Comparative analysis between

Airtel & Videocon Mobile

Services
Introduction
 Airtel was Established in 1985, Bharti (Airtel) has been a
pioneering force in the Telecom Sector.
 Bharti Airtel is one of India's leading private sector providers
of telecommunications services based on an aggregate of
66,689,943 customers
 Approx 64,370,434 GSM mobile subscribers.
 Approx 2,319,509 Bharti Telemedia subscribers.
 Bharti has recently entered into retail business as Bharti
Retail Pvt. Ltd.
 The businesses at Bharti Airtel have been structured into
three individual strategic business units (SBU’s) Mobile
Services, Airtel Telemedia Services & Enterprise Services
 ON July 07,1995 it established as public ltd company
 Provides Telemedia services (fixed line) in 94 cities in India

About Videocon MobileServices
 The Videocon Group is a $4 billion, global business conglomerate
with a strong presence in Household Consumer Goods, Oil &
Gas, Retail, Telecom, DTH and the Power sector.

 Videocon Telecommunications Limited a Videocon group
company,

 Offering GSM Mobile services under brand name Videocon.

 The Videocon Group became the 13th mobile operator in India
with its launch of GSM services & currently providing Prepaid
service.

 Providing the services in Tamil Nadu, Punjab, Haryana, Mumbai, Gujarat,
Kerala, Madhya Pradesh & soon will be present across the country.

 The Videocon group envisages investment of Rs 14,000 crores in
its mobile services over the next three years.


Key steps towards Strategic Planning
 Mission--“To delight and deliver beyond expectation through
ingenious strategy, intrepid entrepreneurship, improved
technology, innovative products, insightful marketing and
inspired thinking about the future.”

 Vision– “ To bring happiness in every home with global
presence offering high quality e-products to ease & enrich
human life”.

 Goal--- “To provide a much higher level of service to all those
who seek information.

 W h y Vid e o c o n ?

 Offering Prepaid plans at competitive price.
 For most of the current Prepaid plans the cal rates are 1
paisa/sec which will be reduced very soon.
 Under Special Tariff Benefits Pack cal rates are for V to V 20
paisa/sec & for V to other local cal 40 paisa/sec.
 On recharge of Rs.59 unlimited local V to V calling & Sms for
30 days.




Co n t in u e …. .
 under the Rs 149 monthly recharge plan, subscribers can
make one hour of local calls free every day.
 Recharge options are V Top-up by visiting nearby mobile
showroom, online or through IVR system.
 Offering value added services like
Music downloads, Sports updates, V rashi every day, Other

News & Updates, Entertainment– jokes, Railway inquiry,

Social Networking---- Face book.
BCG M a t r ix

Stars ?
HIGH

Mobile Services

Cows Dogs
 Fixed Line Services






LOW

HIGH LOW
8
Market Share
BCG M a t r ix



Consumer



Electronics & Television---
 home appliances, Videocon LCD

?
 GSM Mobile
Services,
Stars
Mobile Phones,


 Oil & Gas.

 Colour Picture Videocon D2h

Tube Glass

Dogs

HIGH



Cash Cows


 Market
PLC ( Product Life Cycle )

Mobile Service

Fix line

3G Service

In t ro d u c t io n Gro wt h Ma t u rit y De clin e

Pr o d u c t Lif e Cy c le
Co n t in u e ………
 costs reduced due to economies of scale.

 sales volume increases significantly.

 profitability begins to rise.

 public awareness increases.

 competition begins to increase with a few new players in
establishing market.

 increased competition leads to price decreases.

S W O T A n a ly s is
Ø Strengths
Ø Bharti Airtel has more than 65 million customers (July 2008).
It is the largest cellular provider in India, and also supplies
broadband and telephone services - as well as many other
telecommunications services to both domestic and
corporate customers.


Ø Other stakeholders in Bharti Airtel include Sony-Ericsson,

Nokia and Sing Tel, with whom they hold a strategic
alliance. This means that the business has access to
knowledge and technology from other parts of the
telecommunications world.


Ø The company has covered the entire Indian nation with its
network. This has underpinned its large and rising customer
base.

We akne s s e s
Ø An often cited original weakness is that when the business
was started by Sunil Bharti Mittal over 15 years ago, the
business has little knowledge and experience of how a
cellular telephone system actually worked. So the start-up
business had to outsource to industry experts in the field.


Ø Until recently Airtel did not own its own towers, which was a
particular strength of some of its competitors such as
Hutchison Essar. Towers are important if your company
wishes to provide wide coverage nationally.


Ø The fact that the Airtel has not pulled off a deal with South
Africa's MTN could signal the lack of any real emerging
market investment opportunity for the business once the
Indian market has become mature.

O p p o r t u n it ie s
Ø The company possesses a customized version of the Google
search engine which will enhance broadband services to
customers. The tie-up with Google can only enhance the
Airtel brand, and also provides advertising opportunities in
Indian for Google.

Ø Global telecommunications and new technology brands see
Airtel as a key strategic player in the Indian market. The
new iPhone will be launched in India via an Airtel
distributorship. Another strategic partnership is held with
BlackBerry Wireless Solutions.

Ø Despite being forced to outsource much of its technical
operations in the early days, this allowed Airtel to work
from its own blank sheet of paper, and to question industry
approaches and practices - for example replacing the
Revenue-Per-Customer model with a Revenue-Per-Minute
model which is better suited to India, as the company
Co n t in u e ……
 The company is investing in its operation in 120,000 to
160,000 small villages every year. It sees that less well-off
consumers may only be able to afford a few tens of Rupees
per call, and also so that the business benefits are scalable
- using its 'Matchbox' strategy.


 Bharti Airtel is embarking on another joint venture with

Vodafone Essar and Idea Cellular to create a new
independent tower company called Indus Towers. This new
business will control more than 60% of India's network
towers. IPTV is another potential new service that could
underpin the company's long-term strategy.

Th r e a t s
 Airtel and Vodafone seem to be having an on/off relationship.
Vodafone which owned a 5.6% stake in the Airtel business
sold it back to Airtel, and instead invested in its rival
Hutchison Essar. Knowledge and technology previously
available to Airtel now moves into the hands of one of its
competitors.

 The quickly changing pace of the global telecommunications
industry could tempt Airtel to go along the acquisition trail
which may make it vulnerable if the world goes into
recession. Perhaps this was an impact upon the decision
not to proceed with talks about the potential purchase of
South Africa's MTN in May 2008. This opened the door for
talks between Reliance Communication's Anil Ambani and
MTN, allowing a competing Indian industrialist to invest in
the new emerging African telecommunications market.

 Bharti Airtel could also be the target for the takeover vision of
other global telecommunications players that wish to move
into the Indian market.
S W O T A n a ly s is

In te rn a l
Fa cto rs

E xte rn a l
Fa cto rs

Po sitive N e g a tive
 GE Matrix Classification

Business Strength
Medium Weak
Strong 5 . 00
High
Attractiveness

3 . 67
Medium
Market

2 . 33
Low

5 . 00 3 . 67 2 . 33 1 . 00
Business Strength

 Current market share

 Brand image
 Brand equity
 Production capacity
 Corporate image
 Profit margins relative to competitors
 R & D performance
 Managerial personal
 Promotional effectiveness


 Factors Underlying Market Attractiveness

Factors Weight Rating Value =

(1 –5) (Weight * Rating)
Resource availability 0.20 3.5 0.7

Overall market size 0.15 4 0.6

Annual Market growth rate 0.20 4 0.8

Profitability 0.15 4 0.6

Competitive intensity 0.10 4 0.4

Technological requirements 0.20 4.5 0.9

Total 1.0 4.0

Factors Underlying Market/Biz Strength

Factors Weight Rating Value =

(1 –5) (Weight * Rating)

Market share 0.15 5 0.75

New product development 0.10 3.5 0.35

Brand Image 0.10 4 0.40

Sales force 0.15 3 0.45

Pricing 0.15 3 0.45

Distribution capacity 0.10 4.5 0.45

Product quality 0.10 4.5 0.45

R&D Performance 0.15 3 0.45

Total 1.0 3.75

 GE Matrix of Airtel

High Business Strengths Low

High 5 . 00
Attractive
Market Attractiveness

Airtel Enterpri
Mobile se

3 . 67

Moderate
TeleMedi
a Attractive
2 . 33

Unattractive

Low
GROUP 7
5 . 00 3 . 67 2 . 33 1 . 00
GE Matrix of Videocon Company

Business Unit Strength

High Medium Low
High Videocon CTR Thomson CPT & Allwyn
TVs Display Refrigerators
Industry
Components
Attracti MediumMobile Phones, Videocon Oil & Videocon LCD
veness Mobile Services, Gas TVs
Electrolux
Kelvinator
Low Videocon Videocon Side Videocon
Cassette AC by side Multimedia
Refrigerators Speakers
 Porter ’ s Generic Strategy

25 GROUP 7
Porter’s 5 Forces
1. Threat from Competition

Wireless Market – Top 4 garnering 75 %

market share

HIGH
 Competitor Analysis

  OP Margin Net Margin

Company Sep - 07 Sep - 08 Sep - 072 Sep - 083
Bharti 43.00% 38.00% 26.40% 19.30%
t OP Margins & Net Profit Margins among Peers
Rcom 37.90% 31.60% 23.90% 13.20%
IDEA 32.80% 26.60% 14.10% 6.50%
MTNL 23.70% 22.90% 7.00% 6.80%

Source: CMIE November 2008

 Continue…….
Minutes of Usage per Month – Mobile
Services

U SA 838 Despite a low teledensity of approximately

19 percent, India has the second highest
In d ia 461 minutes of usage per month. This offers huge
growth opportunity to telecom companies.
C h in a 303

R u s s ia 88

ARPU * in India – Mobile Services

10

8
The declining ARPU implies that India Inc.
ARPU (USD per month)

6
is tapping a large market at the bottom of
4 the pyramid by reducing tariffs; thereby,
2 enhancing affordability.
0
Q 1 2006 Q2 2006 Q3 2006 Q 4 2006 Q1 2007
GSM CDMA
2. Customer Bargaining Power

Ø Lack of differentiation among Service Providers

Ø Cut throat Competition HIGH

Ø Low Switching Costs

Ø Number Portability will have –Ve Impact
Ø Businesses & Consumers
Market Scenario

Postpaid Vs Prepaid Customers & Market Share

Threat of New Entrants
 Huge License Fees to be paid upfront & High

 Gestation period


 Entry of MVNOs & WiMAX operators


 Spectrum Availability & Regulatory Issues

 Infrastructure Setup Cost – High

 Rapidly changing technology

3. Suppliers Bargaining Power

LOW

33 GROUP 7
4. Threat of Substitutes

Ø Landline
DIMINISHING MARKET HIGH
Ø CDMA
Ø
Ø Video Conferencing
Ø BROADBAND
SERVICES
Ø VOIP - Skype, Gtalk, Yahoo Messenger
Ø e-Mail & Social Networking Websites
Continue….

Ø Huge License Fees to be paid upfront & High gestation

period
Ø Entry of MVNOs & WiMAX operators
LOW
Ø Spectrum Availability & Regulatory Issues

Ø Infrastructure Setup Cost - High

Ø Rapidly changing technology

Ø
Core Values
 Empowering People - to do their best

 Being Flexible - to adapt to the changing environment and
evolving customer needs

 Making it Happen - by striving to change the status quo,
innovate and energize new ideas with a strong passion and
entrepreneurial spirit

 Openness and transparency - with an innate desire to do
good

 Creating Positive Impact – with a desire to create a
meaningful difference in society.



TARGETING
 Elite
 Up market professionals
 Entrepreneur with business plans
 Low income mass category
 Youth
 Women and senior citizens by post paid connection


POSITIONING
Ø “Power to keep in touch”
Ø “Touch tomorrow”
Ø “Live every moment”
Ø “Express yourself”


Strategy
Ø
Ø Airtel partnered with leading players in telecommunication
players across the globe.
Ø
Ø It has managed to work with the best of domain specialists
globally and emerge as a world class entity.
Ø
Ø Partnerships include operational contracts with marquee
vendors and strategic investors ranging from private equity
investors to global telecom giants.

RURAL STRATEGIES
 Airtel follows “Match-box strategy”
§ Advertisements
§ Sales promotion
§ Publicity and events

 The firm expands regularly in Bihar, piggybacking on 300
distributors and more than 50,000 retail outlets selling
Airtel prepaid cards

 Covers over 4,00,000 villages and hopes to expand to other
1,00,000 by 2009


AIRTEL ADVERTISEMENT
 Airtel basically uses two appeal to connect to the users
 Emotional
 Humorous


 Total advertising budget of Airtel is Rs. 150 crore


SALES PROMOTION
 “Friendz” pre-paid plan

 “Ladies special” plan

 “Senior citizen” plan

Youtopia
 Special tariff plan for youth- Youtopia


 Reduced tariffs, access to cell phones



 14-19 years of age



 Expand customer base (limited to the older age groups till

now)


 Deviation from earlier positioning for older people

symbolizing dignity and power


 Re 0.25 for 30 seconds- night!, special bidding portal, music

download facilities, SMS at affordable prices

PUBLICITY AND EVENTS
Sponsored events
 Delhi half marathon
 Delhi golf tournament
Sponsored TV shows

 Big Boss
 KBC
 Indian Idol


Outsourcing deals in 2004


 Ericsson was given the mandate to provide, manage and
maintain the equipment as well as provide quality
assurance in Airtel‘s then 13 mobile circles.




 IBM was given the mandate to handle the back office
requirements of Airtel’s presence in India

Performance till date
 Bharti Airtel has enjoyed an excellent run ever since the
telecom sector opened.

 It has managed to hold on to its leadership position inspite of
the presence of other players with deep pockets –
Ambani’s, Tata’s, Birla’s and Vodafone.

 Has coped well with regulatory changes.

 Continues to attract and delight customers.

Future Strategies
 Translate its expertise in Indian markets to other emerging
economies.

 This could call for acquisitions globally.

 Technology leadership is a must – Airtel must ensure that its
reliance on GSM technology does not render it obsolete.

 Indian market in spite of being the worlds largest is still not
matured. Opportunities abound in the hinterland which
must be exploited.

THANK YOU !!