Ivey Publishing
Capital Budgeting Management of Bharti Airtel - The Profitability Impact
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5 pages (4 pages of text)
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Case (Library)
Sound financial management is the most important element in the viability of any business undertaking, and capital investment decisions are the foundation stone of this process. A company can pursue either an internal, organic approach to its financing options or an external, inorganic approach that uses borrowed funds to make acquisitions it hopes will increase its business. This is the route taken by Bharti Airtel Limited, India’s leading telecommunications giant. Beginning in 2010, it has borrowed heavily on the international market to invest in acquisitions of a 3G licence in India, in Zain Africa and in the broadband wireless access branch of Qualcomm Inc. However, due to many causes — including the effects of the global recession on the industry; the highly competitive Indian telecommunications market; restructuring and disorganization in the firm’s top management; and lack of innovation in offering and delivering new services in India — the company has experienced not the growth it expected from its expansion strategy, but a steady decline in profits. How can the management turn this situation around and regain the company’s position as a leader in the telecommunications market in India and globally?
Learning Objective:
This case can be used to discuss the concept and application of capital budgeting decisions to students in financial management courses. It can further be used in executive programs to discuss the importance of capital investment decision making in all organizations. Its objectives are

  • To highlight the importance of capital budgeting decisions for the long-term growth of a business and their impact on a firm’s future profitability.
  • To illustrate the key issues of capital budgeting application, financing of capital investment and risk analysis.
  • To discuss the impact of financial leadership and of capital investment on a firm’s profitability and viability.
Finance,  Accounting,  International,  Entrepreneurship
Information, Media & Telecommunications
India, Large, 2010-2013
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