Bharti Airtel: Company Introduction

Bharti Airtel Limited, commonly known as Airtel, is an Indian telecommunications services company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries in which it operates, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's third largest mobile telecommunications company with over 261 million subscribers across 20 countries as of August 2012. It is the largest cellular service provider in India, with 183.61 million subscribers as of November 2012. Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider of broadband and subscription television services. It offers its telecom services under the airtel brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification.It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore.

Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and finance and building the 'minutes factory' model of low cost and high volumes. The strategy has since been copied by several operators. Its network base stations, microwave links, etc.is maintained by Ericsson and Nokia Siemens Network whereas business support is provided by IBM, and transmission towers are maintained by another company (Bharti Infratel Ltd. in India). Ericsson agreed for the first time to be paid by the minute for installation and maintenance of their equipment rather than being paid up front, which allowed Airtel to provide low call rates of 1/minute (US$0.02/minute). During the last financial year (200910), Bharti negotiated for its strategic partner Alcatel-Lucent to manage the network infrastructure for the tele-media business. On 31 May 2012, Bharti Airtel awarded the three-year contract to Alcatel-Lucent for setting up an Internet Protocol access network (mobile backhaul) across the country. This would help consumers access internet at faster speed and high quality internet browsing on mobile handsets.

Acquisitions and Mergers: MTN Group

In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the MTN Group, a South Africa-based telecommunications company with operations in 21 countries in Africa and the Middle East. The Financial Times reported that Bharti was considering offering US$45 billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by an Indian firm. However, both sides emphasize the tentative nature of the talks. The Economist magazine noted, "If anything, Bharti would be marrying up," as MTN has more subscribers, higher revenues and broader geographic coverage. However, the talks fell apart as MTN group tried to reverse the negotiations by making Bharti almost a subsidiary of the new company.[56] In May 2009, Bharti Airtel confirmed that it was again in talks with MTN and both companies agreed to discuss the potential transaction exclusively by 31 July 2009. Bharti Airtel said in a statement "Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a significant partnership with MTN Group". The exclusivity period was extended twice up to 30 September 2009. Talks eventually ended without agreement and on 30 September 2009, Bharti released a statement saying that it had decided to disengage from discussions with the MTN Group when the exclusivity period ended. Informa analyst Matthew Reed, noted that a reported factor in the failure was South Africas worry that control of MTN, which is perceived as a national champion, could pass into foreign hands. The Sout h African government is MTNs biggest shareholder. Bharti said in a statement regarding the failure, "We hope the South African government will review its position in the future and allow both companies an opportunity to re-engage".

Zain
In March 2010, Bharti struck a deal to buy the Zain's mobile operations in 15 African countries, in India's second biggest overseas acquisition after Tata Steel's $13 billion buy of Corus in 2007. Bharti Airtel completed its $10.7 billion acquisition of African operations from Kuwaiti firm, making the Airtel the world's fifth largest wireless carrier by subscriber base. Airtel has reported that its revenues for the fourth quarter of 2010 grew by 53% to US$3.2 billion compared to the previous year, newly acquired Zain Africa division contributed US$911 million to the total. However, net profits dropped by 41% from US$470 million in 2009 to US$291 million 2010 due to a US$188 million increase in radio spectrum charges in India and an increase of US$106 million in debt interest.

Telecom Seychelles
On August 11, 2010, Bharti Airtel announced that it would acquire 100% stake in Telecom Seychelles for US$62 million taking its global presence to 19 countries. Telecom Seychelles began operations in 1998 and operates 3G, Fixed Line, ship to shore services satellite telephony, among value added services like VSAT and Gateways for International Traffic across the Seychelles under the Airtel brand. The company has over 57% share of the mobile market of Seychelles.Airtel announced plans to invest US$10 million in its fixed and mobile telecoms network in the Seychelles over three years, whilst also participating in the Seychelles East Africa submarine cable (SEAS) project. The US$34 million SEAS project is aimed at improving the Seychelles global connectivity by building a 2,000 km undersea high speed link to Dar es Salaam in Tanzania.

Bharti Airtel: Services Offered

Airtel operates in all telecom circles of India. Its network is present in 5,121 census towns and 457,053 non-census towns and villages, covering approximately 86.6% of the countrys population as of September 2012. Airtel is the 6th most valued brand according to an annual survey conducted by Brand Finance and The Economic Times in 2010.

3G
On 18 May 2010, the 3G spectrum auction was completed and Airtel paid the Indian government 122.95 billion (US$2.24 billion) for spectrum in 13 circles, the most amount spent by an operator in that auction. Airtel won 3G licences in 13 telecom circles of India: Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (East), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, North East, and Jammu & Kashmir. Airtel also operates 3G services in Maharashtra & Goa and Kolkata circles through an agreement with Vodafone and in Gujarat through an agreement with Idea. This gives Airtel a 3G presence in 15 out of 22 circles in India. On 20 September 2010, Bharti Airtel said that it had given contracts to Ericsson India, Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for providing 3G services in the country. These vendors would plan, design, deploy and maintain 3G HSPA (third generation, high speed packet access) networks in 13 telecom circles where the company had won 3G licences. While Airtel awarded network contracts for seven 3G circles to Ericsson India, NSN would manage networks in three circles. Chinese telecom equipment vendor Huawei Technologies was introduced as the third partner for three circles. On 24 January 2011, Airtel launched 3G services in Bangalore, Karnataka its largest circle by revenue. With this launch, Airtel became the third private operator (fifth overall) to launch its 3G services in the country following Tata Docomo and Reliance Communications. On 27 January 2011, Airtel launched 3G in Chennai and Coimbatore in Tamil Nadu. On 27 July 2011, 3G services were launched in Kerala's 3 largest cities - Kochi, Kozhikode and Thiruvananthapuram. Airtel 3G services are available in 200 cities through its network and in 500 cities through intracircle roaming arrangements with other operators. Airtel had about 5.4 million 3G customers of which 4 million are 3G data customers as of September 2012.

4G
On 19 May 2010, the broadband wireless access (BWA) or 4G spectrum auction in India ended. Airtel paid 33.1436 billion (US$603.21 million) for spectrum in 4 circles: Maharashtra, Karnataka, Punjab and Kolkata. The company was allocated 20 MHz of BWA spectrum in 2.3 GHz frequency band. Airtel's TD-LTE network is built and operated by ZTE in Kolkata, Huawei in Karnataka, ZTE in Punjab and Nokia Siemens Networks in Maharashtra On 10 April 2012, Airtel launched 4G services using TD-LTE technology in Kolkata, becoming the first company in India to offer 4G services. The Kolkata launch was followed by launches in Bangalore (7 May 2012) and Pune (18 October 2012). It will launch services next in Chandigarh. Airtel plans to provide voice services for its TD-LTE subscribers through its existing GSM network, which would make it the only operator in India to combine voice with TD-LTE services through GSM network. Airtel selected Nokia Siemens Networks to deploy its Circuit Switched FallBack (CSFB) voice solution in Airtels TD-LTE network in Pune. With CSFB, the network can transfer customers to GSM platform to make and receive voice calls while retaining the TD-LTE network for data services. On 24 May 2012, Airtel announced an agreement to acquire a 49% stake in Qualcomm Asia Pacific (India). Qualcomm holds 4G spectrum and licenses in Delhi, Haryana, Kerala and Mumbai. As per the agreement, by the end of 2014, Airtel will assume full ownership and financial responsibility for 4G operations in these 4 circles. Airtel had 3180 4G subscribers as of May 2012.

WiFi
Airtel has plans to launch WiFi services in India. It intends to start offering WiFi services in Delhi NCR, Mumbai and Bangalore in initial phase. All plans will be on secure wireless broadband internet with unlimited usage and will be session or time based. Users can use the service by finding a hotspot, selecting 'airtel WiFi Zone', activating the voucher and then login to start browsing. Airtel intends to partner with establishments to setup hotspots which will be termed WiFi Hangout for an establishment owner and WiFi Partner for the cafe and restaurant owners. Airtel WiFi Partners can offer services at zero investments and can earn commission on every WiFi session sold.

Airtel Money

Airtel has started a new mCommerce platform called Airtel Money in collaboration with Infosys and SmartTrust (now Giesecke & Devrient). The platform was launched on April 5, 2012, at Infosys' headquarters in Bangalore. Using Airtel Money, users can transfer money, pay bills and perform other financial transactions directly on the mobile phone.

SmartDrive
SmartDrive is navigation app exclusive to Airtel customers. The app features voice-based turn by turn navigation, real time information update on traffic, approximate time of the travel on the basis of the traffic situation on the various routes and also lets users see their location on the map and plan the journey accordingly. It also suggests the subscriber an alternate route in case of traffic congestion on the normal route. According to Airtel, SmartDrive calculates the traffic on the basis of the number of GPS devices used on a particular road, their average speed, as well as historical trends of traffic on that route. SmartDrive also allows users to search for points of interest like restaurants, theatres and shopping malls. The app also allows users to keep a record of all trips they make when using voice navigation for later reference through the 'Trip Recorder' feature, Wikipedia information of places for which information is available and the ability to add frequently visited locations to favorites, in addition to weather information about the place. Airtel will offer navigation at 10 per day or 99 per month. Live traffic will be cost 3 per day or 49 per month. Search and map viewer are available for free. The costs do not include data charges. Airtel states in SmartDrive's FAQ that data is only used when the user performs searches or calculates routes. The app is developed by Wisepilot, a mobile navigation solutions provider and uses Navteq Maps for location and traffic info. It was launched on 12 September 2012. At the time of launch, it was available only in Bangalore, Mumbai and NCR. Services are currently available in Chennai. Service will be expanded to Pune and Hyderabad by December 2012. Network Experience Centre Airtel has a Network Experience Centre (NEC) which observes end to end customer experience, in near real time, along with the standard network elements on Airtel's operations. The NEC is located in in Manesar, Haryana and went live on 31 October 2012. It is the first such facility in India and will be able to monitor Airtel's network performance across mobile, fixed line, broadband, DTH, M-Commerce, enterprise services, International Cable Systems and internet peering points from a single location. It will monitor all Airtel and partner NOCs. In case of an emergency, the NEC will enable the operator to prioritize actions to restore normalcy and reduce resolution time.

The NEC houses a video wall with 3600 square feet of solid state LED screen to monitor Airtel's telecom network. This is the world's biggest video wall for a telecom operator. Each cube in this wall is 1.6mx1.2 m and there are 175 cubes arranged in a 25x7 matrix.The clear span of the roof is 49 m x 18 m and the beams, which are fireproof and about 8 feet deep, have been specially designed to hold the structure without columns. The NEC was designed specifically to be used as a command center in case of national emergencies and natural catastrophes. The facility is earthquake proof and also provides for a single control of command and a fully redundant technology layout.

iPhone
The iPhone 3G was rolled out in India in 2008 by Airtel. However, high prices and contract bonds discouraged consumers and it was not as successful as the iPhone is in other markets of the world. Airtel introduced the iPhone 4 on 27 May 2011 and the iPhone 5 on 2 November 2012. Telemedia Under the Telemedia segment, Airtel provides broadband internet access through DSL, internet leased lines as well as MPLS (multiprotocol label switching) solutions, as well as IPTV and fixed line telephone services. Until 18 September 2004, Bharti provided fixed line telephony and broadband services under the Touchtel brand. Bharti now provides all telecom services including fixed line services under a common brand airtel. As of September 2012, Airtel provides Telemedia services to 3.3 million customers in 87 cities. As on 30 November 2012, Airtel had 1.39 million broadband subscribers. Airtel Broadband provides broadband and IPTV services. Airtel provides both capped as well as unlimited download plans. However, Airtel's unlimited plans are subject to free usage policy (FUP), which reduces speed after the customer crosses a certain data usage limit. In some plans, Airtel provides only 256kbit/s beyond FUP, which is lower than the TRAI specified limit of half the subscriber's original speed.The maximum speed available for home users is 16Mbit/s.

Bharti Airtel Rural Strategy - Mobile Connected Life Experiences

Challenge/Opportunity
Bharti Airtel was faced with the challenge of profitably serving the rural areas of India. It is an extremely daunting task due to a variety of factors: rural users' low incomes, a widely dispersed population, and a less than ideal public infrastructure (i.e., roads, electricity, etc.). Specifically, Bharti Airtel had to address the following conditions: The incomes of Indian rural residents are significantly lower than urban residents. The average revenue per user (ARPU) for rural residents was typically less than US$2 per month. Besides deploying a scalable network, Bharti Airtel also needed to establish a costeffective marketing, sales, and distribution channel to provide service promotion and customer support. Counter to these challenges were the significant opportunity that the Indian rural market represented and Bharti Airtel's unique ability to address it. The future growth of the Indian mobile market is expected to be driven by rural customers, which account for about 70 percent of the country's total population (1.1 billion people) with a teledensity of only 18.5 percent as of September 2009. Indian urban mobile penetration is already over 100 percent. Rural dwellers place a high value on communications. Contacting urban/overseas relatives and friends often requires a long and sometimes treacherous trip to the nearest town to reach a payphone. Various studies (e.g., fishermen in the Indian state of Kerala and grain producers in Niger) have shown that increased mobile service penetration in rural areas could have tremendous socio-economic benefits for the rural population. With its strong presence in the relatively untapped rural market (over 27 percent market share as of September 2009), Bharti Airtel is well-placed to continue growth with its focus on under-penetrated Indian regions with new revenue streams such 3Genabled data services and pay-TV.

Alliances/Partnerships
To extend its reach in India's rural markets, Bharti Airtel is focusing on innovative initiatives, including efficient infrastructure deployments, expanding its distribution network via partnerships, and customized content and tariffs. Bharti Airtel has launched microfinancing agreements in collaboration with Nokia and SKS Micro-finance. Under these partnerships, Bharti provides subsidized tariffs and subscriber identity module (SIM) cards to rural users, Nokia provides subsidized handsets, and SKS offers microfinancing. To expand coverage into rural regions, Bharti Airtel is sharing passive infrastructure services with Vodafone (42 percent ownership) and Idea (16 percent ownership) through its joint venture, Indus Towers. Sharing the infrastructure cost and usage between multiple operators has helped Bharti Airtel to reduce its operating and capital expenses. Bharti Airtel also formed a joint venture with the Indian Farmers Fertilizer Cooperative Limited (IFFCO). Its joint venture, IFFCO Kisan Sanchar, uses IFFCO's wide rural presence (present in 80 percent of Indian villages) and appeal among the rural agricultural community to market and distribute Bharti's products. IFFCO Kisan Sanchar provides subsidized handsets and connections at competitive rates in rural areas. It also helps Bharti Airtel to identify and acquire suitable locations for deploying its cell sites. In addition, it offers tailored services including voice-based updates on crop prices, farming techniques, rural health initiatives, and "help line" services.

Strategy
Bharti Airtel first studies the commercial viability of a rural community (and the surrounding villages) based on parameters such as source of livelihood, average income, and involvement in frequent commercial transactions or travels. The company has developed a prioritized deployment strategy based on the specified criteria. Qualifying villages are first to receive a base station, which also caters to nearby communities. To help ensure efficient usage and profitability for each of these base stations, Bharti Airtel tracks the revenue generated per base station (instead of ARPU, which is considered less relevant in a rural context). The following best practices have also been established: Bharti Airtel has adopted the strategy of direct communications to market its value proposition to rural customers. To make its services accessible, the company provides all

of its marketing content in local languages. Vans are used to cover rural areas with staff who educate locals about mobile services and usage. The company has developed a shared phone service called Public Call Offices (PCOs) in rural regions to increase awareness about its brand and services. Bharti Airtel Service Centers have been set up in villages to address customer queries and complaints as well as act as sales and distribution points. These centers employ local people and offer sales and customer services using local dialects. Bharti Airtel has already established over 18,000 service centers in rural India, covering over 400 languages and local dialects. The company plans to expand this network. Success Factors/Metrics/Monetization Bharti Airtel does not provide separate rural key performance indicators, but the following results have been publicly announced: As of April 2010, Bharti Airtel's network covered 440,000 villages in India, which, together with its urban services, accounted for coverage of approximately 84 percent of India's total population. As of March 31, 2010, Bharti Airtel had added 9 million new customers to reach a total of 128 million connections. Ovum estimates that rural users accounted for 60 percent of the company's net subscriber adds in that quarter. Despite Bharti Airetel's overall ARPU of just under $5, its mobile division's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was approximately 30 percent, and its earnings before interest and taxes (EBIT) margin was approximately 19 percent, which indicate a healthy return on overall (including significant rural) investments.

Bharti Airtel : Distribution Channels

Distribution Channel
Under the Company

DSA
(Direct Selling Associates) CSA (Corporate Selling Associates)

FSA
(Franchisee Selling Associates)/

ARC
(AIRTEL Relationship Centre)

Airtel has a wide & effectively spread channel structure all over India. The channel structure is simple and effective. Complications are kept out in order to make the overall process very effective and efficient The above figure illustrates the channel structure at a regional level. This has been generally scaled down for better understanding of the structure. TERRITOTY MANAGER The distributors include one who handles 1) Provisioning 2) Documents 3) Operation back up 4) Field sales executives.

SELECTION OF CHANNEL MEMBERS/DEALERS Airtel follows a strict policy in selection of the dealers, and therefore it is necessary to fulfill the following pre- requisites to be eligible to become a dealer: The dealers should have a sound financial background. The financial capability of a dealer is solely depended on the discretion of the company officials. The dealers should have a good market reputation, since the dealers help the customers in forming the first impression a customer has about the company. The dealer should have a good previous track record, i.e of timely payments, no criminal background etc. The dealers should have good market penetration. The companys ability to gain maximum customers in this era of competition solely depends on the penetration the dealers have in the market. The last criterion of dealers selection for Airtel is the area the dealers cover. This would include different geographical areas which are covered by a dealer.

Responsibilities and functions of the dealers:

Airtel believes in Customer Loyalty and thus Airtel expects that their dealers apart from selling paint products should perform the following functions for better customer relations management: Sales promotion through regular promotional schemes, road shows, campaigns etc. the expenses incurred by the dealers is shared by the company only if these activities are for promotion of the company and not of the dealer. Recruitment- done under the guidance of certain Airtel officials Training and development of manpower with company assistance Servicing according to the size of orders Customer relation management Promote other products of the company The dealer should be in regular touch with the customer, keep taking his feedback and ensure maximum customer satisfaction. The dealer should also try and convince the customer to try newer products of the company. Issues of allocating territories: Presently the territory are divided into circles like Delhi circle, Andhra Pradesh, Karnataka, Chennai, Himachal Pradesh, Kolkatta Circle are to name a few. A multi dimensional marketing and sales team builds both direct and indirect sales channels. Regional organizations are responsible for the definition of the sales and marketing strategies, and plans for their respective territories. Each region also provides significant inputs and reviews of the corporate strategic sales, marketing and product direction. Bharti Airtel uses second degree and third degree distribution network. These two systems are in place for altogether different markets. There is confusion in the roles of the members of the channel. The territory and the degree of distribution network are done only on the basis of whether the market is urban and rural. The distinction between the same isnt clearly defined which is causing confusion among the channel. There are differences between the offers that are offered to retailers in different areas. They vary based on the territory. Allocation of a rural distributors or urban distributors is perplexing.

Channel Management at Airtel:

Since Airtel has an intensive distribution network, proper channel management becomes an indispensable part of the system. One of the major issues encountered in the channel management is channel conflict. Channel conflict is behavior by a channel member that is in opposition to its channel counterparts. It is opponent centered and direct, in which the goal or object sought is controlled by the counterpart. Channel conflicts, that mainly result from competing goals of the channel members, different perceptions of reality, clashes over domains i.e. intra and multi-channel competition, roles unclarity, expectations divergence, relationship disharmony etc. To avoid these conflicts, Airtel has adopted a Second and Third Degree Distribution network Second Degree distribution network: Company makes invoice of SIMs, PEFs, GSM Pay Phones, RCVs of various denominations chiefly Rs.10, Rs 30 and Rs. 60 to only Urban Distributors and Rural Super Distributors. Easy balance is also transferred to only Urban Distributors (UDs) and Rural Supers (RS). Urban distributors distribute the above items to retailers according to the demand and transfer easy balance to retailer through FOS (Field Sales Officer) SIM. This is more suitable for the urban market where demand is obscurely driven. Third degree distribution network: RS distributes the above items to Rural Distributors commonly known as RDs and transfers easy balance into Rural Distributors SIM. Rural Distributor then distribute the above items among the retailer according to the demand of it and transfer easy balance to retailer through FOS SIM from easy balance of Distributor SIM. This three level distribution is used to reach to sub urban and rural areas since there is lesser popular density and large geographical spread that has to be catered to.

Innovations in Channel Management:

With the drastic improvement in technology, a centralized system can be set up in order to reduce the number of channel members and the problems accompanying them. This may lead to improvement in the communication among the channel members.

Reduction of the number of methods through which a retailer can recharge his SIM in order to do recharge/ give service to the end customer. This method would help facilitate better communication as well as improved monitoring of the business.

ISSUES OF CHANNEL CONFLICT:

Due to lack in channel innovation these are the conflicts that are arising in the channel. The following also has a list of problems faced due to this conflict Problem of service gap: Cases have been found where the retailer has run out of its recharging balance and the balance has not been refilled by the distributor timely. This may be caused because of the time lag or because of the no credit policy of the distributor. This however leads to some loss to the company as the customer has to return back without recharging. This also weakens the companys image in the eyes of the customer as retailer here acts as the face of the company. Competition: Due to large number of players, now the retailer has to keep competitor products as well. However they are unwilling to make extra investment and reduce the share of each existing company to accommodate the competitor products. Non-availabilty of particular offers: There have been instances where the company has announced new offers. However those are not available at the retailers outlet. This may happen due to lag in information passage from the company to the retailer. This situation is seen especially in the rural areas where number of retailers is less compared to urban areas. This may lead to loss of potential customers and ultimately unrest among the retailers. Retailers selling SIM Cards at a cost lesser than the MRP: Big retailers who purchase the SIM Cards in bulk sell the SIM Cards at a cost lower than the MRP. They use the economy of scale achieved through bulk purchase, reduce money from their commission and pass on the difference to the end customer. Thus they are able to sell the SIM Cards at a lower cost then the competing retailer. This leads to unequal sell by the various retailers. Old SIM Cards not replaced in time: Once some offer is over, the SIM Cards which hold that offer has to be taken back by the distributor and replaced by new SIM Cards. However there have been instances where the distributor is late on completing this activity. This leads to inventory accumulation at the retailers shop which the retailer cannot sell.

Suggestions:
The following suggestions are made for Bharti Airtel to increase its customer base: Further efforts should be made to capture rural markets by lowering call rates and providing cheaper handsets. Efforts should also be made for improving visibility in rural areas. Airtel should have a more widely-accepted Brand Ambassador (such as Amitabh Bachchan) to increase its visibility among the consumers. Airtel should provide more people-friendly tariff schemes to help it compete with Vodafone with the Younger Audience,although its advertisements are a good step in the right direction. Airtel should make sure technical glitches are fixed in time to ensure no problems occur for customers who are using the network. With a larger amount of Competition, they should focus on establishing a more wider distribution base and make Sim cards available at every centre so as to reign in maximum number of consumers.