If you were wondering about why Bharti Airtel decided to set up separate divisions for Mobile Entertainment and Mobile Commerce, here one reason: Deputy CEO Sanjay Kapoor told PTI that "Music Bharti" is the largest music company in India, with more revenues than BSE listed Saregama India. (Hat Tip: NeverClever on Twitter) It is worth noting that Saregama India has not yet announced its financial results for 2008-09, and it earned Rs. 143.7 crores in revenues during the 2007-08 fiscal (FY08). But, according to our calculations, Airtel's music revenues are significantly higher than those of Saregama. Much like other telecom operators, Airtel does not produce music, but earns revenues from music distribution via caller ringback tones, mobile radio and music on demand. Along with SMS, Mobile Music is the largest contributor to Airtel's Value Added Services Revenue. Rs. 481.3 crores of Airtel's Value Added Services (VAS) revenues in Q4 were not from SMS. This non-SMS component has steadily been growing for Airtel, despite total VAS revenues flattening out over the last 2 quarters. (Details here). What Kapoor hasn't talked about, is the sheer margin by which Airtel is ahead of Saregama in terms of total music revenues. Airtels Music Revenues: A Calculation Taking a highly conservative assumption that Music accounts for as little as 40% of Airtel's Non-SMS VAS revenues - it's probably closer to 55% - we calculated that Airtel had revenues of at least Rs. 708 crores from music distribution in 2008-09 (FY09), up from Rs. 458.4 crores in FY08:…
