Bharti Airtel Limited

Business Description

Provides mobile, broadband & telephone (fixed line) and enterprise

services (carriers & services to corporate)

Established July 07, 1995, as a Public Limited Company

Highlights for Second Quarter and Half Year Ended September 30, 2006

¬ Market leader with a market share of all India mobile subscribers at

21.4%

¬ Highest ever-net addition of 41.1 lakh customers in a single quarter.

¬ Q2 Total Revenues of Rs.4,357 crore (up 61% Y-o-Y)

¬ Q2 EBITDA of Rs. 1,702 crore (up 67% Y-o-Y)

¬ Q2 Cash Profit of Rs. 1,644 crore (up 75% Y-o-Y)

Q2 Net Profit of Rs. 934 crore (up 79% Y-o-Y) and Net Profit crosses 1,600
crores

Market Capitalization

Customer Base 24,337,837 GSM mobile and 1,547,872 broadband &

telephone (fixed line) customers (Status as at month ended July 31, 2006)

Operational Network

Provides GSM mobile services in all the 23-telecom circles in India, and
was the first private operator to have an all India presence.
Provides broadband (DSL) and telephone services (fixed line) in 90 cities
in India.

OrganisationStructure
As an outcome of a restructuring exercise conducted within the company;
a new integrated organizational structure has emerged; with realigned
roles, responsibilities and reporting relationships of Bharti’s key team
players.

With effect from March 01, 2006, this unified management structure of
'One Airtel' will enable continued improvement in the delivery of the
Group’s strategic vision.

Buying behavior

IT research firm In-Stat predicts that the global market for wireless
handsets will grow 23 percent to USD 136 billion in 2006, and may exceed
USD 250 billion in 2011. In Stat said the wireless market has reached USD
110 billion in 2005.

The firms pointed out that after 2006 the growth rate would be slower. So
depending upon the Market behavior for Handsets the buying behavior for
Service Provider will also be bit slow in the year 2007.

3G is the latest innovation India is goin’ through. Airtel is goin’ to start its
operation soon on 3-G network system where the user will have the
facility of online TV shows etc. on the mobile Phone itself.

In Stat said that the prediction is not preordained. According to the study
it depends upon phone manufacturers continuing to add features that
consumers’ value and the rest of the industry can support.

The greatest challenge is to just add the features different customers

want without adding unneeded cost or complexity from unneeded or
unwanted features from the service provider.

The report includes end-user survey results that explore current customer
attitudes as well as how it corresponds to there past buying behavior.

In Stat said the goal for wireless phone manufacturers and service
provider is to make customers forget they ever tolerated a phone or
service without the new innovations. This has happened as the mobile
phone has advanced dramatically in the past several years.

According to the survey, very few U.S. users, less than 5 percent, do not
use at least one of the technological innovations introduced over this
period. Consumers seem ready to embrace other new features, including
location-based services and Bluetooth connectivity, but only a narrow
segment have interest in multimedia features and camera phones use will
see a decline, predicts In-Stat.

"Big trends over the next five years include adoption of wireless phones as
a mobile wallet that and more users will carry multiple devices," says Bill
Hughes, In-Stat analyst.

"The primary changes in phones over the next five years are that they will
become more capable, incorporate beefier security, and be more targeted
as organizations have greater involvement in the wireless service
decisions of their employees. Perhaps more importantly, they will help us
be safer."

The key findings of the research, "The Big Trends for Cell Phones, 2006-
2011” are:

• Worldwide sales of mobile phones will rise from 935 million units in 2006
to more than double that 2011 and with this service providers will also
have a rise.

• Smart Phone sales will surpass 480 million units by 2011and to cash it
on all the service Providers are launching different useful facilities to cash
it on the rising trend of Smart Phone Usage.

• Nokia is by far the most popular phone brand among survey respondents
who obtained their phone through work or for private uses and Airtel is
the most trusted network in which companies like to operate.

The research covers the worldwide mobile phone market and their service
provider and predicts future developments for wireless phones over the
next five years.

The research takes into consideration the entire wireless phone value
chain, which consists of phone manufacturers, supplier ecosystem,
distributors, carriers, and in many cases, the organization to which many
customers belong.

Product promotion strategy and Ad campaign

To understand the product promotion strategy and Ad campaign we have

to look into the vision statement of Airtel

AIRTEL VISION STATEMENT & BRAND POSITIONING

By 2010 Airtel will be the most admired brand in India:
• Loved by more customers

• Targeted by top talent

• Benchmarked by more business

"In a service industry like telecom, people live a brand 24X7. It's all about
experience; and for Airtel 'brand=customer experience," says Rajan Mittal,
joint managing director, Bharti Tele-Ventures Ltd.

That's now, but when mobile telephony began in India a decade ago, the
brand was all about aspiration. That's understandable: a handset cost
about Rs 45,000 - the price of a second-hand Fiat - and call charges
hovered around Rs 16 a minute.

Naturally, the target customer was clearly defined: elite, upmarket

professionals and entrepreneurs. "We positioned Airtel as an aspirational
and lifestyle brand, in a way that trivialised the price in the mind of the
consumer.

It was pitched not merely as a mobile service, but as something that gave
him a badge value," recalls Hemant Sachdev, chief marketing officer
(mobility) and director, Bharti Tele-Ventures.
Airtel was on a power trip: the logo was black, uppercase bold lettering;
and the baseline was "the power to keep in touch". "

From day one, it was decided that the brand should always connote
leadership - be it in network, innovations, offerings or services," says
Diwan Arun Nanda, CMD, Rediffusion-DY&R, the agency that has created
all Airtel ads over the past decade. The taglines emphasised that stance:
"Airtel celebrates the spirit of leadership" and "The first choice of the
corporate leaders".

This was also a time when customers needed to be educated; interest

levels were high, but customers' exposure to the cellular world was
limited. Airtel took out full and half-page ads in newspapers, answering
queries like "what is roaming?", "what is coverage area?" and "how to
make international calls".

In 1999, the rules of the game changed. The New Telecom Policy came into
effect, replacing license fees with a revenue-sharing scheme and
extending the license period from 10 to 20 years.
Now, cellular service operators could drop their prices and target new
customer segments. As SEC B became part of the catchment area, Airtel's
communication changed from "power" to "touch tomorrow".
The focus now was on the endless possibilities of technology to make life
good and advertising became two-pronged: a product-driven
communication that showcased new offerings like the Magic prepaid card,
and an emotional communication that showed younger people.

In 2002, Airtel signed on music composer A R Rahman and changed its

tune to "Live every moment": Rahman's signature tune for Airtel is,
perhaps, the most downloaded ringtone in India. But that was just part of
the ongoing communication.

The following year Airtel adopted the "Express yourself" positioning,

which is also its current tagline. Now, the emotional angle was
predominant - and stark, black and white imagery to stand out in what
was becoming a highly commoditised, crowded market.

The latest campaign continues that thought. Only, mobile telephony is

now extending to even low-income mass categories. So the first TVCs in
Hindi and regional languages are now on air, as are low-priced products,
like the Rs 200-recharge coupon.

Communication was just part of the battle: customer service would prove
more critical. "We were very clear that Airtel will be a service-led brand,"
says Mittal.

RELATIONSHIP MANAGEMENT
Accordingly, Airtel was the first cellular service provider to start customer
centres (called Airtel connects), where customers could pay their bills,
apply for new connections and touch and feel new handset models.
The way to the future, though, seems to be through product innovations
such as easy charge (recharging prepaid connection through SMS), hello
tunes, the Blackberry option, stock tickers and M-cheques (mobile credit
cards).

The customer care centres, too, are metamorphosing into "relationship

centres", one-stop shops where subscribers can not only pay their bills
and have their queries answered, they can shop for new phones, surf the
net and enjoy a cup of coffee. "What matters is what the customers want,"
points out Mittal.
Based on there vision statement their product Promotion strategy and Ad
Campaign is based. Airtel is an amazingly successful brand. It has very
visible advertising, with a fairly high share of voice.

As mobile services are an extremely competitive (cutthroat?) category,

there are a number of advertising renditions that happen. One of the most
interesting ones for me as a consumer was the one with A. R. Rahman in
Hyde Park, was it, playing with an assortment of musicians even as an
adoring recording artist listens to the music that is carried through Airtel
mobile's service.

it was a brilliant track. Airtel had integrated this piece of communication,

making it a fairly popular ring tone. Every second Airtel user had this ring
tone and enthusiastic guys even used it in their cars as they reversed.

Brands often lose their way when their communication deviates from a
tried and tested property just to be different. This is not a situation that
cannot be salvaged, though. Brands stray when they try to be different for
the sake of being different.

The desire to be different is pretty common in advertising. And this desire

to be different usually means a break from the past.

AIRTEL’s Ads are a trend setting Ads and considered a landmark Product
promotion, which they are doing for their Broad Band and telephone
services are also a land mark promotion campaign.

Promotions, whose need is increasingly being felt by the surging services

sector, will click if they realize marketing objectives and reinforce brand
values.

Other precautions too need to be taken in the case of promotions. For

instance, too many promotions can be detrimental to the health of a
brand.

A brand, which is perpetually on price-off, would not only lose key brand
attributes but also consumer interest. The consumer's reasoning being `if
a product is cheaper now, does it mean I was being overcharged earlier'?
Similarly, if a brand is always doling out freebies, sales would be affected
when there are no freebies on offer.

Marketers agree that no matter the market segment, for any promotion to
be successful it has to be a part of an overall marketing strategy and not a
one-off sales-driving initiative.

COMPERATIVE PRICING OF DIFFERENT MOBILE SERVICE PROVIDERS

THOUGH THE rollout of mobile cellular networks (GSM) in India began only
seven years ago, the industry has already passed through three growth
phases. The initial phase (1995-98), period with the bare minimum
network coverage, catered only to the high-end segment with call charges
around Rs.14 a minute.

With the explosion in subscriber volume during 1998-2000 (Phase 2), the
rollout spread to metropolitan cities, major highways and relatively
dynamic small cities bringing down call charges to Rs. 9 a minute.

The third phase (2001 and 2005) was a watershed for the Indian mobile
industry; the growth in these two years exceeded all the achievement of
the earlier five years.

This pushed the operators to add capacity to their networks furiously The
low call charges or upfront costs of mobile are only bait to lure customers
and only the QoS can ensure retention capability for a service provider.

An attempt is made here to highlight the current QoS lag of Indian

networks vis-a-vis the international mobile market and the minimum that
companies should do to sustain their subscriber base. There is also a peep
into the billing aspect, which indicates that Indian subscribers are paying
much more than they need to.

The mobile operators have put up the required infrastructure to carry calls
on their networks with capacities determined by the demographic profile
of their respective areas buttressed by market research. However, no
guidelines exist from the regulatory authority (TRAI) for QoS of the
networks.
Traditionally, wireless operators have used a number of metrics that
collectively provide a measurement of `network service quality' from the
users' perspective. A combination of the following 4-key performance
indicators (KPIs) largely determines the overall service quality: system
coverage; call blockage; voice quality; and dropped call rate.

Following four is the main area of attention kept in mind by the companies
while providing and deciding pricing

• System coverage

• Call blockage

• Voice quality

• Dropped call rate

Comparison chart between Current Pricing for different cellular service

provider in all the four zones are provided in the link