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Prof. Suman Sarkar
Table of Contents
1. ABOUT THE INDUSTRY 2. OVERVIEW OF THE COMPANY 3. PRODUCT 4. PRICE 5. PLACE 6. PROMOTION 7. PEOPLE 8. PROCESS 9. PHYSICAL EVIDENCE 10. SWOT ANALYSIS 11. CUSTOMER GAP ANALYSIS 12. COMPETITORS 13. MARKET AND PROFIT SHARE 14. CRITICAL SUCCESS FACTORS AND UNIQUE STRATEGIES 15. FUTURE IN HOLD 15. CONCLUSION 16. BIBLIOGRAPHY & REFERENCES
1. ABOUT THE INDUSTRY
The Indian telecom industry consists of incumbent players such as BSNL, MTNL, and VSNL; and private operators licensed for various services since the mid-1990s. The major players in the various sub-segments are detailed below: According to TRAI, the overall revenue for the telecom sector for all the operators for FY2003 was estimated at Rs. 456,722 million or Rs. 456.72 billion. With revenues of Rs. 311 billion, BSNL and MTNL together accounted for almost 68% of the total revenues. Among the private operators, Bharti group had a turnover of Rs. 31.72 billion, accounting for around 7% of total sector revenue. VSNL had a turnover of Rs. 45.38 billion, representing 10% of total sector revenues. Fixed/Basic Network Services Although nearly a decade has elapsed since India laid out a regulatory framework for the liberalization of basic telecom services, competition in fixed local loop telephone services, so far, extends to only a fraction of the total population. Competitive entry has focused principally on services for urban customers in relatively affluent areas. Even the pattern of switching capacity (which indicates the capacity in a circle) indicates that around 57% of the switching capacity of the private operators at endSeptember 2003 was in metros and Category A circles. Further, an estimated 68% of the fixed network telephone connections of private operators at end-March 2004 were in metros and Category A circles. In terms of subscriber connections, private operators had a market share of around 5.5% at end-FY2004, as compared with 2.3% at end-FY2003, and 1.5% at endFY2002. While private operators accounted for 25% of subscriptions in urban areas at end-March 2004 (17% at end-September 2003), their market share in rural areas was negligible at 0.2% (0.2% at end-September 2003). Because subscriber density and income (and ability to pay) are low, providing access in rural areas is unprofitable because of the higher costs and lower revenues. The cost of providing telephone service in rural areas is much higher than in urban or suburban areas. The demand for profitable long distance services and value -added fax and Internet services is insignificant in rural areas. Above -cost long distance services are often bundled with cheaper local services in urban areas. Cellular Services
For cellular GSM and CDMA services, there presently exists significant extent of competition in nearly all service areas. In GSM services, during January 2005, of the 23 service areas (reduced from 24 after the merger of A&N Islands into the WB circle), fourteen service areas had 4 operators, seven service areas had 3 operators, and two service areas had 2 operators, and one had only one licensed operator. However, the intensity of competition is higher in Metros and Category A circles, which have higher potential and penetration. For example, all the four metros and five Category A service areas had four licensed operators. By comparison, six out of 8 Category B circles, and none of Category C circles had four operators. Increasingly GSM service providers are facing competition digital CDMA based wireless services. Unlike GSM, which offers seamless national and international roaming, WLL-LM services did not offer roaming. However, CDMA mobile services are, currently, competitive on product offerings and prices as compared with cellular GSM services. At end-2004, there were an estimated 11.08 million CDMA mobile connections, as compared with 37.38 million cellular subscriptions. Thus, CDMA subscriptions accounted for 22.9% of the total wireless mobile connections in India at endDecember 2004. A key factor in analyzing the degree of competition in the Indian cellular services market has been the trend of increased concentration in the Indian GSM cellular services market. The top five operators/operator groupings accounted for 87.2% of total cellular subscriptions at end -December 2004, as compared with 79.5% at end FY2003, and 76.6% at end-FY2002. Unlike in many countries (where licenses were awarded on a national or regional basis), the cellular services industry structure in India was fragmented at the outset. The direct consequence of the GoI’s policy14 in the first round of bidding in 1995 was that licence ownership was fragmented and most of the operators could offer no more than contiguous regional coverage; national coverage could only be provided through a multitude of roaming agreements. Seamless national coverage is an obvious objective for an industry whose goal is to provide mobility, but delivering such a service has been fraught with difficulties. National Long Distance The Indian NLD market was estimated at around Rs. 50 billion during FY2004. Because of the significant decline in prices of NLD services caused by regulatory interventions and market competition, the NLD market has declined from around Rs.
59 billion during FY2003. Though the number of minutes of NLD traffic has increased, the market has shrunk because of intense competition between the various operators—BSNL, BIL, RIL, and VSNL. Competition is steadily leading to a decline in NLD prices as they more accurately reflect true costs. However, long-distance service hinges on access to local networks, which for now is controlled by BSNL, MTNL, and private operators such as BTV, and Reliance. Long-distance service hinges on access to local networks. Thus, new entrants without a significant fixed/cellular local access customer base will have to use the customer access networks of the existing local access network operators (fixed and cellular) to originate and terminate their traffic. International Long Distance The Indian ILD market was estimated at around Rs. 43 billion during FY2004. Because of the significant decline in prices of ILD services caused by regulatory interventions and market competition, the ILD market has declined from around Rs. 50 billion during FY2003. Though the number of minutes of ILD traffic has increased from 3.7 billion during FY2003 to 5.2 billion during FY2004, the market has declined in value terms because of intense competition between the various operators—VSNL, DAIL, BIL, and RIL.
1. OVERVIEW OF THE COMPANY
Airtel comes to us from Bharti Airtel Limited, India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 94 cities. The Enterprise services provide end-to-end telecom solutions to corporate customers and national & international long distance services to carriers. All these services are provided under the Airtel brand.
Business Decisions Mobile Services: Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is the largest mobile service provider in the country, based on the number of customers. Airtel Media Services: The group offers high speed broadband internet with a best in class network. With Landline services in 94 cities we help you stay in touch with your friends & family and the world. Enterprise Services (Corporates): The group focuses on delivering telecommunications services as an integrated offering including mobile, broadband & telephone, national and international long distance and data connectivity services to corporate, small and medium scale enterprises. Enterprise Services (Carrier Services): The Company compliments its mobile and broadband & telephone services with national and international long distance services. It has over 35,016 route kilometers of optic fibre on its national long distance network. For international connectivity to east, it has a submarine cable landing station at. For international connectivity to the west, the Company is a member of the South East Asia-Middle East-Western Europe – 4 (SEA-ME-WE-4) consortiums along with 15 other global telecom operators. Airtel is the largest cellular service provider in India in terms of number of subscribers. Bharti Airtel owns the Airtel brand and provides the following services under the brand name Airtel: Mobile Services (using GSM Technology), Broadband & Telephone Services (Fixed line, Internet Connectivity (DSL) and Leased Line), Long Distance Services and Enterprise Services (Telecommunications Consulting for corporates). Leading international telecommunication companies such as Vodafone and SingTel held partial stakes in Bharti Airtel. In April 2006 Bharti Global Limited was awarded a telecommunications license in Jersey in the Channel Islands by the local telecommunications regulator the JCRA. In September 2006 the Office of Utility Regulation in Guernsey awarded Guernsey Airtel with a mobile telecommunications license. In May 2007 Jersey Airtel and Guernsey Airtel announced the launch of a relationship with Vodafone for island mobile subscribers. In July 2007, Bharti Airtel signed a MoU with Nokia-Siemens for a 900 million dollar expansion of its mobile and fixed network. In August 2007, the
company announced it will be launching a customized version of Google search engine that will provide an 'array of services' to its broadband customers. In March 2008, Bharti Airtel will roll out third generation services in Sri Lanka in association with Singtel. This is because Singapore-based Asian telecom major Singtel, which owns a little over 30% in Bharti Airtel, is a major player in the 3G space as it has already third generation networks in several markets across Asia.
Segmenting the Indian Mobile Consumer Market With the proliferation of mobile phone users, several micro segments have also emerged lately, each with their own specific needs. The Indian Mobile consumer market has been segmented as follows. The rationale behind the above segmentation is to identify customers on the basis of their stage in life and hence to tailor-make schemes for each customer segment. The different segments are explained as follows. Youth Over the years, service providers have started giving greater attention to this segment, as it has emerged as one of the biggest users of mobile phones. For the youth, mobile phones are not just a necessity, but rather an indispensable accessory. This segment particularly values prepaid schemes with free SMS services. It is further differentiated into various micro-segments based on age and gender. For instance, youngsters in the age group of 19 to 23 years generally have a large circle of friends and more access to money. Companies thus focus on providing services like group talk and group SMS to these people. This segment is very dynamic as its needs keep changing very frequently, driven by the latest trends and fads. For instance, downloading new ringtones is the latest fad among the youth today. This is a huge revenue source for service providers and so they need to keep up with the changing tastes of this segment. Young Professionals People entering the workforce and thus moving out of the dependent bracket constitute this market segment. They generally prefer using post paid schemes with value added services like information about stock markets, news updates and so on. Small and Medium Enterprise
This segment mainly consists of people who are switching over from landlines to mobile phones, seeking a cost advantage. The focus here is on economy-packages rather than value added services. Family Family as a segment consists of more number of dependents. These dependants are serviced by prepaid schemes. Geographically dispersed families tied by the same cellular service providers may get cost advantages in terms of lower pulse rates. Special The ‘Special’ category includes a small but growing segment which requires largely customized services sought by celebrities, politicians, CEOs and the super-rich. Tailor made schemes for each segment have been a great success so far. This customization, however, has reached such a stage that every service provider has numerous schemes being provided at the same time. Being short term schemes, they keep changing frequently and customers thus start switching from one service provider to another based on the attractiveness of the scheme. This has brought down customer loyalty and hence service providers are finding it difficult to retain existing customers. It is estimated that in the near future the plethora of schemes provided by the different service providers will stop being a differentiating factor. Products and Services Company provides mobile services, fixed line services, national long-distance services, international long-distance services, broadband, Internet and VSAT services. Bharti has been a groundbreaking brand in the telecom sector. It was the first mobile service in Delhi, first private basic telephone service provider in the country, It provides comprehensive telecom services outside India in Seychelles Bharti is also the first private sector service provider to launch National Long Distance Services in India. Bharti Enterprises also manufactures and exports telephone terminals and cordless phones. Apart from being the largest manufacturer of telephone instruments, it is also the first telecom company to export its products to the USA. Bharti Tele-Ventures has launched the country's first stock and portfolio tracker on the mobile in association with the Bombay stock exchange. The service named Airtel Portfolio Manager is made available nationally to both Airtel (Bharti's brand) postpaid and pre-paid customers using GPRS/EDGE phones at a fixed rate of Rs 150 per
month. The customers would be able to view live quotes of chosen stocks and analyse the status of their portfolio through Airtel. The service can be accessed even while roaming all over India and in 20 different countries where Airtel has GPRS roaming agreements. The company is planning to increase its network to more cities and villages in the country. Recent developments In 15 April 2005, Bharti Tele-Ventures plans to roll out 3G services on a national level over the next 18-20 months, with an investment of around $1 billion (Rs 5,000 crore) to enable mobile users to access broadband services on the move. According to sources, the company will be ready to kick off 3G services on its network within 12 months of TRAI giving go-ahead and allocation of suitable spectrum. TRAI is currently working on its recommendations on spectrum allocation between GSM and CDMA services for use in 3G services. Bharti group, with plans to invest up to $1 billion in the Delhi airport modernization project is planning to dilute the promoter’s stake in its flagship Bharti Tele-Ventures Ltd, to fund the group’s diversified business ventures. The group has also planned to venture into the railways and hospitality sectors, and further deepen its presence in agricultural business. Recently, High Court of Delhi has approved the scheme of amalgamation of Bharti Cellular Ltd and Bharti Infotel Ltd with the Company. The appointed date of merger is April 1, 2004. Further the Company has informed that certified copy of the Order has been filed with the Registrar of Companies, New Delhi on June 01, 2005 and on filing of the same Bharti Cellular Ltd and Bharti Infotel Ltd stands merged with the Company. In this that characteristics of services are to be defined that meets the needs of customers. Organization has to keep in mind what the customers want from them. Incase of Airtel, the intangible aspects of service should be defined. The areas which make Airtel’s service more attractive should be considered. Incase of product, the physical features are described. For e.g. Bharti Airtel has tied up with HTC; a Taiwan based mobile company to offer HTC touch, a Microsoft windows based smart phone in the country.HTC touch will be exclusively available to all Airtel customers. The HTC Touch smart phone is a
windows mobile 6 professional based phone, providing one touch access to e-mails, text messages. The HTC touch is compatible with outlook mobile, office mobile, windows life etc. Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti Group, has a diverse business portfolio and has created global brands in the telecommunication sector. Bharti has recently forayed into retail business as Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It has successfully launched an international venture with EL Rothschild Group to export fresh agri products exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance Company Ltd under a joint venture with AXA, world leader in financial protection and wealth management. Airtel comes to you from Bharti Airtel Limited, India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 94 cities. The Enterprise services provide end-to-end telecom solutions to corporate customers and national & international long distance services to carriers. All these services are provided under the Airtel brand. Business Divisions
Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is the largest mobile service provider in the country, based on the number of customers.
The group focuses on delivering telecommunications services as an integrated offering including mobile, broadband & telephone, national and international long distance and data connectivity services to corporate, small and medium scale enterprises.
The group offers high speed broadband internet with a best in class network. With Landline services in 94 cities we help you stay in touch with your friends & family and the world.
The Company compliments its mobile and broadband & telephone services with national and international long distance services. It has over 35,016 route kilometers of optic fibre on its national long distance network. For international connectivity to east, it has a submarine cable landing station at. For international connectivity to the west, the Company is a member of the South East Asia-Middle East-Western Europe – 4 (SEA-ME-WE-4) consortium along with 15 other global telecom operators.
Perceptual Mapping This technique is used to see how a particular brand is perceived on the various attributes taking two at a time.
The above perception map shows the perception of various service providers with reference to the two factors – Call Rates and Promotions. The Call rates in the minds of the consumers are one of the highest for Reliance compared to other service providers. Further, the consumer seems to be spoilt with promotional offers, with almost all the players offering various promotional schemes. Reliance, Hutch, Airtel, Idea, and Tata have nearly the same perception about Promotional schemes among the consumers. From the survey it was found that the selection of a service provider was very much dependent upon both Price of the connection and call rates as well as the Promotional schemes that the company launches. Network and Service Response were not rated highly by the users of the mobile phones. They were more or less resigned to the fact that there would be network problems and as well as unanswered service requests. The essence was that incase TRAI comes up with one number across all service providers then the attributes would become more important. From the perception mapping we see that Airtel rates the highest in providing good network as well as timely service response. The service response of BSNL is pretty low as is for MTNL. This goes along with their PSU image and may dampen their growths. Apart from Airtel, other players should focus on increasing their brand image in terms of service response and network coverage. Cost Competitiveness The cost competitiveness of the large telecom companies, caused mainly by the sheer size of operations, along with the low tariffs on network service, have enabled these companies to offer lower call rates, improved service facilities and promotional schemes and offers. This facilitates high retention rate of consumers due to increased customer loyalty as well as attracting new users of the service altogether. 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. Value-added services - such as "Privileges" (discount coupon booklets), cricket scores and stock market information - have formed as critical a part of Hutch's marketing efforts as its advertising. Other services like Hutch World (GPRS service), Hutch Alive (non-stop, streaming action) and Hutch4Help, a unique dial-in 'convenience' service, all emphasise the premium attributes of the service. But now there's Chhota Recharge, small value recharge cards (starting at Rs 10), which will also help mobilise small spenders. 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 Mcheques (mobile credit cards). Reliance Communications provides CDMA handsets for as low as Rs.2000 and is steadily slashing STD and ISD call rates. Its trademark Webworld outlets are a one-stop shop for all related services for Reliance customers. Following articles, easily can be interpreted as a part of their innovative pricing strategy which involves creating rate fences, building alliances, co-sponsorship etc. Airtel cuts price
Airtel has reduced the price of its starter pack in the prepaid segment in Chennai, according to a press release. It will offer a student prepaid starter pack at Rs 149 — cost reduced from Rs 224. This pack has a talk time of Rs 50 and is valid for seven days. It offers call charges of 49 paise per minute, the release said.
Price war: Airtel, Nokia plan joint strategy Bharti Airtel is all geared up to face the challenge posed by Vodafone. In the massmarket low-cost segment, in order to take on Vodafone, it is entering into an alliance with the world’s largest handset maker Nokia to offer bundled phones at partly subsidised rates. The two companies will also follow a ‘joint go to market strategy’, where they will combine some of their advertising and marketing initiatives to tap the mid-and lowerend segments, which account for a vast majority of India’s cellular subscribers. Bharti is also set to unveil a slew of value-added services (VAS), particularly mcommerce applications within the next few days. VAS, especially m-commerce is another area of strength for Vodafone. Bharti chairman Sunil Mittal will also announce the launch of its much talked about mobile money transfer services within the next couple of weeks. The company has just unveiled a facility that allows all its post-paid users to link their credit card, debit card or bank accounts to their mobile connection, and is also set to
extend these services to its pre-paid users by next week. (A Bharti subscriber can use this facility to top up or pay the bill of other cellular users also). Apart from paying one’s mobile bills, the company will soon extend this facility to allow its customers pay other utility bills such as electricity and water. In the next stage, Bharti will soon throw open its m-commerce platform to help customers pay for railway tickets and hotel rooms via their handsets. The company will formally announce the launch of these m-commerce applications within the next few days. With regard to handset bundling, Bharti already has small-scale alliances with many manufacturers, including Nokia. However, these deals are very specific to certain towns and regions. “We are deepening our alliance with Nokia on a large scale - both companies will go to rural India together to tap the mid- and low-end segments. We can synergise our operations as both employ strategies such as using rural vans to promote services and running outlets across the country. We are also working towards common outdoor advertising and exploring other areas of partnership,” Bharti Airtel’s marketing and communication head Gopal Vittal told ET. Mr Vittal also added that going forward, he expected a significant majority of the Bharti’s new subscribers to take up a connection bundled with a Nokia connection. This also marks a significant strategy shift for Bharti Airtel, which along with other GSM operators have so far shied away from large-scale handset bundling, especially on a pan-India level. However, the goal posts have been shifted with Vodafone’s entry into the Indian market as the UK-based cellular major has announced that it would launch a series of ultra low-cost bundled handsets to get a bigger pie of the rural Indian market and increase its market share. In fact, Bharti is betting so big on VAS, that it has segmented all its high-end users into a separate category called ‘funsters’. The company will focus its marketing efforts on this category, which it defines as gadget savvy heavy VAS users who are between the age group of 18-35 years. The logic: “The top 20% of our customers account for about 75% of the company’s
total revenues,” Mr Vittal added. This is a change of strategy again as Bharti Airtel has done away with its earlier marketing policy of ‘one-size-fits-all’ demographic segmentation. Looking Ahead Probably the single most important development on the horizon is a move towards converged regulation. In 2001, the government announced its intention to pass a Communications Convergence Bill, which would bring telecommunications, broadcasting, cable and Internet under a single regulator, the Communications Commission of India (CCI). Inspired by the emergence of “super-regulators” in several countries (e.g., UK and Malaysia), the bill has undergone several drafts, but at this point appears stalled in the legislative process. 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. Value-added services - such as "Privileges" (discount coupon booklets), cricket scores and stock market information - have formed as critical a part of Hutch's marketing efforts as its advertising. Other services like Hutch World (GPRS service), Hutch Alive (non-stop, streaming action) and Hutch4Help, a unique dial-in 'convenience' service, all emphasise the premium attributes of the service. But now there's Chhota Recharge, small value recharge cards (starting at Rs 10), which will also help mobilise small spenders. 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 Mcheques (mobile credit cards). Reliance Communications provides CDMA handsets for as low as Rs.2000 and is steadily slashing STD and ISD call rates. Its trademark Webworld outlets are a one-stop shop for all related services for Reliance customers.
It refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P refers to the channel by which a product or services is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales. Airtel covers around 94 cities in India.
The application of this “P” can be explained as under: Due to the large geographic area they comprise, telecom circles often require deployment of more than one mobile switching center (MSC). AirTel connects between MSCs using leased lines. With the help of the local RAD distributor MROTEK, AirTel deployed RAD’s CVS compressed voice system based on the Kilomux2100 multiplexer platform to maximize bandwidth utilization of each leased line. At each MSC, the Kilomux-2100 multiplexer compresses traffic from six E1 lines onto one E1 line, significantly reducing the number of lines AirTel leases from the incumbent carrier, thereby achieving the lowest possible connectivity costs between MSCs. As one of the first cellular operators in India, in some locations the AirTel backbone is based on a microwave PDH network with 16 E1 line capacities, insufficient for today’s demand for cellular bandwidth. Since CVS increases the transport capacity of the PDH network, AirTel can deliver all services over this network, without the need to upgrade to an SDH network (63 E1 capacity), which it was considering before installing the CVS system. “CVS enables AirTel to provide value-added services over limited bandwidth”.
The Airtel subscriber base according to COAI - Cellular Operator Association of India as of May 2008 was:
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Delhi - 4,055,704 Mumbai - 2,468,016 Chennai - 1,823,532 Kolkata - 1,852,838 Maharashtra & Goa - 4,345,945 Gujarat - 3,004,824 Andhra Pradesh - 6,516,332 Karnataka - 7,316,500 Tamil Nadu - 4,218,705
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Kerala - 1,703,298 Punjab - 3,239,200 Haryana - 1,067,990 Uttar Pradesh (West) - 1,624,001 Uttar Pradesh (East) - 3,897,278 Rajasthan - 4,242,006 Madhya Pradesh - 3,084,776 West Bengal & Andaman and Nicobar - 2,106,163 Himachal Pradesh - 809,829 Bihar - 4,912,900 Orissa - 1,911,070 Assam - 939,746 North Eastern States - 585,213 Jammu & Kashmir - 1,100,069
The total is 67,425,935 or 32.81% of the total 205,460,762 GSM mobile connections in India till May 2008.
It has an installed base of 40,000 cell sites and 59% population coverage. The company will invest up to $3.5 billion this fiscal (07-08) in network expansion. After the proposed network expansion, an additional 30,000 towers will result in the company achieving 70% population coverage Bharti has over 39 million users as on March 31, 2007 It has set a target of 125 million subscribers by 2010 Prepaid customers account for 88.5% of Bharti’s total subscriber base, an increase from 82.7% a year ago.
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In August 2007, the company announced it will be launching a customized version of Google search engine that will provide an 'array of services' to its broadband customers. Recently, Airtel has launched services in UK to connect NRI’s to India. Airtel provides its services from retail outlets located in various cities. Airtel also provides services through online services i.e. Internet and broadband. For e.g. To find
out the Airtel broadband & internet tariffs available in the particular city, a location is selected from the drop-down.
Now one can experience the internet in a new way with Airtel Broadband. It is powered by DSL technology which gives you blazing-fast; secure Internet access as soon as you switch on your computer. They give you the power of limitless discovery on Internet – from shopping to banking, paying bills to making new friends and not to mention endless fun & learning for children. Airtel is providing various interesting services through broadband. E.g. Airtel Broadband Services and TCY Online offer online competitive tests for GRE, GMAT, SAT and MBA, from the comfort of your home. Airtel brings you a host of exciting features ranging from facilities like online tests, in touch and Video Surveillance Solutions to trouble shooting devices like, Net Expert and Web Jockey.
The mobile services group provides GSM mobile services across India in 23 telecom circles, while the ATS business group provides broadband & telephone services in 94 cities. The Enterprise services group has two sub-units - carriers (long distance services) and services to corporates. All these services are provided under the Airtel brand. Advertisement Material: Bharti Airtel uses aqua-based ink for all its in-shop branding, in spite of its cost being three times the cost of ink which is normally used. The aqua-based ink is environment friendly and does not emit any fumes and hazard. Sometimes flex materials are used for hoardings, but since they are not disposable these hoardings are donated to poor people so that they can use it as roof-material on their huts. Advertising is supposed to inform people about ones product. It is used to generate awareness and to help people make a decision. This definition has led to advertisements being bold, in your face attempts to ram the product down the consumers throat, without a hint of class. This reeks of indifference to the intelligence
of the consumer. But, in recent times all this has changed, and the airtel ad is an example of this sweeping change in the mindset of the adman. What makes the Airtel ad so special? The Airtel ad is an amazing journey into the entire gamut of human emotions. It is a compendium of human expression at its simplest and best. What could be more endearing than the picture of a small boy caught red handed, to potray the need for better communication -- his efforts to convince his mother that he has done no wrong, or to confess that he indeed has. It is this method of potrayal -- where the message is left to the viewers to decipher, where the meaning is implied rather than thrust at you, that truely proves a beakon in these murky waters of FMCG advertising. AirTel has launched a new logo. The new logo would symbolise innovation, energy and friendliness The Airtel logo is a specially drawn woodmark. It incorporates two solid, red rectangular forms whose counter-form creates an open doorway. The title case lettering with its capital ‘A’ reinforces our leadership position. The red dot cues in our focus on innovation. Our logo is a reflection of our identity – a confident symbol of a brand that is always ahead of the rest , always ‘In-touch’ and on customer’s side. Look at some of their promotional strategy and schemes, “Airtel Mobile Campus” – Redefining the power of connect with anytime anywhere access to friends, communities on the go! Community members enjoy special tariffs for calls and SMS New Delhi, August 03, 2008: Bharti Airtel, India’s leading mobile service provider has unveiled a unique opportunity for its customers with the launch of ‘Airtel Mobile Campus’. A unique ‘virtual place – on the move’, Airtel Mobile Campus, by facilitating a one-of-its kind convergence through web, wap and SMS, gives a new dimension to the idea of the mobile as the most simple, convenient device for entertainment on the go. With this, customers can express their feelings, emotions, needs, aspirations and connect with their friends anytime anywhere. A unique 360 degree offering for the youth, Airtel Mobile Campus enables an exciting user experience with a host of activities that users can engage in. Users will amongst
others, be able to upload & share photos and videos or blast an SMS to their circle of friends on Campus, express themselves through mini blogs, give shape to their aspirations with contests & applications or participate in discussions/forums happening on their Campus. What’s more, users get to avail Night and weekend calls @ 25p, SMS @10p and earn rewards on the basis of the activities they engage in on Airtel Mobile Campus. Shashi Arora, CEO Bharti Airtel, Mobile Services Delhi & NCR says, “One of the key enabling reasons for our continuing leadership position in the competitive telecom market has been our ability to ‘Think Fresh’ and innovate, giving our customers a delightful experience. Airtel Mobile Campus brings a unique ‘virtual place – on the mobile’ enabling customers to give shape to their aspirations through unique community engagement initiatives and communicate the way they want to, anytime anywhere.” Users can access Airtel Mobile Campus by visiting the Mobile Campus banner on Airtel Live! Or by sending keyword < mcampus> to 54321 to get a link to Mobile Campus on their GPRS enabled handsets. To avail the Airtel Mobile Campus service, existing as well as new customers need to recharge with Rs 250 for a talk-time of Rs 50 and a 90-day validity period. Tariffs: Calls Day** Night/Weekend** Local Airtel to Airtel 0.5 0.25 Other Calls 1 0. 5 STD 1.5 1 SMS Local 0.2 0.1 National 0.5 0.25 * *(All call tariffs@ Rs. per minute, Night tariffs for calls between 11:00pm7:00am,Weekened tariffs-Friday 11:00pm-Mon 7:00am) Mobile and the internet have become an integral part of the life of the youth for staying in touch with the community. Airtel Mobile Campus promises to bring
together a unique value proposition that enables this segment of mobile users to stay in touch with their world through affordable means. IFFCO and Airtel Join Hands to Usher in the Second Green Revolution Joint venture company IFFCO Kisan Sanchar Ltd. to provide big boost to Indian agriculture and rural economy Airtel’s telecom products and services to become lifeline for rural India Unique VAS platform to offer free daily voice updates on mandi prices, farming techniques, weather forecasts, fertilizer availability Dedicated helpline for farmers to answer their queries
Mr. Sunil Bharti Mittal, Chairman and Managing Director, Bharti Airtel Limited and Dr. U.S.Awasthi, Managing Director, IFFCO launching a joint venture company IFFCO Kisan Sanchar Limited (IKSL)
Airtel Launches Enhanced CallHome Service in the U.S
* Enables Payment Through Indian Credit Cards to Target 700,000 Indian H1B Visa Holders, Business Travelers, Tourists and Students in the U.S. * Plans to Extend Service to NRIs in Two More Countries by Q1 FY 08-09 Bharti Airtel to Pilot XIUS-bcgi's New End-to-End Mobile Transaction Platform "We have generated early interest with the current launch of our mobile commerce service in India, and we already have more than 260,000 customers signed up," said Pallab Mitra, head of m-Commerce for Bharti Airtel. "We believe that the solutions being offered by XIUS-bcgi will improve the ease of use and accessibility of new products and services that we plan to offer with our m-commerce initiatives." Bharti Airtel has more than 50 million users. With the company's current rural initiatives, eCognNito's ease of use solutions will improve accessibility, penetration and adoptions of Bharti Airtel's m-commerce offerings to their rapidly growing customer base.
Airtel launches services in the UK to connect NRIs to India Enters market with virtual calling card service ‘Airtel CallHome' to connect over 1.6 million NRIs and students ‘Airtel CallHome' the smartest way to call India :
Unmatched call quality – ‘No call drops' and unmatched clarity on state-ofthe-art Airtel network. Free trial offer of 25 minutes to experience the service Competitive tariffs of 3.5 pence/min for toll access and 4.5 pence /min for toll free access Inaugural offer of 50% extra talk time over and above what is purchased bringing effective call rates down to 2.3 pence/min Quick two touch dialing service – 10 numbers in the UK and 50 numbers in India. Value added services such as Astro chat, Music and Friends Chat
Option to sign-up/ top-up calling minutes from India using a local credit card. Especially beneficial for students
EASE OF USE: Customers need to log on www.airtelcallhome.com, create a personal account and the customer immediately gets a PIN to start calling. This virtual calling service is available 24X7 as per convenience of the customers. Additionally, the online account allows customers to have complete control over their usage, payment history and new promotional scheme at all times.
Brand Airtel was born free, a force unleashed into the market with a relentless and unwavering determination to succeed. A spirit charged with energy, creativity and a team driven “to seize the day” with an ambition to become the most globally admired telecom service. Airtel, after just ten years, has risen to the pinnacle of achievement. As India's leading telecommunications company Airtel brand has played the role as a major catalyst in India's reforms, contributing to its economic resurgence. Today they are connected to people’s lives with our Mobile services, Telemedia services, to connecting India's leading 1000+ corporates. We also connect Indians living in USA with our callhome service. Corporate Responsibility at Bharti Airtel At Bharti, CSR is a way of life. Each department and employee strives to be sensitive to the stakeholders and environment within their work context. Bharti encourages employees to take decisions and design business-linked processes that are sensitive to communities and environment. Corporate Social Responsibility (CSR) in Bharti encompasses much more than only social outreach programs. It is an integral part of the way Bharti conducts its business. The essence of Bharti’s commitment to Corporate Social Responsibility is embedded in the ‘Corporate Values’, which stem from its deepest held beliefs. These Values are:
• • • •
To be responsive to the needs of our customers To trust and respect our employees To continuously improve our services – innovatively and expeditiously To be transparent and sensitive in our dealings with all stakeholders
They encourage our employees to take decisions and design business processes, keeping in mind the following:
• • • •
Ethics, fairness and being correct Meeting and going beyond compliances and legal requirements Showing respect and sensitivity towards stakeholders and communities, and Nurturing the environment
They practice our CSR beliefs and commitments through a three-pronged approach:
• • •
Engaging with stakeholders Ensuring stakeholder sensitive policies and practices Undertaking programs for our employees, community and environment
Bharti Airtel sensitizes its employees towards CSR issues at various forums. They feel that it is important that each employee should understand the importance of environmental, social and economical aspects while taking business decisions. At Bharti, each employee is sensitized towards CSR issues and thus operations at the ground level are influenced. Such sensitization exercises have resulted in many socially and environmentally sensitive decisions on the ground. For example, Confidence Plan for hearing impaired people, covers noise-making DG sets at extra cost, investing in consumer awareness campaigns to ensure safe use of mobile are some examples of the above. People They have developed the habit of thinking in terms of the people inside and outside of your business who are responsible for every element of your sales and marketing strategy and activities. It's amazing, for them, their ability to select, recruit, hire and retain the proper people, with the skills and abilities to do the job they need to have done, is more important than everything else put together.
Many of the best business plans ever developed sit on shelves today because the [people who created them] could not find the key people who could execute those Plans. So, employees play an impotant role in company performance. Board of Directors The board of directors of the Company has an optimum mix of executive and nonexecutive directors, which consists of two executive and twelve non-executive directors. The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an Executive Director and the number of Independent Directors on the Board is 50% of the total board strength. The independence of a director is determined on the basis that such director does not have any material pecuniary relationship with the Company, its promoters or its management, which may affect the independence of the judgment of a Director. The board members possess requisite skills, experience and expertise required to take decisions, which are in the best interest of the Company. The key functions of the HR Committee includes the followings:
• • •
Attraction and Retention strategies for employees. Employees Development Strategies. Compensation (including salaries and salary adjustments, incentives/benefits bonuses, stock options) and performance targets for the Chairman and Managing Director (CMD) and Joint Managing Directors (JMDs) Executive Directors.
All Human Resources related issue. Other key issues / matters as may be referred by the Board or as may be necessary in view of Clause 49 of the Listing Agreement or any statutory provisions.
Employees They believe that one of the most important drivers of growth and success for any organization is its people. At Bharti Airtel, our ‘Mantra’ for employee delight focuses on 5 Ps – People, Pride, Passion, Processes and Performance.
Bharti Airtel has been recognized among the Best Employers in the Country for two successive years – being 14th in 2003 & jumping ahead of several other large conglomerates to an enviable position of the 2nd Best Employer in the Country in 2004. This is a clear demonstration & acknowledgement of the robust, progressive, people as well as business aligned Human Resource practices, which the organization has developed and implemented remarkably in a very short span of time. Bharti Airtel follows an “open door policy” to approach the management, which helps resolve issues with mutual agreements. We encourage people to stand up against any unfair treatment for which we have the Office of the Ombudsman, where employees can raise any issues regarding business and workplace conduct. Bharti ensures transparency through the various communication policies, strategies and plans. . Regular Employee Communication Forums provides a platform for the employees to raise issues that require resolution. Their leaders strongly believe in facilitating and initiating activities that help employees manage their health and well-being. Our focus always remains to redefine leadership; we develop leaders who enable performance and inspire their people to unleash their potential. Their people orientation reflects in their vision of being “targeted by top talent”, and a key aspect of our business focus “building a best-inclass leadership team that nurtures talent at every level.” Employee friendly HR policies have been put in place, which amply reflect the organization’s concern for its people. Some typical examples of these policies and practices include a family-day at office, half day leave for birthdays, gifts for anniversaries, compulsory 10 days off, festival celebration with family, no official meetings on weekends, five day weeks, concierge services, call center engagement programs etc. These “care” policies and practices are applied across the organizational levels without any discrimination. From self-management workshops to aerobics sessions, yoga classes to provision of relaxation/meditation rooms, we ensure that every employee keeps a check on his/her fitness. Tie-ups with leading health service organizations enable our employees to undertake periodical health check-ups depending upon their age. This facility is also extended to employee family members at discounted rates. The company provides
Flexible Group Mediclaim insurance to all employees, covering all kinds of illnesses, accidents and hospital coverage for serious ailments. Apart from these specific engagements, we regularly organize health check up camps, eye check-up camps and stress management sessions. Some of their offices have opened gymnasiums/fitness facilities to ensure that the fitness fanatics do not have to worry about time constraints to remain fit. At many of their locations, they have hired psychologists who undertake personal counseling sessions for employees. Bharti Airtel offers a flexible compensation structure to its employees wherein the employees have the flexibility to structure their fixed component of their compensation according to their requirements within the ambit of legislation. “Even a sweeper in the corporate office must understand that, if he does not keep the office clean, the visiting shareholders could question the company’s ability to manage a business if they cannot manage their premises well” Target customers 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
Customer defined business process, Airtel Marketing Strategy • • Process innovations and continuous improvement through people involvement Problem investigation by Fact based – Root Cause Analysis
Based on customer specifications, Airtel have webbed many business processes on the following concepts: • • • • Delivery time Turn around time Lead – time Time to market
Other performance indicators
Result Oriented Approach: Each process has been designed by first planning the desired result. The targeted results are then arrived at through identification of the following: • • • The next-customer and end-customer expectations. Quantifiable purpose of the process and key result areas. Past experience of “what went wrong and can go wrong”.
SupportSoft, Inc., a provider of software and services that make technology work, announced that Bharti Airtel Limited, a leading telecommunications provider in India, has successfully rolled out three new services to its Airtel broadband customers using SupportSoft software. Bharti launched these services under the "NetXpert" brand, offering India's first ever automated broadband self-care technology including automated installation and enhanced customer care to its approximately two million broadband subscribers across India. Bharti is using SupportSoft SubscriberAgent™ software to provide Airtel customers with the "Airtel NetXpert Agent." Installed on each customer's personal computer with their permission, SubscriberAgent's built-in software intelligence can help diagnose problems and provide automated resolutions to top issues that the subscriber may experience, including possible connectivity, browser and e-mail related problems. Extending on solution, Bharti Airtel will also use the NetXpert Agent as a marketing and revenue generating tool by providing links to Bharti's Value Added Services (VAS) as theyll as sending out scheduled alerts on topics ranging from new plans to billing reminders to their subscriber base. Bharti has also rolled out the "Airtel NetXpert DTL" using SupportSoft Intelligent Assistance™ software, which provides a set of remote diagnostics tools to Call Center executives. This allows analysts the ability to diagnose technology problems quickly and easily by reducing both the time consuming and manual steps involved in solving
problems, leading to increased first call resolution, decreased call handling times, and decreased field visits. Lastly, Bharti Airtel is leveraging SupportSoft's LiveAssist™ software to support its "Airtel NetXpert Chat" service, whereby Airtel customers can have an online "conversation" with a Bharti customer service representative to respond to questions or issues in real time. Customers simply click on the "Chat with an Xpert" icon on the Bharti Airtel Theyb site to quickly get connected to an agent, and they can save a transcript of the chat for future reference. LiveAssist can enable a customer service representative to chat online with up to four customers at one time, helping reduce customer wait time and speed anstheyrs to subscriber questions. "As industry leaders, they at Airtel are constantly taking initiatives to offer the best in class services that seek to enhance customer experience. With the introduction of the upgraded NetXpert platform, our customers will now not only be able to troubleshoot connectivity related issues themselves but also avail updated billing information, thereby taking customer convenience to new levels," said Srinivas Rao, Chief Marketing Officer, Airtel Telemedia Services. "They are extremely happy to be partnering with SupportSoft in this endeavour that will set new standards of service care delivery, helping further the uptake of broadband services in the country." "Forward-thinking service providers like Bharti understand that superior customer care from the start can lead to more loyal customers and increased adoption of new and additional services," said Josh Pickus, president and CEO of SupportSoft. "They are proud to be the driving force behind Bharti's innovative line of services to provide its customers with convenience and peace of mind, while providing Bharti with measurable benefits to the bottom line."
8. PHYSICAL EVIDENCE
Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgements on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down! Physical evidence is an essential ingredient of the service mix, consumers will make
perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service. In this way the physical environment plays an important role in shaping the service experience and dlivering the customer satisacfaction. So, Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service. In Bhati Airtel, the physical evidence plays an important role. At Bharti, they believe in the philosophy to refuse, reduce, reuse and recycle. The company has taken many initiatives in this regard, both within the offices for the benefit of our employees; and for outside world for the convenience of the people. Few examples of the initiatives taken are mentioned below: (a) Most of the new Airtel buildings recycle waste water for sanitary and cooling of equipment purposes e.g. DG sets and AC systems. These buildings also have rain water harvesting systems for ground water replenishment where appropriate. (b) All Airtel offices have energy efficient light fittings and DG sets. We also ensure automation that enables energy savings in our buildings. Building Management System (BMS) – Intelligent Building concept is being followed in all the new Airtel building and campuses that are coming up. The BMS controls The Heating, Ventilation and Airconditioning (HVAC) system,, electricity load management, water management, parking management, security and safety systems to ensure an efficiently run building on optimal resources. (c) New buildings also incorporate the concept of and Energy Wheel which optimises energy efficiency in buildings. The AC system in our buildings adds a certain amount of fresh air periodically; In the process of adding this fresh air the cool air within the building vents out which may result into higher usage of energy to bring the cooling/ temperature back. The Energy Wheel concept ensures that as we bring the fresh air in it is pre-cooled thereby optimizing energy efficiency.
(d) Air quality is checked periodically in all Bharti Airtel offices, and based on the results, duct cleaning, carpet cleaning, chair and sofa shampooing is undertaken. Water quality is also monitored in cooling towers for DG sets and Air Conditioner systems so that water born diseases such as legionella, etc. are avoided. (e) Use of air curtains on major office exits and double glazing also results in significant energy saving. (f)At the time of oil change in DG sets etc. the discarded oil for disposal is only sent to companies/ vendors approved by the Central Pollution Control Board (CPCB) for proper disposal as per CPCB approved processes. All Bharti Airtel offices follow the basic requirements specified by the Pollution Control Board) and ensure statutory compliance. (g) All Bharti Airtel offices have fire alarm systems. Periodic fire drills are carried out in Bharti Airtel offices as a practice. All Airtel offices are provided with First Aid boxes and have identified people as First Aid specialists.. Bharti Airtel takes all its equipment from its key vendors, namely Nokia and Ericsson, who comply with all the required health and safety norms. Each contract with the supplier has a clause that they will comply with our code of conduct and each year suppliers have to give Bharti Airtel a certificate that they are compliant. There is an induction manual for sub-contractors to ensure that they follow all the safety and statutory compliances as well as Bharti Standard Operating Procedures. Bharti Airtel is in the process of finalizing its Environment/ Health & Safety Policy (EHS) and will apply for ISO 14001 compliance within the next 3 years for each of its facilities. For outside world Reduce Paper usage: Due to technological innovations such as e-bills and electronic recharging, Bharti Airtel customers are given a chance to help save the environment. This has led to the major achievement of paper savings of approximately 32,500 sq meter every month. This leads to the saving of 96 trees every year. In addition, as per calculations during 2005-06, and is continuously improving since then. They save
49,000 sq meter in plastic monthly as the reduced usage of paper coupons and bills. These results are all the more remarkable, as these paper savings were achieved despite our customer base increasing. Sharing Infrastructure: They promote and believe in sharing of infrastructure (passive) with other telecom operators. This ensures that we can continue to serve our customers while utilizing minimum resources. This is of great help in nation like ours where we have a huge burden on our natural resources At present, they share around a quarter of our mobile cell sites across the country, with other service providers. They have extended our approach of sharing even for the rural areas, where it makes lesser business sense for operators to roll out. Their efforts have been well acknowledged by the regulator and the government, who have initiated efforts for shared rural roll out . Reducing Fuel Consumption due to travel: Bharti, having grown to be a large company on many counts, faces the key issue of operations coordination. While one would usually coordinate with others through face-to-face meetings, Bharti has institutionalized the habit of using videoconferencing and intranet facilities to interact. This significantly reduces the need for transport and thereby fuel consumption, it saves on time and generally creates a much more efficient working atmosphere. Bharti’s earnings calls, i.e. sharing the results with our stakeholders, also happen via audio-bridge. This enables investors and analysts world-wide to link in to the call and raise queries. Bharti does not stop at providing these facilities for internal use though. By offering our services, we enable people across the country to follow the same path and cut down on transport. This is not only convenient; it also saves tremendous fossil fuel consumption. Green-Shelters: Another key initiative has been the deployment of environmental friendly green-shelters at around 7,000 sites. These green-shelters use high insulation material and Passive Cooling techniques like PCM, a thermal salt, for indoor Base Transceiver Stations (BTS). Due to its high freezing point, PCM provides cooling for 4 to 5 hours without any Air conditioning, thus negating any need of electrical power
or diesel generator during that time. This not only saves cost but also minimizes pollution. These green-shelters also keep noise at a minimum. Bharti is the first company in India to initiate such a measure, and is well ahead of governmental regulations on the matter. Our Green shelter initiative has been appreciated by operators across the world and is being studied for mass deployment in many countries. Free-Cooling is another technique that we use to maintain temperature level during night hours by circulating cooler natural air from outside to inside the shelter by reworking air conditioner flows. This has reduced air conditioner consumption by almost 30%.
Bharti Airtel is also working with its suppliers and experimenting with alternate sources of energy like solar, wind, bio-fuel/ hydrogen to further reduce environmental impact. We are very keen to look at the viability of these technologies once experiments are being found to be successful like in the case of Green Shelters.
9. SWOT ANALYSIS
Strengths • 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. • 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. • The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base. Weaknesses • 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.
• 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. • 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. Opportunities • 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. • 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. • 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 moved into small and remote villages and towns. • 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. Threats • 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 Inidan 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. Airtel comes to you from Bharti Airtel Limited, India's largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services.
Positioning strategy of Airtel
Positioning is the perception market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand or organization. Product – Mobile services: Hutch, AirTel and Tata Indicom Points of parity – Mobile services and network connectivity. Points of difference – Value added services, call tariffs Hutch Tagline - Wherever you go, our network follows The brand tries to convey the message that the service is robust enough to provide coverage in every corner of its coverage area. Even if a person travels to remote locations, he will be able to use the Hutch network.
This has been portrayed very effectively by showing the puppy following a little boy wherever he goes, be it his house, his school or his playground. This gives the impression that the connectivity of Hutch is very good. The tagline of the company is reflected in the ad campaign showing the puppy. AirTel Tagline – Express yourself The idea conveyed is again the reach of the network. However, AirTel positions it in a way such that it helps maintaining relationships between people who may be far off. It tries to appeal to the innermost core of the human heart with the idea that a person can connect to loved ones wherever they may be. This has been portrayed in the ad campaign of AirTel where a teenage boy goes to meet his grandparents in a far-flung village and still manages to talk to his father using the AirTel network, thus emphasizing the fact that connectivity is there in far-off areas and also that AirTel is helping people bond and come together. In the sequel once the boy leaves the village he is still able to play chess with his grandfather over the phone while traveling in the train, thus driving home the point once again. Thus we can observe that the ad campaign is in sync with the tagline of the company Tata Indicom Tagline – Switch to Tata Indicom – And experience the difference The campaign positions the network and technology platform as the unique differentiator. The network is portrayed to have zero call drops, clarity of voice, low electro magnetic radiation technology and a highly secure network. The ad campaign showing popular bolywood actress Kajol emphasizes time and again on the fact that Tata Indicom is better in providing zero call drop and clear voice quality service to its customers. All the adverts whether it be the girlfriend getting angry with her boyfriend because of lack of clarity of voice, an executive losing a deal because of faulty network, a person not being able to talk in the lift due to lack of connectivity compare Tata Indicom with some other service provider and say that Tata Indicom is better. Hence the adverts do justice to the tagline and ask the customers to feel the difference by switching over to Tata Indicom. Conclusions
We can observe that all the three service providers are basically providing the same service and catering to the same need of the consumers. i.e. providing a cellular service with good connectivity and clear voice. But all the three providers have positioned themselves differently by adopting different taglines and then creating adverts consistent with these taglines. Nowhere have they mentioned about the call tariffs and value added services in their campaigns. So they are basically trying to position themselves by showing that their connectivity is better than the others.
Core competencies are the capabilities that are critical to a business achieving competitive advantage. The starting point for analysing core competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power. There are three analysis, which should be applied when identifying and developing core competence of Airtel: The core competence should: • • • Provides potential access to a wide variety of markets Mark a significant contribution to the perceived customer benefits of the end Make it difficult for competitors to imitate
product In order to provide potential access to a wide variety of markets, a company should attract customer using a number of different services for example multimedia so they are not just focused on the mobile telecommunications, they are broadening their product line. Airtel customer base ranges from the young to the corporate user to the more mature market. To mark a significant contribution to the perceived customer benefits of the end product, Airtel marketing strategy aim is to grow its revenue and improve its profit margin by adding value to its products and services i.e. earning more from each product sold. They are doing this by offering a range of multimedia service which is tailored for the consumer as well as the corporate consumer. These services help attract new customers who maybe unsure of which network to go to and keep the existing customer base happy.
It is difficult for competitors to imitate as they focus on a strategy of customer focused and product led; the company is continually developing new products and services which utilise the latest technological advances. This means they focus on a value plus strategy compared to their rivals.
Porter’s five forces
1. The threat of substitute products There is low product differentiation in the mobile phone industry, it can be suggested that the brands of the mobile phones are more important than network operators, therefore product differentiation in airtel home market could only be successful if in conjunction with the major phone manufacturer brands – for example 02 and the Apple I-phone The main substitute for the mobile phone industry would be the fixed line network, although its quality and performance differences are now small compared to mobile phone products. Switching costs are low but there is a larger chance of to mobile phones from fixed-line phones than the other way around. 2. The bargaining power of customers The switching cost between networks is low for the consumer as there is low product differentiation - industry's products are undifferentiated and standardized but as multimedia content is introduced such as airtel Live! Or if mobile phone operators and manufacturers decided to create and operate equipment that was not compatible across mobile phone operators; this may raise the switching costs for customers. Currently the Bargaining Power of Buyers is high and as the industry firm’s battle for higher quality, greater levels of service, and lower prices than their competitors, and the consumers benefit. 3. The threat of the entry of new competitors The threat of new entry competitors in this industry is low as there are high capital Requirements, this present a significant barrier to entry, network licenses went up for auction, only the most financially fit and liquid mobile phone operators could acquire licences, additional new competitor may not bring extra production capacity, nor does their entry hold consumer cost down.
Government control the mobile licences; deregulation would pose a significant threat to existing mobile phone operators, but this is currently not even being considered. The Economies of Scale are Moderate - Mobile phone manufacturers did enjoy great economies of scale in production, marketing and R&D, which allowed the three major producers to dominate the industry and sustain a competitive advantage. 4. The intensity of competitive rivalry There is a low exit barrier as mobile phone network licenses maintain a high resale value. Fixed costs of exit, strategic interrelationships, emotional barriers, government and social restrictions are all negligible. The slow down in UK mobile phone has meant more pressure on networks to take customers from competitors so the Intensity of Rivalry among Competitors is high. 5. The bargaining power of supplier The Bargaining Power of Suppliers is High this is because mobile phone manufacturing brands were more important to consumers than the mobile phone operators themselves, the manufacturing market is dominated by Ericsson, Nokia, and Motorola with 61 percent of the market. Suppliers’ goods are critical to buyers' marketplace success. Mobile phone manufacturers could integrate forward into the industry.
10. CUSTOMER GAP ANALYSIS
Mobile Telephone Service - Customer Gap Analysis
Indian mobile industry was started almost 10 years before, because of Govt. regulation it couldn’t grow like China. As per current estimation India's mobile services market is expected to grow at 28.3% CAGR through 2009. But the market is also very much competitive, all the players are keen to increase the market share, so the prices are getting slashed. The current players in the market are – • Reliance Infocomm
• Bharati Telecom (AirTel) • BSNL • Tata Teleservice • Spice Telecom • Hutchison / Orange • BPL Telecom The industry is moving from the Growth stage to the Shakeout stage, although the market is growing fast, but the Cut-throat Competition is slashing the profit margins, which is very common in Later Growth stage and players those who don’t have strong financial back up are going to be sold to the stronger players. So it’s very clear that players with stronger brand and financial back up will make the future profit. The bigger players are also operating in other Telecom areas like – Landline, ISP, Broadband, Corporate data & voice services etc, to become one stop solution provider, hence forth increase the market share, this clearly indicates the Sorry situation for the smaller players. Entry barrier for any new player is too strong. Once the Shakeout period is over in next few years the Mobile Industry in India is likely to enter in matured market. But there is a other theory too – the economic growth in India, currently the market is growing more on the Network area growth, providers are moving to smaller cities from big cities, demand is generated from ‘B’ class & ‘C’ class cities – middle class population. A major section of middle class population of India in smaller cities couldn’t enjoy the advantages of Telecom service due to the Govt. monopoly, poor capacity, regulations; they are the immediate customers of the Mobile operators. The Landline is no more the preferable choice for the new Telco users; people like to use mobile phones because of its added advantages and easy subscription. Also the middle
class size is expected to grow in India in next decades, so the Mobile market in India will be probably in Growth – Shakeout phase for a longer period. Also the Roadmap, which was thought by the Govt. earlier has become more like a roadblock for the growth, to keep the market competitive they introduced lot regulations and zoning concepts, which have become barrier for market growth and to play at Economies of scale, which are likely to change by the market dynamics and market forces. So the Growth – Shakeout phase is likely to continue for a while. Few years before the number of players were many, as TRAI had stringent laws in number of zone operations by single provider, but these are changing rapidly. • Service Providers Offerings India is a vast and complex market. The Indian Department of Telecommunications classifies the country's telecom markets into "metro" and "A", "B" and "C" circles or zones, based on how many potential subscribers they have. For example, the C circles refer to rural areas and are the least attractive sectors with very little wealth. The 1999 National Telecom Act defined a phased telecom deregulation with national operator, VSNL, privatized in April 2002. The cellular market is divided into 4 metro areas, 5 circle A areas, 8 circle B areas and 5 circle C areas. When all the cellular licensees become operational, India will be served by 77 networks. This segmentation of the market and licensees has certainly not helped the growth of the Indian market. These Network is increasing very fast, as companies want to tap the middle class population in smaller cities, and technological development, they are able to increase the Network boundary with lesser investment and also the competition. Indian mobile operators offerings are segmented in two broad categories – Pre-paid and Post-paid. Although mobile market is growing positively, the Post-paid market is declining and Pre-paid market is increasing by leaps and bounds. TRAI regulations and Indian consumer behavior are causing for the growth in Prepaid market. As the revenue in pre-paid offer is increasing in Circle ‘A’ and Circle ‘B’ for Economies at scale, the Pre-paid market share is going to be the more important.
When Reliance InfoComm came into the market, they didn’t realize this initially, but very soon they came with Pre-paid offer. • Brief on Customer Service Gap Model First analyze the Provider Gap • Market Information Gap – Not knowing what Customers Expect: The Company's incomplete or inaccurate knowledge of customers' service expectations. Key Factors – • Inadequate marketing research orientation • Lack of upward communication • Insufficient relationship focus • Inadequate service recovery 2. Service Standards Gap – Not having right standard and design: The Company's failure to translate accurately customers' service expectations into specifications or guidelines for employees. Key Factors – • Poor service design • Absence of customer-defined standards • Inappropriate physical evidence and Servicescape 3. Service Performance Gap – Delivery lag: Lack of appropriate internal support systems (e.g., recruitment, training, technology, compensation) that enable employees to deliver to service standards.
Key Factors – • Deficiencies in HR policies • Not match Supply & Demand capacity • Customers failed to meet their roles • Intermediaries problem 4. Internal Communication Gap – Promises don’t match: Inconsistencies between what customers are told the service will be like and the actual service performance [e.g., due to lack of internal communication between the service 'promisers' (such as salespeople) and service providers (such as after-sales service representatives)]. Key Factors – • Lack of Integrated services marketing communication • Ineffective management of Customer expectation • Over promising • Inadequate horizontal communication Companies wishing to improve their service quality must diagnose the four organizational gaps and take appropriate corrective action to close them. An important message for managers from this overall implication is that a mere external focus (e.g., being customer-oriented and conducting periodic customer-satisfaction surveys) is not sufficient for delivering superior service. Managers must also systematically analyze and correct potential deficiencies within the organization. Customer perceptions are subjective assessments of actual service experiences; customer expectations are the standards of, or reference points for, performance against which service experiences are compared. The sources of customer expectations
consist of market-controlled factors, such as advertising, as well as factors that the marketer has limited ability to affect, such as innate personal needs. Ideally, expectations and perceptions are identical: customers perceive that they think they will and should. In practice, a customer gap typically exists. Good marketing strategies reduces this gap. • Indian Consumers Behavior & Gap Model This section is analyzed in following sub-sections – • Consumer Perceptions – What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning, i.e. we chose what info we pay attention to, organize it and interpret it. Information inputs are the sensations received through sight, taste, hearing, smell and touch. This is very important factor for Indian consumers, as the average literacy level is low in India. People want to judge the quality of service with more on Physical evidences comparing to western world, where people rely on the specifications. As Mobile Telecom service is ‘Remote Service’, people don’t see any infrastructure of Network, consumers want to see the Front offices / people of the provider. This was realized by Reliance very quickly, they offered the Handset on Mail order basis which didn’t work out well, immediately they started opening retail store which brought lot of success for them, even entering late in the market. AirTel (Bharti), Hutch, Spice offer this presence through the dealer network and selective retail store. But provider direct presence is more valuable. BSNL being the poor customer handler, they are still able to keep large market share because of their physical presence. But this concept is changing gradually amongst young generation. Usually the Indian consumers see large gaps in Gap4, and they believe that Physical presence can only reduce this gap, Physical presence also helps provider to get feedback quickly and reduce Gap1.
• Learning & Communications – In India this process is comparatively slower than western world or developed countries. So the communication to the consumers play much bigger role than here, the need for mobile communication is much more in Rural India and cities, but the impediments are the cost and learning process. As the costs of mobile services are coming down, the opportunity in Rural India will grow. But the providers and operators have to communicate much more in teaching the people. TSPs also need to encourage some retails network in Rural India, which can offer cheaper service, like HLL or P&G offers 1 Rs packet for their toiletries products, or ITC offers Internet centers in villages of several states. Tech. MNCs (AMD is releasing cheaper chips, Dell is coming up with low end PCs) are trying to come with tailored products for the emerging markets, which can be cheaper, less features, and easy to use. Bharti planned to open a SMS based public booth Network in cities few years before, but that business plan became infeasible as SMS prices dropped like a falling rock. But potential for similar mobile public booth in Rural India is very high. Learning & Communications are more required to close Gap 3 and Gap 4. • Perceived risks – In service risk assessed as it is consumed and experience, also ‘Word-of-Mouth’. People perceive more risk in service than products, because of its’ intangibility. In India this is more because of rudimentary legal framework, the Consumer protection is much less than developed country. This is one ‘Major Reason’ also for booming Prepaid market than Post-paid. TSPs have to offer some kind of financial warranty in case of Post-paid connection. So far the experience of Indian consumers with Govt. Telecom organization is very poor. Physical presence and financial back up required more to reduce the risk factors. The risk will be perceived less as Gap 3 and Gap 4 will be closing. • Group Dynamics –
This is one of the most important factors in Indian market, here ‘Word-of-Mouth’ is much powerful than any other communication, and people follow their families, friends, and social groups. The Market communication from TSPs should keep this in mind. The Call Plan should consider this with high importance, some mobile operators are considering this factor, but there is no still Customer analysis or segmentation done. Group dynamics consideration should be taken care in closing Gap 3. Customer Service Quality analysis Extensive qualitative and empirical research-spanning multiple phases, covering a variety of sectors, and involving a number of companies-suggests the following general insights about how customers assess service quality. Firstly, customer-defined service quality stems from a comparison of customers' service expectations (i.e., their mental standards about what a company ought to provide by way of service) with their perceptions of the delivered service. Secondly, customers evaluate the nature and extent of the gap between their perceptions and expectations along five broad service attributes (listed below in decreasing order of importance): Reliability: Ability to perform the promised service dependably and accurately. This is more dependent on the Technology and Network Infrastructure is used, Indian TSPs are at per or near per with Global standards in this regard. Responsiveness: Willingness to help customers and provide prompt service. – This one major are Indian Mobile operators are lagging and lot of work needed to be done. Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence. This is also another lagging area. Empathy: Caring, individualized attention the firm provides its customers. This is also another lagging area.
Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials. Mobile service is ‘Remote Service’; the Tangibility needs to be created other ways. Recommendations & Conclusion Till today all the Mobile Operators are focused on Transactional Marketing (Get new customers) than Relationship Marketing (Retaining old customers). They are more focused on increasing Network area and circles – which is definitely require. And India has a huge market, which is fragmented in nature and too many customer segments – geography, income, age, language spoken, culture. Relationship Marketing is not much emphasized in India but the Industry, which is too competitive and can be operated remotely, this will be more important. As the Industry will move towards mature stage (as happening in Developed countries), Relationship Marketing is more required and it needs to start now. The communication was pathetic till late 90s, but as it improves the Regional customers information sharing will increase. Also the operators should come with new Business plans for Rural Areas, there is huge market in Mobile Data & Voice communication, there is huge potential but proper learning tool and communication required. As the Wireless Network cost is reducing, the focus in rural area will become important. Final Recommendation List to Close Customer Gaps – • Relationship Marketing focus • Employee management • Service focus on Pre-paid market • New Business Ideas for Rural market • Usage of right CRM tool
Comparison with the competitors.
Current year : 2008 Group Company Airtel(GSM) Reliance (CDMA + GSM) Vodafone Essar(GSM) BSNL(GSM) IDEA(GSM) Tata (CDMA) Aircel(GSM) Spice(GSM) MTNL(GSM + WLL) BPL(GSM) HFCL (CDMA) Shyam (CDMA) Total (All India) Total Subscribers 66825935 48696295 47466853 36997418 26140643 25476062 11491986 4497675 3350437 1331261 326150 108396 272709111
India - GSM Cellular Operators Market Share
Bharti Airtel No. 1 GSM Operator in India Operators Bharti Airtel Vodafone Essar BSNL IDEA Aircel Reliance Telecom Spice MTNL BPL Source: HT The leading cellular service providers have the following number of subscribers: in 2005-2006 Service Provider Reliance Tata Airtel No. of CDMA Subscribers 2.75 crores 1.07 crores 3.37 crores No. of GSM Subscribers 38.76 lakhs Subscribres 4,88,75,664 3,56,57,546 3,03,03,230 1,86,71,860 80,39,355 43,47,593 34,81,710 27,72,120 11,53,357 Market Share(%) 31.88 23.26 19.77 12.18 5.24 2.84 2.27 1.81 0.75
MTNL BSNL Hutch Idea Spice BPL Aircel
24.98 lakhs 2.44 crores 2.44 crores 1.3 crores 25.56 lakhs 10.62 lakhs 48 lakhs
Bharti Airtel gains market share, but RCOM and PSUs suffer decline During the last eight months, the biggest GSM operator in India, Bharti Airtel, has gained share in the cellular market, but Reliance Communications (RCOM), Mahanagar Telephone Nigam (MTNL), and Bharat Sanchar Nigam (BSNL) have suffered a reduction in terms of their share in the market. According to subscriber figures, the market share for Bharti rose by 1.1 percent to 22.28 percent from the period between April 1 and November 30. India’s numero uno integrated mobile service provider, Bharti Telecom enjoys a market capitalization of $17 Billion and has subscriber base more than twice that of Hutch and is also growing at a faster rate than Hutch. Also Bharti-Airtel offer Landline and Broadband services. Bharti-Airtel mobile business valuation translates to approximately Rs35,000/subscriber. Considering the valuation and growth rates Bharti-Airtel enjoy, Hindujas price tag of $12 Billion for Hutch is ridiculously high. While Bharti is adding well over 2.5 million customers each month for the last two months, BSNL’s subscriber base is growing by merely 6,00,000 each month. The landline connections, which are seeing a positive growth for Bharti, constitute just a minuscule 3% of its subscribers. For BSNL the landline subscribers constitute slightly less than half. Bharti Airtel, which has a mobile subscriber base of over 69 million in June, is growing at an average of 3% while BSNL, which has a mobile subscriber base of over 37 million is growing at less than 1%, adding around 3 lakh subscribers each month. The state-run company is also experiencing a decline in its fixed line growth. Its landline subscribers declined by 160,000 in June contrary to Bharti Airtel. BSNL, which was the country’s second largest GSM service provider, before Vodafone became the No 2 GSM service provider, slipped to the third position owing to delays in its capacity expansion arising
out of the delay in tenders and equipment orders. BSNLis expanding the capacity of its mobile network—the company has ordered the equipment required for expansion. The company has ordered 5 million lines each for north and east, while an additional 5.5 million for south and 9 million lines for the western zone. With this it is hoping to have an extra capacity of as many as 24.5 million lines. Currently, the company has 4.6 million customers in CDMA and is hoping to add another 3 million customers. It is ordering equipments to add another 2 million lines.
12. MARKET AND PROFIT SHARE
Market Share and presence of Airtel in India
Airtel is one of the leading telecom company of india. Dealing in various group activity which are as follows: The Group's principal activity is to provide mobile telecommunication services in India. The Group also provides fixed-line, VSAT, Internet and broadband services. The Group has commenced offering national and international long distance services. The Group operates in four segments: Mobile, Fixed Line, Long Distance and Broadband Services. During the year, the Group acquired balance 49% equity stake in Bharti Aquanet Limited. Total sales of the Bharti Airtel in 2008 is 270120000000 in India and it has 25543 employees in total. Bharti Airtel Ltd is one of the largest mobile telecoms providers in India (26.5% market share). In August 2006 the company awarded Ericsson an extension to the existing contract of US$1bn to upgrade and develop its GSM/GPRS network. The new three year services agreement will see Ericsson manage design, development and deployment of the network, including capacity and coverage, enabling the operator to expand in rural India and reach out to all the towns and cities across 15 regions. The number of mobile subscribers in India, the world's secondlargest wireless market, jumped more than 56 percent in the year to May 31 to about 280 million and consultancy Gartner expects this to grow to 737 million by 2012. India's mobile user base rose 25 times between 2002 and 2007, and research firm Gartner expects it to touch 737 million by 2012 from about 280 million in this year. Bharti's market value is U$16.5bn; just over 30% is owned by Singapore Telecommunications Ltd and nearly 10% by Vodafone Group Plc. India adds 5 million mobile subscribers per month across the board and one quarter of these become Bharti
subscribers. Bharti's mobile subscriber base is now just shy of 25 million. The carrier added 1.26 million mobile subscribers in July 2006 alone, bringing the total to 24.34 million. As a whole the Indian mobile market is growing by 5% per year. Bharti manages more than 70% of the company's existing GSM/GPRS network within 15 of the 23 Indian telecoms regions. Bharti provides mobile services on the popular GSM platform in all of India's 23 service areas, and accounted for nearly a quarter of the country's total mobile users.
Regions In October 2006 Bharti Airtel also signed a $400m network expansion contract with Nokia to expand its managed GSM/GPRS/EDGE networks in eight regions not covered by Ericsson. The eight telecom regions include Mumbai, Maharashtra and Goa, Gujarat, Bihar (including Jharkhand), Orissa, Kolkata, West Bengal and Madhya Pradesh (including Chattisgarh). from Bharti (previous orders obtained were worth US$650m in 2004 and 2005). Bharti’s ambition is to bring its network to every one of the 5,200 towns described as census towns by the Indian authorities by March 2007, an expansion of 1,000 over the present total.
Subscribers Airtel has 73 million customers and increasing at 2.5 million per month. The country’s largest mobile operator Bharti Airtel is set to become the country’s largest telecom operator (both fixed line and mobile), beating the state-owned BSNL in a month’s time. Bharti Airtel, which has a mobile subscriber base of over 69 million in June 2008, is growing at an average of 3% while BSNL, which has a mobile subscriber base of over 37 million is growing at less than 1%, adding around 3 lakh subscribers each month. Profit share of Airtel in INDIA and reason for such growth.
Bharti Airtel, India's top mobile operator, Airtel had achieve a 34 percent rise in quarterly profit as it rode a boom in the world's fastest-growing wireless market, sending its shares up 5 %.
2. Bharti ‘s consolidated net profit rose to 20.25 billion rupees ($484 million) in its fiscal first quarter ended June, from 15.1 billion a year earlier. 3. Revenue rose 44 percent to 84.83 billion rupees from 59.05 billion. That compared to a Reuters poll forecast of net profit of 19.34 billion rupees on revenue of 84.06 billion.
Bharti Airtel - A Fundamental Analysis Fundamental Analysis: Bharti Airtel's Performance from 01 April 2005 to 31 March 2007: *figures Lakhs Net Sales: Net Profit: Interest Cost: Depreciation: EPS: in 2005-06 1122868 201207 22560 143235 10.69 2006-07 1779443 403322 25584 235330 21.27 Growth 58.47% 100.45% 13.40% 64.30% 32.82%
It's a good track record. The Net Sales has grown by almost 59% from April 2005 to March 2007. the growth of the Net Profit is almost double that of Net Sales growth. Net Profit has grown by 100.45%!! Bharti Airtel's Performance from 01 April 2007 to 31 Dec 2007: *figures in Lakhs Net Sales: Net Profit: Interest Cost: Depreciation: EPS: From last 3 Quarters 1914859 453669 22338 265639 23.62
As it can be seen from the above data, even from just 3 quarters, the Net sales has already grown by 7.61% compared to the last year, 2006-07. Net Profit has grown by
12.48%, and EPS has grown by 11.05% as compared to the last full financial year. Interest cost has been reduced by almost 13%. Bharti Airtel Limited - Summary of Consolidated Financial Statements represents Consolidated Statement of Income as per United States Generally Accepted Accounting Principles (US GAAP) (Amount in Rs. Crores, except ratios) Quarter Ended Particulars June 2008 Audited Total revenues EBITDA Cash Income income taxes Net income profit before from operations 8,483 3,522 3,339 2,381 2,025 June 2007 Audited 5,905 2,447 2,622 1,890 1,512 Y-o-Y Growth 44% 44% 27% 26% 34%
Operating Highlights (Figures in nos., except ratios) Parameters Customers Network Mobile Services Total 000's 71,777 64,268 12% 44,676 61% Services Broadband & Telephone on our 000's 000's 69,384 2,394 61,985 2,283 12% 5% 42,704 1,972 62% 21 % Unit June 30, March 31, Q-on-Q 2008 2008 Growth June 30, Y-on-Y 2007 Growth
Bharti Airtel results for the first quarter ended June 30, 2008
Highlights for First Quarter ended June 30, 2008
• • • • • • •
Overall customer base crosses 7.17 crore.. Highest ever-net addition of 75.09 lakh customers in a single quarter. Market leader with a market share of all India wireless subscribers at 24.2%. Total Revenues of Rs. 8,483 crore (up 44% Y-o-Y). EBITDA of Rs. 3,522 crore (up 44% Y-o-Y). Cash Profit of Rs. 3,339 crore (up 27% Y-o-Y). Net Income of Rs. 2,025 crore (up 34% Y-o-Y).
Reasons: 1. Airtel has adding more than 8 million subscribers a month due to call rates of as low as U.S. 1 cent a minute and affordable handsets starting from $15. 2. expands its network to smaller towns and villages. 3. The bulk of the new users are seen coming from the rural areas, where only one in 10 people has a phone, compared to a national average of about 25 percent. 4. Bharti’s average revenue per user had fallen to Rs 350 from Rs 390, even as minutes of usage climbed to 534 from 478 a year earlier. 5. an improved market share of all India wireless subscribers at 24.2 percent as on June 30, 2008, up from 23.1 percent corresponding to the same period of last year. 6. Airtel has improved network, distribution and brand strength which help it in increasing its profit and market share. Achievements/Recognitions:
Bharti Airtel crosses 60 million customers mark. Bharti Airtel wins The Best Billing/ Customer Care Solution at the GSMA Mobile World Congress Conference at Barcelona Bharti Airtel - Sunil Mittal Awarded Global Telecom Sector's Highest Honor, GSM Association Chairman's Award 2008. Bharti Airtel has achieved No.1 slot in an independent survey of the top 60 CMT (Communication, Media, and Technology) companies across
the world in terms of Shareholder Performance Index (SPI). This survey was conducted by a New York based Financial Services firm, Oliver Wyman. This survey was done for it's first annual state of the CMT industry report. 450 CMT companies were the participants.
A leading private equity firm, Kohlberg Kravis Roberts & Co. (KKR) is going to invest $250 million in Bharti Infratel
Bharti to jointly construct Under-Sea cable system to meet high bandwidth demands: Bharti Airtel joins hands with 5 big international companies to build a high bandwidth undersea optical fibre cable between United States and Japan. This trans-Pacific infrastructure is named as "Unity" and would enhance the connectivity between Asia and United States. The international companies involved in this are Global Transit, Google, KDDI Corporation, Pacnet and SingTel. NEC Corporation and Tyco Telecommunications are selected to construct this under-sea network.
Bharti Airtel Signs with VeriSign® to Bring Next-Gen Internet Infrastructure & Identity Services to India. Airtel to add 3500 towers in Andhra Pradesh.
Bharti Airtel Limited Q1FY 2009 : 44% Revenue Growth and Net Profit crosses Rs. 2,000 Crore .
13. CRITICAL SUCCESS FACTORS AND UNIQUE STRATEGEIS
Key Success Factors:
Marketing efforts The aggressive marketing strategies of major players in the Indian telecom industry are a key propeller of success in the competitive market for cellular services. The key telecom giants make huge investments to capture a substantial market share. Bharti Tele-Ventures, which positioned itself as a brand for the elite, adopted celebrity endorsement as its chief promotional strategy. By 2004 it emerged the unprecedented leader commanding the largest market share in the cellular service market. Hutch implemented the celebrity endorsement strategy partially, relying primarily on its
creative advertising for the promotion of its brand. Reliance Telecommunications, which targeted all income groups, when launched, invested in advertising campaigns that boasted of affordability of the service for the Indian consumer. Such large investment in marketing efforts in itself creates an entry barrier for smaller players in the Indian telecom industry and continues to consolidate the position of the telecom giants. Extensive Network Coverage An extensive national network coverage by the service provider is a prerequisite for success, especially in the Indian market, where the consumers have numerous options and are demanding with respect to their requirements/expectations from the cellular service. This is particularly important to the high-revenue business users. Airtel, one of the first telecom service providers, expanded its network coverage steadily from the time of launch. Reliance, on the other hand, when launched invested heavily in establishing a nation-wide infrastructure in order to compete effectively with the already established players. Government Policies Indian telecommunications today benefits from among the most enlightened regulation in the region, and arguably in the world. The sector, sometimes considered the “poster-boy for economic reforms,” has been among the chief beneficiaries of the post-1991 liberalization. Perhaps even more significant, problem with India’s initial attempts to introduce competition was the lack of regulatory clarity. Private operators complained that the licensor – the DOT – was also the incumbent operator. The many stringent conditions attached to licenses were thus seen by many as the DOT’s attempt to limit competition. It was in response to such concerns that the government in 1997 set up the Telecom Regulatory Authority of India (TRAI), the nation’s first independent telecom regulator. Despite several hiccups along the way, the Telecom Regulatory Authority of India (TRAI), the independent regulator, has earned a reputation for transparency and competence. With the recent resolution of a major dispute between cellular and fixed operators, Indian telecommunications, already among the most competitive markets in the world, appears set to continue growing rapidly. All of these events have created an impressive forward-momentum in Indian telecommunications, resulting in a vigorously competitive and fast-growing sector.
India has also suffered from its fair share of regulatory hiccups. Many operators (mobile players in particular) still complain about the difficulties of gaining access to the incumbent’s (BSNL) network, and the government’s insistence on capping FDI in the telecom sector to 49% (a move made in the name of national security) limits capital availability and thus network rollout. Unified Licensing But perhaps the biggest – and, until recently, most intractable – regulatory problem has been the drawn-out battle over “limited mobility” telephony. This imbroglio began in 1999, when MTNL sought permission from TRAI to provide CDMA-based WLL services with “limited mobility.” GSM cellular operators were soon up in arms, arguing that “limited mobility” was simply a backdoor entry into their business. Moreover, fixed operators had paid lower license and spectrum fees than cellular ones; were not required to pay access charges for cell-to-fixed calls (unlike their cellular counterparts); and, amidst accusations of cross-subsidization, were charging considerably lower rates than the cellular operators. It was not until late 2003 that the issue was finally resolved, under considerable government pressure, when cellular operators agreed to withdraw their many cases against the fixed-line operators. Fixed operators would in effect be allowed to enter the mobile business; in return, the government granted cellular players several concessions, including lower revenue-share arrangements estimated to total over $210 million. Perhaps most notably, the government announced its intention to adopt a “unified access licensing” regime, which would in the future provide a single, technology-neutral license for fixed and cellular operators. The hope is that this new license category will prevent a repeat of the recent controversy, and allow new technologies to enter the Indian market without requiring a wholesale rewrite of licensing laws. The Wireless Planning and Coordination wing of the Department of Telecommunications allocates spectrum in accordance with the National Frequency Allocation Plan. The NFAP is revised every two years in line with the radio regulations of the ITU. Spectrum is generally not auctioned but allotted to all licensed operators. The present allocation of spectrum is on a case-by-case basis.
UNIQUE FEATURES (Few examples) Two touch speed dial: ";Unlike Physical calling cards where customer has to go through a cumbersome dialing process, dialing via Airtel CallHome is as simple as pressing two buttons. Customers can now register up to 10 telephone numbers in UK for outgoing calls in UK . Thereafter, they can configure up to 50 numbers in India that they call frequently, and store them as a short code (Easy Dial feature). Once the access number is stored as a “Speed Dial” on the handset – they simply need to press two buttons on the phone to connect with his friends and family in India , instantly and conveniently. Value added services : Customers can also access other services such as Astro chat and Friends chat. For Astrology Chat, customers will be able to speak to an astrologer back in India at all times and get personalized consultation at just 49 pence per minute. For Friends Chat, customers will be able to make friends at just 29 pence/min. EASY PAYMENT OPTIONS Available on the pre paid option only. Payment for pre paid charges will be accepted through a credit card on the web portal through a secure payment gateway. Customers New Delhi , August 17, 2008 : Bharti Airtel , India 's leading telecom services will have the option to top up their calling minutes using an Indian credit card from India as well. Additionally, customers will also be able to access their personal account through toll free access numbers that can be accessed from anywhere in the UK .
Bharti Televentures is positioned to maximize returns in the world’s fastest growing telecom market on the back of superior leadership, proven execution capability, tight cost management, strong brand equity and early mover advantage. Robust earnings on the back of strong subscriber growth in FY04 are likely to drive earnings. Bharti Tele-Ventures current businesses include -
• • • •
Mobile services Fixed-line National and international long distance services VSAT, Internet services and network solutions
Performance on track Bharti continued its march towards sequential improvement in profitability and reported a better-than-expected growth in net profit in the first quarter. This was an excellent performance, considering that Q1FY04 witnessed tough operating conditions resulting from tariff rationalizations and implementation of the IUC regime. Bharti's mobile business displayed robust earnings performance despite the regulatory changes (CPP) and lower tariffs. Mobile operations contributed 63.4% to total revenues and 60.4% to total EBITDA. The mobility business registered QoQ growth in revenues on the back of a strong 22% QoQ growth in subscribers. The NLD (National Long Distance) business including ILD division reported only a slight decline in EBITDA. This was because NLD traffic rose 33% qoq-mainly due to a surge in cell-to-cell calls bringing to naught the fear that this would be a drag on the numbers. Wireline operations contributed 14.9% to total revenues and 10.6% to total EBITDA. All the wireline operations are generating cash profit, Haryana wireline operations turning PAT-positive and MP wireline operations already generating positive free cash flow. Industry prospects India is likely to be among the fastest growing telecom markets in the world over the next three years. The true liberalization of the sector following regulatory amendments in 1999 and the full impact of competitive pressures unfolding in FY2003 onwards would be the key drivers. According to Gartner Inc, a leading IT and telecom research firm, the Indian telecommunications sector would witness one of the fastest growth rates globally with a compounded annual growth rate (CAGR) of around 19 per cent up to 2006. In contrast, the growth in telecom services worldwide is projected at about 5 per cent in 2003 and with an uncertain future. The cellular market, which has been the front-runner in the growth of the local telecom industry, will maintain a CAGR of
46 per cent, making it the highest growth market in Asia-Pacific. This growth rate is expected to be more than that of China's. The subscriber base, currently estimated at 8 million, will grow to around 44 million by 2006 with the entry of new players. The revenue from cellular subscribers, which is currently pegged at $909 million (around Rs 4,500 crore), is expected to touch $5.2 billion (around Rs 25,000 crore) at a CAGR of 38.3 per cent. Future plans According to news reports, the company is planning to list on the Nasdaq in 2004-05, which is likely to be another trigger. The company is also considering the proposal of pumping in Rs 2,000 crore in the current fiscal. Around 65 per cent of this investment is expected in the mobility business and the balance in fixed-line services. In terms of topline revenue, mobile telephony services is expected to fetch 60 per cent and the rest will come from fixed-line services. Valuations Revenues are likely to grow at a compounded annual growth rate (CAGR) of over 40 per cent. EBITDA is likely to rise by 60 per cent. Bharti Televentures is expected to post its maiden annual net profit in FY04E. This makes the company a high-return growth story.
The primary goal of this report is to look at Bharti Airtel from the service point of view, to identify various factors involved in its continued success and growth. During the course of the project we found that it is not only the product quality and service but lot of other things such as unique/ innovative marketing strategies, focus on customers’ need and wants, various promotional measures and many other activities which contribute to its success. One of the most exciting stories of recent times is that of Bharti Televentures. From a peddler of assorted consumer durables, to a maker of telephone instruments, to its current "avataar" as the frontrunner of India's cellular revolution, the transformation has been staggering. Their current market cap of Rs 15,383 crores makes them the 11th largest Indian listed company, and 7th among private sector firms. Planning and implementation is their main suit, Bharti has delivered a strong performance, which reflects the success story of the Indian telecom sector. The company continues to set new industry benchmarks, be it product and process innovations or fostering partnerships with world-class companies. The outlook for the industry remains positive and the year ahead promises to be an exciting one for Bharti. With an integrated organisational structure in place, the company is confident of making rapid strides towards fulfilling its vision of making Airtel the most admired brand in the country by 2010. To conclude, the solution at Bharti Airtel is an inspiring success story. The professional services team met goals and challenges by flexibly addressing unique operator needs. The implemented services facilitate revenue growth and build loyalty by providing users with choice, convenience and control. Regardless of all this, We believe that a decade from now, we are likely to have four or five large, integrated players left standing. We also believe that Bharti will be one of them, apart from Reliance, BSNL and maybe the Tatas and Hutch. However, this
does not detract from the level of pain they (and other players) will have to endure in getting there.
BIBLIOGRAPHY AND REFERENCES
Services Marketing by Lovelock, Wirtz and Chatterjee Marketing Management by Philip Kotler Business Today Business World The Hindu www.airtelworld.com www.blonnet.com www.indiainfoline.com www.sgilbertcompaniesinc.com www.tradepartners.gov.uk http://server1.msn.co.in www.emeraldinsight.com www.airtel.in www.bharti.com www.trai.gov.in www.nasscom.in www.india-cellular.com