Telecom Sector in India

•One of the fastest growing sectors in the world- Number of subscriber additions
showed a growth of 3.25% from March to April, 2009
• Key Highlights attributable to the Sector are :
 Subscriber base- More than 330Mn
 Second Largest Telecom Market
9 GSM & 5 CDMA players in 19 circles and 4 metros connecting 2000 towns
Lowest tariff charges in the world
Bharti Group - Overview
 Bharti Airtel
•Airtel is the flagship company of Bharti Enterprises
•Asia’s leading integrated telecom services provider with operations in
India and Sri Lanka
Businesses at Bharti Airtel have been structured into three individual
Strategic Business Units (SBUs):
- Mobile Services
- Airtel Telemedia Services
- Enterprise services
• VISION: To make Airtel India’s most admired brand that will be : Liked
by more customers, targeted by top talent, benchmarked by more
businesses
•MISSION:
“We will meet global standards for telecom services that delight
customers through Customer service Focus, Empowered Employees,
Innovative Services and cost efficiency “
 Porter’s 5 Forces Analysis of Industry

Threats from Competitors: High

•Large number of players in the Indian market poses a serious threat
• Average Revenue Per Unit (ARPU) in India is decreasing each year due to
intense competition faced in the market

Customer Bargaining Power: High

•Cut throat competition proving as advantage for Customers

•Low Switching Costs
•Number Portability option in near future
•Lack of differentiation among service providers

Threat of Substitutes: High

• Better services of International players entering India viz. Vodafone
• VOIP- Skype, Gtalk, Yahoo Messenger 
 Porter’s 5 Forces Analysis Cont…..
Threat of New Entrants: Low
•Huge License fees to be paid for entry
•Spectrum Availability and Regulatory Issues
•High Setup Cost of Infrastructure
•Rapidly changing technology
Suppliers Bargaining Power : Low
Outsourcing Vendors/ Features
Deals Suppliers
Networking Ericsson, Nokia
and Siemens Ease of Network Planning
Maintenance Network Payment linked to service quality and network
quality
Information IBM
Technology Payment as a % of revenues
Service Level Agreement for quality and
deployment
Passive Indus Towers,
Infrastructure Bharti Infratel Reduced CAPEX spending
Increased focus on sharing infrastructure
Call Centre IBM Daksh,
Outsourcing Aegis BPO, Enhanced and consistent customer experience
Hinduja TMT Common platform across groups
 SWOT Analysis
Strengths

- Largest cellular provider in India, also big share in broadband services

- Strategic Alliance with Sony-Ericsson, Nokia - and Sing Tel
- Has covered the entire Indian nation with its network
- Has a good hold over Financial resources
Weaknesses
-Airtel does not has hold over infrastructure eg. own towers
- MTN failure: lack of any real emerging market investment opportunity
Opportunities
-Still there is untapped market – local as well as other emerging markets
-Embarking joint venture to create a new independent tower company
-To change the revenue-per-minute model to pulse model
Threats
-Entry of Foreign players in India with 3G tech. eg. Aircel
-Knowledge and technology moved to one of its competitors- Vodafone
Strategic Decisions: Operations Front
 Suggestions to Increase Customer Base
Suggestion Resources Acceptability Effectiveness Sustainability
Airtel to Airtel calls, Not much and Will capture new Will be really High with more
Group packs etc. which can be markets effective if they profits
basically volume recovered with and also established satisfy different
based games increased customer ones customers with
base different needs

• Marketing (event Not a problem. Rs Will be more if Help in brand High

sponsors), CSR 150 -200 Crores campaigns are awareness and
initiatives attractive, creative brand recall
• Taking advantage and more retainable
of Melas in customers mind
• Doordarshan
enjoys maximum
viewership
Strategic alliances Heavy investments Lesser competition • Innovative value High
and acquisitions (capital and human) and more resources adds can be
in pool (human, designed to cover
suppliers etc) more customers
• Access to
established network
and distribution
chain. “Ease of
availability”
 Infrastructure Front

Challenge

Country wide expansion but requires huge investment to set

their own towers

Decisions Taken

Sharing of Towers (INDUS):

- Rapidly increasing subscriber base
- Emerging technology
- Sharply rising site rentals
- Need for denser coverage due to spectrum constraints
- Regulatory and planning authorities
- New Tower Restrictions
 Infrastructure Front
Decisions taken Contd….
- Nokia-Siemens as service partner
- Huawei Technologies to manage Airtel’s core network
- Ericsson to design, plan, deploy and optimize Airtel’s GSM network
- IBM to transform its processes and take on the management of its IT
infrastructure.

Benefits
- Ability to process 1.5 million new customers per month
- Optimization of business processes through flexible,
standardized integration framework
- Outsourcing of technology enables Airtel to focus resources
on growing the business
- Tie ups enables Airtel to avoid major increases in capital
expenditures
 Technology Front

3G

- Spectrum and licensing

- Infrastructure
- Pricing
- User Conversion
- 4G?

Mobile Number Portability

IPTV
 FINANCIAL ANALYSIS

• EBTDA – Rs. 151 billion up by 33%

• Negative only for digital TV (strong competition by
sun TV)
• Revenue – Rs. 369 billion up by 37%
• Cash profit – Rs. 140 billion up by 27%
• Capital Expenditure – Rs. 140 billion
• Average Revenue Per User – Rs 305 down from Rs.
324
• Net profit – Rs. 84 billion
Earning per Share – Rs. 44.67
FINANCIAL ANALYSIS- Contd..
 Strategic Decisions- HR Front

Problems
• Most of Youngsters leaving within 2 years of joining
• Tata Telecom largest talent competitor – 28% of people joining them

Strategies
•Revamping of PMS- employee to decide Flexi-benefits, increased Takehome
•Rotation policy: Atul Bindal- Telemedia to Telecom Business; Creation of new
position of Deputy CEO; Sanjay Kapoor- Mobile to Telemedia & DTH

Suggested Strategies
•Inclusion of Sub-ordinates in PMS
• Proper timing of Bonus and Incentive
 Strategic Decisions- International Front
Key Trends
• 2007 ( Year of iPhone) – 2008 ( Touch Phones)
• Mobile Industry- more than 1 Trillion USD : 80% services & 20% infrastructure
• 50% worldwide penetration- 4 B worldwide ( 600 M China & 330 M Ind)
• 3G penetration ( Japan – 85%); Mobile Web penetration- 25%

Developed Economies- European Union

- European telecom sector- major contributor in economy
- Highly concentrated: 4 players capturing 61%
- Favours Infrastructure Competition

Trends to Watch out for Airtel- Developed Economies

• Consolidation in Sector: European operators achieved acquisitions
through overseas instead of Regional consolidation
• Convergence in Sector: Mobile & Services platforms merging
• Go out with Locally responsive International Strategy
 International Front Contd.. Developing Econ.

Differentiating Factors

- Growing middle class income

- Small premium segment
- Increasing rate of Urbanization
- Young population compared to most developed nations

Key Trends to Watch out for Airtel- Developing Economies

- Make Broadband assessible to everyone

- Look out for Government subsidized deployments- Korean Govt.
offsets 50bn US$ to subsidy fibre; Govt. tax incentives
 International Front Contd.. Developing Econ.

Recent Developments of Airtel

- Announcement of online desktop for broadband- started in 95 countries

- Australian Japan Cable and Airtel partnership- offer services in future
- Overseas Recharge Service- Recharge available online in 150 money ex.
- Looking out for merger with MTN; Started Operations in Sri Lanka

Proposed Airtel Strategy

- Should go for Polycentric Approach- while costly may serve

- Should look out Merger and Acquisitions
- Look out for 3 things while short listing developing countries- political
stability, regulatory aspect and easy licensing
- Go to Disruptive Innovation/ Innovating strategies eg. TataDoCoMo
Strategic Decisions: Marketing Front

Changing Strategy Timeline

 Marketing Mix

•Product
•Airtel Pre-paid
•Airtel Post-paid
•Blackberry Wireless Handheld
Value Added Services (VAS)
•Price
•Customer based pricing strategies.
•Flexible pricing mechanism
Controlled by TRAI.
•Place
•It has wide and extensive presence even in the remotest areas
•Airtel Customer Care Touch Points
Distributors like : Paan shops, grocery stores, chemists, outlet etc
•Promotion
•Large scale print and video advertising.
•Big celebrities like SRK and Sachin are roped in to endorse the product.
•In 2002 Airtel got its Signature tune from A.R. Rehman, this signature tune is perhaps the
most downloaded tune in India.
Provides innovations such as Bollywood movie premiers, music services such as ring back tones
& many more.
 SWOT Analysis
Strengths
Market share.
Pan India Footprint.
The only operator in India other than VSNL having international submarine cables.
Customer care.
Promotions.

Weaknesses
Price Competition from BSNL and MTNL
Losing lead on technical expertise.
Opportunities
The fast extending IPLC market.
Latest technology and low-cost advantage.
Growth of mobile phone users.
Untapped Rural Market.

Threats
Market Maturity in basic telephony segment.
 Marketing Front- Future Perspective

Segmentation
Long Term Outlook
Product Innovation
Quality Strategy
Heavy Advertising & Media Pioneer
Effective Sales Promotion
Competitive Toughness
Customer care
New tariff plans.
More value added services.
Increase in visibility and coverage
The AirTel - AirTel advantage
New innovative packages
More of the e-factor
 Further Suggestions

• Tele-density Utilisation
India (1.29), US (60.73)
CAGR of 23.44% is required to reach network that of US
• Partnership in developing economies
• Technology Leadership
• Constantly evolving Value Added Services