STRATEGIC MANAGEMENT

PROJECT ON

“STRATEGIC APPROACH ADOPTED BY AIRTEL”

SUBMITTED TO:

“Prof: MALAY PATEL”

SUBMITTED BY:-

KHUSHI KABRA (22)

MUSKAN GUPTA (29)

DAMINI CHAUHAN (09)

SEMESTER-4

SECTION-B

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 DECLARATION

We hereby declare that the project work entitled “Strategic approach adopted by airtel ”
submitted to United World School of Law, Gandhinagar , is record of an original work done
by us under the able guidance of Prof. Malay Patel, faculty member, United World School of
law, Gandhinagar.

SUBMITTED BY:-

KHUSHI KABRA (22)

MUSKAN GUPTA (29)

DAMINI CHAUHAN (09)

SEMESTER-4

SECTION-B

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 TABLE OF CONTENTS

➢ INTRODUCTION…………………………………….……………4
➢ RESEARCH METHODOLOGY……………………………….…5
• Objective
• Hypothesis
• Research Question
• Coverage & Scope
➢ WHAT IS PORTER’S FIVE FORCES OF AIRTEL.................6-9
• THREAT FROM COMPETITION
• THREAT OF NEW ENTRANT
• THREAT OF SUBSTITUTE
• BUYER’S POWER
• SUPPLIER POWER
➢ WHAT IS SWOT ANALYSIS OF AIRTEL............................10-12
• STRENGTHS
• WEAKNESSES
• OPPORTUNITIES
• THREATS
➢ CONCLUSION...............................................................................13

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 INTRODUCTON

• Bharti Airtel Limited, also known as Airtel, is an Indian global telecommunications

services company based in Delhi, India. It operates in 18 countries across South Asia
and Africa, and also in the Channel Islands. Airtel provides GSM, 3G, 4G LTE, 4G+
mobile services, fixed line broadband and voice services depending upon the country
of operation. Airtel had also rolled out its VoLTE technology across all Indian
telecom circles.1It is the third largest mobile network operator in India and the second
largest mobile network operator in the world with over 411.42 million
subscribers.2Airtel was named India's 2nd most valuable brand in the first ever Brandz
ranking by Millward Brown and WPP plc.3
• 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 adopted by
several operators. 4 Airtel's equipment is provided and maintained by Ericsson,
Huawei, and Nokia Networks 5 whereas IT support is provided by Amdocs. The
transmission towers are maintained by subsidiaries and joint venture companies of
Bharti including Bharti Infratel and Indus Towers in India.6Ericsson 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
(1.4¢ US)/minute.7
• Airtel India is the third largest provider after Jio Communications and Vodafone Idea
Ltd of mobile telephony and second largest provider of fixed telephony in India, and
is also a provider of broadband and subscription television services.

1
"Airtel Plans to Launch Its 4G VoLTE Services Later This Year, Says CEO". NDTV Gadgets360.com.
Archived from the original on 10 July 2017. Retrieved 10 July 2017.
2
"Press Release on Telecom Subscription Data as on 30 September, 2019" (PDF). Telecom Regulatory
Authority of India. 19 November 2019.
3
"HDFC Bank named India's most valuable brand in BrandZ ranking". Archived from the original on 21 May
2016.
4
Joji Thomas Philip (15 October 2012). "Bharti Airtel may merge India & Africa operations by mid 2013 –
Economic Times". Economictimes.indiatimes.com. Archived from the original on 8 November 2012. Retrieved
29 October 2012.
5
"Business.in.com". Business.in.com. Archived from the original on 13 July 2011. Retrieved 23 August 2010.
6
"First break all the rules". The Economist. 15 April 2010. Archived from the original on 28 May 2010.
Retrieved 23 August 2010.
7
"Economist.com". The Economist. 15 April 2010. Archived from the original on 28 May 2010. Retrieved 23
August 2010.

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 RESEARCH METHODOLOGY

➢ ABSTRACT
Bharti Airtel Limited, also known as Airtel, is an Indian global
telecommunications services company based in Delhi, India. It operates in 18
countries across South Asia and Africa, and also in the Channel Islands.8
➢ OBJECTIVE
Here the objective is to know how the organization is dealing with the strategic
approach of the company.
➢ HYPOTHESIS
By analysing company’s strategic approach to know the growth of the company.
➢ RESEARCH QUESTIONS
1. WHAT IS PORTER’S FIVE FORCES OF AIRTEL?
2. WHAT IS SWOT ANALYSIS OF AIRTEL?
➢ COVERAGE AND SCOPE
There is not much material on these researches, so the research and conclusion are
drawn from the various factors it may vary from person to person. However the
author is open for every outcome.

8
"Bharti Airtel Financial Statements 2019" (PDF). Bharti Airtel Ltd. Retrieved 25 July 2019.

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 WHAT IS PORTER’S FIVE FORCES OF AIRTEL?
THREAT FROM COMPETITION9
• High Fixed Cost: The industry also suffers from high fixed cost which makes the
entry barrier also very high for the industry. It comes as no surprise that in the capital-
intensive telecom industry the biggest barrier to entry is access to finance. To cover
high fixed costs, serious contenders typically require a lot of cash. When capital
markets are generous, the threat of competitive entrants escalates. When financing
opportunities are less readily available, the pace of entry slows. Meanwhile,
ownership of a telecom license can represent a huge barrier to entry. There is already
6-7 players in each region excluding 3 -4 big players like Bharti Airtel, reliance,
Vodafone and BSNL.
• Very less time to gain advantage by an innovation: Every company in this industrial
sector in investing a huge amount in research and development and marketing
strategy. That is why we see when any offer launched by any company is always
counter attacked by other companies very soon. This makes the industry rivalry most
prominent. E.g. Caller tunes, Life time cards.
• Price wars: The price war is really very fierce in this industry. Price war in telecom
industry has commoditized the market that branding has taken a backseat. New
players are reducing their tariffs to get better hold in the market and in turn the
existing big players like Airtel, reliance etc. also have to compete by introducing low
tariff new plans such as youth plan for younger generation, ladies special etc.
THREAT OF NEW ENTRANT10
• Both potential and existing competitors influence average industry profitability. The
threat of new entrants is usually based on the market entry barriers. They can take
diverse forms and are used to prevent an influx of firms into an industry whenever
profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist
whenever it is difficult or not economically feasible for an outsider to replicate the
incumbents’ position. The most common forms of entry barriers, except intrinsic
physical or legal obstacles, are as follows:

9
All Answers ltd, 'Airtel Pest Analysis and Porter’s Five Forces' (UKEssays.com, March 2020)
<https://www.ukessays.com/essays/business/pestel-of-airtel.php?vref=1> accessed 29 March 2020
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 • Economies of scale: In telecom industry the economies of scale exists from the
supplier side. That is why companies try to increase their subscriber base at drastic
rate.
• Distribution channels: Distribution channels are also providing a major determining
factor. These channels are not loyal to any company and competitors can easily access
them and make out work for them.
• Though huge licence fee to be paid upfront and high gestation period reduces the
threat of new entrant and discourages investment and infrastructure in the telecom
sector.
• Limited Spectrum availability, Regulatory issue which again leads to high licence fee
also restrict new players from entering into the market.
• Rapidly changing technology and setup the efficient Infrastructure for the same
accordingly is also the major factor which stops new player to enter into the telecom
sector.
• New entrants are ready to enter huge capital considering the attractiveness of the
market.
• Increase in FDI limits to 74% is bringing competition from foreign players. Huge
investments are being made by the foreign companies to setup better infrastructure
and getting latest technology into the country.
• Threat from the non telecom background brand which could foray into the telecom
industry by the ease of outsourcing.
• Customer switching cost is very low, as cost of new connection is really low. And
new connection offers more benefits to the customers.
THREAT OF SUBSTITUTE11
• The threat that substitute products pose to an industry’s profitability depends on the
relative price-to-performance ratios of the different types of products or services to
which customers can turn to satisfy the same basic need. The threat of substitution is
also affected by switching costs – that is, the costs in areas such as retraining,
retooling and redesigning that are incurred when a customer switches to a different
type of product or service. It also involves:
• The potential major substitutes for telecom industry are as follows:

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 • Products and services from non-traditional telecom industries pose serious
substitution threats. Cable TV and satellite operators now compete for buyers. The
cable guys, with their own direct lines into homes, offer broadband internet services,
and satellite links can substitute for high-speed business networking needs.
• Wireless phones are also getting cheaper each year over the last decade; this has
provided consumers with more convenience and mobility, to the extent that the
younger demographic now considers a fixed line phone redundant.
• Just as worrying for telecom operators is the internet: VOIP i.e. voice over ip
telephony is becoming a viable vehicle for cut-rate voice calls. Delivered by ISPs –
not telecom operators – “internet telephony” could take a big bite out of telecom
companies’ core voice revenues. Applications like Skype have been extremely
popular among younger generation users and are fast emerging as preferred means of
communication.
BUYER’S POWER12
• Buyer power is one of forces that influence the appropriation of the value created by
an industry. The most important determinants of buyer power are the size and the
concentration of customers. Other factors are the extent to which the buyers are
informed and the concentration or differentiation of the competitors. Kippenberger
(1998) states that it is often useful to distinguish potential buyer power from the
buyer’s willingness or incentive to use that power, willingness that derives mainly
from the “risk of failure” associated with a product’s use.
• The following points influence the buyer power:
• Lack of differentiation among the service provider: As telephone and data services
does not vary much regardless of which companies are selling them.
• Cut throat competition: Competition level has increased a lot with increase in new
foreign as well as domestic players in the industry. Operators are engaging in an
intense price war which is benefitting to the buyers in every way.
• Customer is price sensitive: Every operator is offering low tariffs with better services
due to high level of competition among the operators which has made customer more
sensitive to price.
• Low switching costs from one operator to other operator.

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 • The consumer now has access to several means of communication like email, instant
messaging which are diminishing the importance voice services.
• Attractive Schemes for new connections.
• Availability of all operators everywhere.
SUPPLIER POWER13
• Supplier power is a mirror image of the buyer power. As a result, the analysis of
supplier power typically focuses first on the relative size and concentration of
suppliers relative to industry participants and second on the degree of differentiation
in the inputs supplied. The ability to charge customers different prices in line with
differences in the value created for each of those buyers usually indicates that the
market is characterized by high supplier power and at the same time by low buyer
power. In the drawback of Indian telecom industry the following should be kept in
mind:
• Large number of suppliers: The industry basically has a large number of suppliers,
which helps them to choose from a lot of options. So they try to select the best option
to deliver the value to the customers and to have a competitive advantage from their
competitor.
• Shared tower infrastructure: Technology has helped them to share the tower
infrastructure. This basically helps them to reduce the initial investment a lot.
• Limited pool of skilled managers and engineers especially those well versed in the
latest technologies which put companies into weaker side in terms of hiring and
salaries.
• Medium cost of switching since changing their hardware would lead to additional cost
in modifying the architecture.

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 WHAT IS SWOT ANALYSIS OF AIRTEL?
STRENGTHS14:
• Biggest mobile service provider in world’s second largest telecom market:–Mobile
phone subscriptions now follow the normal population trends around the world. With
about 870 million wireless subscriptions, India ranks second after China in the
wireless market. Airtel has a 22.2% share of that market.
• Well-established nationwide infrastructure: – Airtel has been in the market for 18
years and thus has towers and backhaul all over the country. This is a major
advantage. Deployment of new technologies or increasing capacity at times requires
software and minimal hardware upgrade. Having infrastructure already on the ground
makes that process much faster and smoother. Secondly, it is easier to capture new
customers if a telco already has a network in place.
• High brand equity: – Airtel is among India’s most visible brands omnipresent in most
parts of the nation through television, print and various other forms of advertising.
Celebrity endorsements and innovative advertising that understand the pulse of
market are some of the assets of the Airtel brand.
• Superior overall network quality and reliability: – Bharti Airtel (along with Vodafone)
runs one of the better mobile networks’ in India. They have nationwide penetration
and although there is no dearth of consumer complaints regarding dropped calls and
slow data against Airtel, it still offers a higher quality telecom service experience as
compared to most other telcos.
WEAKNESSES 15
• High competition in the telecom market:–Airtel, like all other service providers in
India, has been adversely affected by the extreme price competition. Although the
average voice call rates have gone up recently, they were as low as Rs. 0.6/min. (1
cent/min.) a few years ago. The story is similar with data and 3G tariffs. As a result,
the company has been reporting declining profits for many years. ARPU had been
decreasing too although it is showing signs of bottoming out now.
• Debt and finances:–According to their latest quarterly report, Airtel is burdened by
$9.7 billion in net debt, which is a lot of money when converted to rupees. How can
Airtel repay this debt is the question? Possibilities include stake and equity sale or

14
https://freebcomnotes.blogspot.com/2017/05/bharti-airtel-swot-analysis.html
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 spike in revenue. Depreciating rupee is also an issue since it results in foreign
exchange losses and increases the financing cost.Africa acquisitions and operations –
Airtel acquired Zain’s Africa business for $9 billion in 2010. Since then, it has
struggled to turn around those operations reporting repeated losses from the continent.
While the Africa operation has widened the companies’ geography, it continues to be
a drag on its balance sheet.
• Late adoption of 3G and advanced wireless technologies: – Due to various regulatory
uncertainties and delayed spectrum auctions, India and Airtel were late to the 3G
party. 3G services were launched by Airtel only in early 2011. The data tariffs were
high, speeds were unsatisfactory and customer acceptance of 3G was slow. The
company lacks nationwide 3G license with spectrum in 13 out of 22 telecom service
areas. Airtel’s LTE network for mobile broadband is still confined to only 4 cities in
India.
OPPORTUNITIES16:
• Untapped voice market: – Despite many believing that the voice market in India is
close to saturation, hundreds of millions remain without a phone. Recently, VLR
(Visitor Location Register) numbers released by the regulator TRAI, showed that
around 730 million out of the total 870 million are active connections. Given many
people in India use multiple SIMs, it is safe to say that mobile phone penetration in
the country is less than 50%. The opportunity for Airtel is huge, especially in the rural
segment.
• 3G and data revenue:–Airtel’s 3G subscribers constitute less than 5% of its total
subscriber base. Apart from getting new 3G customers to join Airtel, there is immense
room for growth within its existing customers. The operator should be more
aggressive in marketing the benefits of high speed data access on phone.
Simultaneously, it must ensure faster and consistent data speeds on its network.
• LTE:– The whole wireless world is moving towards LTE. LTE for mobile broadband
can be a good solution for India where fixed broadband penetration is otherwise low.
Airtel has taken the lead with this version of LTE in 4 cities, but deployment needs to
catch up pace. Despite a weak LTE ecosystem in India, Airtel should portray itself as
the embracer of that technology. It must pursue the device manufacturers to produce

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 LTE capable phones for India and then take the lead in the deployment of LTE for
cellular networks too.
• Mergers and Acquisitions:– Unfortunately, the M&A rules in India are yet to formally
declared although recent media reports have suggested that companies may be
allowed to merge as long as their market share in every circle is less than 50%. Airtel
with a market share of 22.2% should be good to acquire smaller telcos to reduce
competition and add subscribers and spectrum. Such acquisitions will incur huge
spectrum costs, but it could be well worth it in the long term.
THREATS17:
• Unfriendly regulatory environment: – The telecom industry in India has been plagued
by a hostile and unstable regulatory scenario. This has adversely affected the industry
sentiment and the wireless service providers. While some clarity has begun to emerge,
many guidelines are far from certain. Airtel has not remained untouched from this
chaos. And this threat would continue to linger for the next few years.
• Spectrum auctions and refarming:–Government of India and TRAI kept a high
reserve price for 3G, BWA and the recent 1800 MHz auction. Airtel had spent Rs.
123 billion ($2.7 billion per rupee to dollar conversion back then) for 3G airwaves.
Since the returns are slow due to low tariffs, buying the spectrum at high price is
detrimental for the telcos. Refarming 900 MHz is another terrible idea which would
negatively impact Airtel’s finances, given that it will have to repurchase those
airwaves to continue 2G operations.
• Mobile Number Portability: – MNP gives the customer independence to change the
service provider while retaining the number. With similar tariffs across various telcos
and satisfaction with the current service provider being low, consumers are willing to
jump ship. The larger incumbent operators are losing millions of customers to the
newer players who attract these customers with their freebies and innovative offers.

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 CONCLUSION

• Airtel have done a good job by improving their competencies. Airtel is working on
their research and development. This is the main reason it is on the top position. Airtel
was the first player to enter into 4G market, so it has to take the advantage. The
journey was not a bed of roses for Airtel. They faced numerous stumbling roadblocks
along the way and overcome most of them. This is because they applied and adopted
sound strategies relating to outsourcing, marketing, advertising and creating customer
value and satisfaction.
• Even though the growth of the company is stagnating in recent times, and the pressure
from competitors and regulatory bodies always increase, new strategies and
innovation ensure that Airtel keeps its nose above its strong competitors.
• Among its priorities it now counts new economic and social concerns as the
information society develops, national coverage is a major issue and Airtel intends to
play its part to protect the interest of all consumers.

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