.). With increasing competition from other operators, market pricing has been dampened, putting pressure on margins and cash increased debt (leverage). Increased investments in network to ensure quality of service, continued spends on distribution and maintaining world class customer service are expected to remain, thereby elevating debt levels.

Mitigation actions

The Company has institutionalised the War on Waste

(WOW) programme, an enterprise-wide cost-reduction and cost-efficiency initiative. This has been rolled out across all functions, business units and countries. The Company continues to focus on capex optimisation through various programmes like ICR, tower-sharing, fiber sharing through therebyleadingto IRU or co-build.

Digitisation and automation with significant programmes on self-care, paperless acquisitions, e-bill penetration, online recharges, indoor to outdoor conversions and digital customer interactions are continuously monitored through the WoW initiative.

The Company has been progressively striving to keep its debt at acceptable levels. To achieve this, company has multiple de leveraging options.

Inability to provide high-quality network experience with exponential growth in data demand (Strategic) Outlook from last year > Stable

Definition

In order to keep pace with rising data demand of customers and to ensure competitive parity traffic, telecom companies will be required to invest heavily in building data capacities and broadband coverage expansion. Operators are adopting new strategies to provide unlimited voice and significant data benefits to customers. Additionally, today’s customer is looking at seamless mobile internet experience and is technology agnostic.

Mitigation actions

Airtel acquired 355.5 MHz of Spectrum in sub-GHz, mid band and capacity bands. This would enable the Company to launch sub-GHz services pan-India, and thus enhance indoor penetration and cover larger population footprint.

Spectrum addition in 1800, 2100 and 2300 bands will help mitigate the capacity needs due to ever increasing data consumption, resulting in much better improved experience.

Airtel added additional 23K new 4G Sites to expand its footprint and strengthened coverage in rural and urban areas. This is a step for providing better experience to its customers.

Airtel added 45 PB capacity in the network for fulfilling the customer needs due to increased data consumption in the

COVID-19 period. Various tools like the addition of TDD, L2100, Twin Beams, m-MIMO, spectrum addition were used for enhancing the capacity.

The spectrum efficiency improvement programme helped in sweating the spectrum and providing more capacities. This included L900 maximisation, bringing in new features and functionalities, running 2G on lean carrier and reusing spectrum for 4G, along with various optimisation activities.

Airtel has re-farmed spectrum from legacy technologies like 2G and 3G to 4G, to get better coverage and capacity. The liberalised spectrum in the 900MHz band has been re-farmed to 4G to provide better in-building coverage. Similarly, spectrum in the 2100MHz band (which was being used for 3G) has been re-farmed to 4G for providing additional capacity, barring partial 3 circles where only 5 MHz of 2100 band exists.

Airtel is continuous stepping up backhaul readiness and capacities on sites with increased fiberisation and capacity expansion of transmission backbone & internet to cater to additional data load as projected in AOP by respective

Business Units. This will move the Company closer to readiness for 5G.

Pan-India VoLTE footprint and roaming across circles on VoLTE have been established because of which 50% of the voice traffic has been offloaded from legacy core to 4G (HD) voice and 79% of total 4G smartphone traffic is being carried over VoLTE.

Technological evolution in telecom has been quite rapid. The next few years will witness wide-scale commercial deployment of 5G. Airtel is future-proof for such scenarios and are building up for 5G network deployment. The

Company demonstrated the 5G working in Hyderabad using its existing spectrum and base stations.

Airtel has been investing in digitisation of its operations using automation and machine learning tools. This will help the Company improve customer experience through faster resolution of complaints and queries while bringing in efficiency in the network.

Airtel has been accelerating the broadband rollout (Fiber to Home) in multiple cities across India through the LCO model bolstered with its own rollouts. This model has led to a substantial growth in the home passes. During the year under review, with surge in demand due to the pandemic impact, Home broadband has catered to these needs efficiently and very quickly.

Airtel has future proofed its technology by ensuring that new equipment deployed are 5G enabled/plan configuration. A network readiness programme is being run to ensure full readiness at the time when spectrum auctions are scheduled. Airtel was the first one to demonstrate 5G in real network using dynamic spectrum sharing of existing spectrum between 4G and 5G. It showcases the readiness of its radio, core and transport network. Airtel is leading in 5G trials, as it has demonstrated more than 1 Gbps experience on commercial smartphones in Delhi and Mumbai. The Company will be deploying 5G in rural area as well to showcase the capability of 5G for rural markets. Beyond this, the Company is working with application partners, both indigenous and global partners, for showcasing new use cases and applications that can be deployed on 5G.

Gaps in internal controls (financial and non-financial) (Operational) Outlook from last year > Stable

Definition

The Company serves its customer with extensive load due to voice network and huge data carried on wireless networks. Gaps in internal controls and/or process compliances not only lead to wastages, frauds and losses, but can also adversely impact the Airtel brand.

Mitigation actions

The Company proactively ensures compliance with all accounting, legal and regulatory requirements. Compliance is monitored meticulously at all stages of operations. Substantial investments in IT systems and automated workflow processes help minimise human errors.

Besides internal audits, the Company has a process of self-validation of several checklists and compliances as well as a ‘maker-checker’ division of duties to identify and rectify deviations early enough. The Company has implemented a Compliance Tool that tracks and provides a comprehensive list of all the external compliances that Airtel needs to abide, by function. The Compliance Tool’s ownership lies with the head of the respective function with oversight by the legal team.

The Company has Internal Financial Controls and the Corporate Audit Group has tested such controls. The Audit Group has asserted that the Company has in place adequate tools, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

Climate Change

Over the last decade, climate change has emerged as a credible risk to almost every business sector, including the telecommunication sector. Telecom industry’s carbon footprint is likely to increase as developing markets continue to grow, network traffic increases, and companies move towards 5G.

Consequently, there is an urgent need for us to identify potential risks posed by climate change and their impacts on the company, to be able to develop our own mitigation strategy.

At Airtel, climate change risks are considered an integral part of our centralised enterprise risk management framework.

We foresee climate change manifesting in the form of the following risks to our business in the coming years.

Policy and Legal Risk

Following the Green Telecom guidelines issued by the

Department of Telecom (DoT), Government of India, calling for an increase in the use of green energy technologies in telecom sector, climate change is emerging as a potential factor that can interfere with the realisation of our strategic, operational, financial and compliance objectives.

Technology Risk

The need to transition to lower emission technologies, necessitated by regulatory or market environment, might lead to early retirement of existing assets. For instance, Green

Telecom guidelines issued by DoT require all telecom products, equipment and services to be energy and performance assessed and certified ‘Green Passport’, using the ECR ratings.

Physical Risk

Because of increased frequency and severity of extreme weather events, there is a greater risk of damage to our network infrastructure and physical assets exposed to such weather.

Market Risk

Adverse impacts of climate change might impact the livelihoods of some customers (for example, those in rural areas), thereby reducing their capacity to afford our services.

Reputational Risks

Rising expectations of customers and other stakeholders from a business organisation to contribute to a low-carbon economy, expose us to a certain degree of reputational risk.

Impact

The above climate related risks have the potential to translate into the following impacts for Airtel:

Higher operational expenses due to increased regulatory and compliance requirements, such as increased cost of GHG emissions and emission reporting obligations, as well as higher insurance premiums for assets exposed to climate risks.

Increased capital investment in new technologies and green energy solutions.

Impact on revenue from decreased operational capacity due to network failure or other interruptions.

Increased frequency and intensity of extreme weather events interrupting our materials supply by disrupting modes of transport.

Increased temperatures adversely impacting the health and safety of workers at our facilities, with the potential to disrupt operations and decrease revenue.

Mitigation Measures

We are cognisant of the considerable negative impact that climate change can have on our business and have identified ‘Climate Change, Energy Efficiency & Emission Reduction’ as one of our high priority material issues. Further, we have set a goal to achieve net-zero emissions by no later than 2050 and have defined Science Based emission reduction targets, to guide our decarbonisation strategy.

Following are some of the measures that we have taken to mitigate this emerging risk and build climate resilience:

Adoption of green energy solutions such as rooftop solar

PV plants at Airtel’s data centers and main switching centres (MSCs). By end of FY 2020-21, Airtel installed rooftop solar PV plants at 28 locations including data centres and MSC sites, thus expanding the total installed capacity to 1.57 MWp.

Power wheeling agreements for procurement of green energy. Airtel procured 81,315 MWh of green energy through various power wheeling arrangements in FY 2020-21.

Use of solar-DG hybrid model across various network sites to reduce diesel consumption.

Electrification of networks towers to reduce carbon emissions. In FY 2020-21, Airtel was able to undertake electrification of 2,247 non-electrified telecom towers.

Measures to reduce energy consumption across Airtel’s networks, such as conversion of 2,247 indoor BTS sites to outdoor sites in FY 2020-21, resulting in lower demand for electricity, infrastructure sharing with network partners and use of advance VRLA batteries and lithium-ion battery-based solutions to optimise energy consumption. Total sites installed with advanced batteries and Li-ion battery solutions stood at 41,462 till March-2021. This led to a substantial reduction in diesel consumption, which reduced by 100 litre/site/quarter.

Measures to reduce energy consumption across data centres and MSC sites, such as installation of energy efficient equipment, lighting and cooling optimisation and cold aisle/hot aisle containment to name a few. All such conservation measures in data centers and MSC sites led to energy savings of 11,258 MWh in FY 2020-21.

Various other initiatives were undertaken to enhance energy efficiency at Airtel’s facilities such as HVAC air duct cleaning, installation of LED lights, retrofitting and UPS optimisation, which allowed the Company to save 284.43 MWh of energy in FY 2020-21.

Lack of Digitalisation and Innovations

Digitalisation is reshaping the telecom industry and will be a key driver for innovation within the Company, as companies compete in a digital ecosystem away from a pure connectivity based environment. This is now becoming even more relevant. The onslaught of COVID pandemic highlighted the need to provide the entire customer base with access to digital solutions and innovative digital products, rather than only focusing on the high-end customers in urban markets.

Further, evolving technologies are resulting in change in customer value propositions. Digital content and apps are defining the lifestyle for mobile customers across all segments. Moreover, enhanced digitisation is required not only for catering to the customers, but also for managing internal systems and processes within Airtel. Digital mobile money technologies, innovative mobile apps, Cloud, M2M, SaaS and other technology-based SAS products are also evolving. Such rapid technology evolution may impact the functionality of existing assets and accelerate obsolescence.

As Airtel expands its market and prepares itself for the launch of 5G network services, the need for digitisation and innovation will grow significantly, both for customer solutions and internal processes.

Impact

Keeping pace with changing customer expectations is a big agenda for the telecom sector. Lack of digitalisation of internal business processes may render the company in-able or lethargic in responding to customer needs. This is an emerging risk for Airtel as it may cause a significant impact on its business in the next few years if consistent action is not taken.

Rapidly evolving technologies like robotics, block chain and app automation for internal processes in functions such as

Customer Management, Finance, Supply Chain and HR can render the company slow in decision making and reacting to new and emerging customer, vendor, and partner expectations. This can impact our time-to-market and in-turn erode our customer base.

Mitigation Measures

Digitalisation for our customers continues to be the prime area of focus with several digital initiatives being undertaken.

We have adopted new digital platforms for attracting millennials and digitally savvy customers. One Airtel

(erstwhile Homes) platform allows consolidation of services like DTH, broadband and mobility through one install, one service and one bill.

The focus is to strengthen digital reach by powering the core digital properties of Airtel such as Wynk music, Airtel TV, and Airtel Xstream. These are driving enhanced customer experience, lower churn rate and improved

ARPUs. Also investing in digital channels like Airtel Thanks app & Airtel.in have led to tremendous growth in customer interaction.

Airtel is building its own digital innovations across various functions, such as in offline distribution network Mitra app is enabling innovations such as assisted sales of life insurance offline. Another key digital initiative is creating a digital network-planning, deployment, operations and quality.

Other forms of digitisation, like compulsory electronic invoicing from vendors, and end-to-end digitised approval process are being aggressively pursued to keep the organisation nimble-footed at all times.

Significant investment on B2B in the field of digitalisation from acquisition to fulfillment of orders in order to improve the efficiency of overall business and thus, improve return on investment.

With focus on planned innovation by investment in businesses such as Advertising, Surveillance and Financial

Services, a new vertical termed as ‘New Business Incubator’ under Airtel Digital Services Ltd has been launched to cater to these work streams.