Ogundiminegha Oludamilola

Capital Structure Questionnaire

Part 1 Company Background

1. Name of Company: Airtel Nigeria Ltd

2. Year Established: July 7, 1995

3. Nature of Company:

Regulatory
Non-Regulatory

4. Address of Company
Nigeria: Plot L2 Banana Island, Foreshore Estate, Ikoyi, Lagos Nigeria.
India: Bharti Crescent, 1 Nelson Madela Road, Vasant Kunj, Phase II, New Delhi- 110 070,

5. Quotation Status of the Company?

Premium Board of NSE

Main Board of NSE

Alternative Securities Market of
NSE
NASD
Non-quoted

6. E-mail Address: info@airtel.com

7. Website: www.airtel.com

8. Tel: 08021500121, 02021500111

9. Contact Person:

10. Name of CEO: Mr Manoj Kohli

11. Name of CFO: Srikanth Balachandran

12. Products and services: Mobile Services, Telemedia, Digital TV, Airtel Business and Tower
infrastructure
 13. Industry Classification: Wireless Telecommunication

14. Board of Directors:

Mr Sunil Bharti Matal Chairman

Mr Manoj Kohli MD & CEO International
Mr Gopal Vittal Joint MD & CEO India

15. Nature of Ownership Control

Private Nigerians controlled ownership

16. Private Foreign controlled ownership

Government controlled ownership

16. What is the financial year-end date of the company: 31st March of every year

17. What is the most recent annual report of the company: 2015 Accounts

18: What is the highest level of education of CFO?

Below Bachelors Degree

HND/Bachelors Degree A Chartered Accountant
MBA
Non-MBA Masters
Higher than Masters Degree

19. What is the CFO Age?

Below 40
40 - 49
50 - 59
60 and above

20. What is the CFO Gender?

Male
Female
21. What is the CFO Nationality?

Nigerian
Anglophone African Countries
Franco Phone African Countries
Europeans
Americans
Asian
Indian

22. What is the CFO tenure?

Less than 4 years

4 9 years
Greater than 9 years

Part 2 Board and Ownership

1. What is the total number of outstanding shares of the company?

2011 2012 2013 2014 2015
3,997,400,102 3,997,400,102 3,997,400,102 3,997,400,102 3,997,400,102

2. What is total number of shares of the company held by government? NONE

3. What is total number of shares of the company held by other companies/institutions?

705,841,899 shares

4. What is total number of shares of the company held by individuals?

68,000 shares

5. What is total number of shares of the company held by the Chairman? NONE
6. What is total number of shares of the company held by the CEO?
274374 shares

7. What is the total number of shares held by the executive directors?

225,739 shares
8. Is the Chairman the same as CEO?

Yes
 No

9. Is the CEO the same as the Chief risk officer?

1Yes
No
10. Does the Chief risk officer reports to the board of Directors?

Yes
No

11. What is the total number of directors of the Company? 13

12. What is the total number of executive directors of the Company? 2

13. What is the total number of non-executive directors of the Company? 11

14. What is the total number of women directors of the Company? 3

15. What is the total number of women executive directors of the Company? NONE

16. Number of shareholders holding more than 5% of the company's equity? 1

17. Is the largest shareholder an individual, corporate or government agency? Corporate

18. What is the number of shares held by the largest shareholder? 199,870,006 Shares

19. What is the number of shares held by largest single family members? 56,471,438 shares

Part 3 Financial Information

1. Complete the following financial information on the company in x000

2011 2012 2013 2014 2015

m m m m m
Turnover 455,792 714,508 803,112 857,461 920,394
Foreign Sales 156,802 392,319 315,865 287,122 425,165
Depreciation 67,328 133,681 154,964 580,205 607,468
Interest and finance 73,400 40,828 49,477 58,788 73,252
charges
Profit before tax 227,778 65,183 49,820 78,643 107,130
Profit after tax 208,344 42,581 22,669 30,194 53,083
PPE 479,680 674,932 688,430 596,429 579,157
Intangible Assets 122,096 660,889 680,808 809,716 922,283
Current Assets 541,017 148,084 202,904 223,857 267,655
Total Assets 1,687,126 1,570,616 1,673,232 1,831,772 1,957,818
Overdraft and loan 5,614 12,263 14,767 10,233 13,207
Current Liabilities 314,819 488,873 450,421 568,050 634,435
Long term debt 145,617 497,154 615,485 549,919 452,283
Debentures and loan - - - - -
stock
Total Liabilities 1,168,137 1,036,808 1,129,129 1,192,110 1,289,729
Preference shares - - - - -
Total equity 518,989 533,808 544,103 639,662 668,089
Total equity and 1,687,126 1,570,616 1,673,232 1,831,772 1,957,818
liabilities
Number of issued 3,997,400,102 3,997,400,102 3,997,400,102 3,997,400,102 3,997,400,102
shares
Share price at year end 275.55 275.60 275.60 339.00 339.00
Number of employees 15,463 15,563 16,234 17,764 16,697
Staff costs 57,524 35,159 40,098 46,228 47,123
Donation 288 408 390 902 1,290
IFRS Compliant No Yes Yes Yes Yes
(Yes/No)
Corporate Governance Yes Yes Yes Yes Yes
Report (Yes/No)
Corporate Social Report Yes Yes Yes Yes Yes
(Yes/No)

Part 4 Capital Structure Analysis Questionnaire

1. To what extent does the following represent the CEO objective function/financial
management objective?

Please rate in terms of importance using the following Likert Scale

0 - Not important
1 - Fairly Important
2. Average Important
3 - Important
4 - Very Important

Achieve and maintain high debt ratings 2

 Achieve a capital structure similar to that of other firms 4

Enhance and sustain financial flexibility, independence, & survival 4

Maximize the market price of bonds and stock 4
Maximize the market share (in terms of net total assets) 4
Maximize the Price Earnings Ratio 3

Maximize the Return on Investment 4

Maximize the Return on Equity 3

Maximize the growth of earnings per share 4

Maximize shareholders returns 4

Maximize the book value of a share of stock 4

Maximize the book value of the banks net total assets 4

Maximize the cash flow per share of stock 4
Minimize the risk of financial distress and bankruptcy 4
Minimize the companys cost of capital 4

2. What factors affect how you choose the appropriate amount of debt for your firm?

Please rate in terms of importance using the following Likert Scale

0 - Not important
1 - Fairly Important
2. Average Important
3 - Important
4 - Very Important

Financial flexibiliy
Our credit rating (as assigned by rating agencies) 3

The tax advantage of interest deductibility 4

The volatility of our earnings and cashflows 4
We limit debt so our customers/suppliers are not worried about our financial stability 3
The transactions costs and fees for issuing debt 4
The potential costs of bankruptcy or near bankruptcy financial distress 3
The debt levels of other firms in our industry 2
The personal tax cost that our investors face when they receive interest income 1
To ensure that upper management works hard and efficiently 4
We try to have enough debt so that we are not an attractive target 3
If we issue debt our competitors know that we are very unlikely to reduce our output 3
A high debt ratio helps us bargain for concessions from our employees 3
3. What factors affect your firm's choice between short- and long-term debt?
Please rate in terms of importance using the following Likert Scale
0 - Not important
1 - Fairly Important
2. Average Important
3 - Important
4 - Very Important

Matching the maturity of our debt with the life of our assets 4
We issue long-term debt to minimize the risk of having to finance in bad times 4
We issue short term when we are waiting for long term market interest rates to decline 3
We borrow short-term so that returns from new projects can be captured by shareholders 4
We expect our rating to improve, so we borrow short term until it does 3
Borrowing short-term reduces the chance that our firm will want to take on risky 4
projects

4. Has your firm seriously considered issuing common stock? If yes, what factors affect
your firms decisions about issuing common stock?

Please rate in terms of importance using the following Likert Scale

0 - Not important
1 - Fairly Important
2. Average Important
3 - Important
4 - Very Important

Earning per share dilution 3

If our stock price has recently risen, the price at which we can issue is high 0
Maintaining a target debt-to-equity ratio 4
Providing shares to employee stock option plan 2
The amount by which our stock is undervalued or overvalued by the market 3
Diluting the holdings of certain shareholders 4
Whether our recent profits have been sufficient to fund our activities 4
In case of paying a target by shares, the ability to use the pooling of interest method 3
Stock is our "least risky" source of funds 0
Using a similar debt/equity ratio as is used by other firms in our industry 2
Common stock is our cheapest source of funds 0
Issuing stock gives a better impression of our firm's prospects than using debt 0
The capital gains tax rates faced by our investors (relative to tax rates on dividends) 0
Inability to obtain funds using other sources 3

5. Has your firm seriously considered issuing convertible debt (or issued debt in last ten
years)? If yes, what factors affect your firm's decision to issue convertible debt?

Please rate in terms of importance using the following Likert Scale

0 - Not important
1 - Fairly Important
 2. Average Important
3 - Important
4 - Very Important
Ability to "call" or force conversion of convertible debt if/when we need to 3
Avoiding short-term equity dilution 2
Our stock is currently undervalued 0
Convertibles are an inexpensive way to issue "delayed" common stock 4
To attract investors unsure about the riskiness of our firm 4
Convertibles are less expensive than debt 4
Other firms in our industry successfully use convertibles 2
Protecting bondholders against unfavourable actions by managers or stockholders 3

6. Has your firm seriously considered issuing (or issued) common stock or debt in foreign
countries in the last decade? If yes, what factors affect your firms decisions about
issuing in foreign markets?
Please rate in terms of importance using the following Likert Scale
0 - Not important
1 - Fairly Important
2. Average Important
3 - Important
4 - Very Important

Providing a "natural hedge" 3

Keeping the "source of funds" close to its "use 3
Favorable tax treatment relative to Europe 0
Market conditions may be better than domestic conditions 3
Lower interest rates in foreign markets 3
Foreign regulations require us to issue abroad 3

7. How important are the following factors generally in the determinants of your
companys capital structure?

Please rate in terms of importance using the following Likert Scale

0 - Not important
1 - Fairly Important
2. Average Important
3 Important
4 Very Important

Asset Risk 4
Correct mispricing in past security issues 3
Historical performance of companys shares 4
Possibility of a takeover bid 4
Private consumption behaviour 4
Foreign exchange rate fluctuation 4
Capital market performance 4
World economy performance 4
Nigerian economy performance 4

Importation of raw materials 1

Political Stability 1

Militancy and Terrorism Attack Domestic fuel crisis 2

International Oil price volatility 2

Legal restrictions on share repurchases 2

Interest rate changes 3
Employees, Industrial Relations and Collective Bargaining 3
Customers Customer Service 2

Suppliers 4