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PROJECT SUMMARY

The project aims at understanding the Business strategies of Bharti Airtel vis-à-vis the Telecom Industry in India. The purpose of the Strategy analysis is to understand what is unique about Bharti Airtel and how it not only helps in maintaining Bhart’s leadership status but takes its business to new horizons.

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Table of Contents

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Introduction Telecommunication Scenario in India About Bharti Airtel Value Chain Analysis Resource and Capabilities Industry Analysis-Five force Model Competitive Advantage PESTEL Analysis SWOT Analysis Business Strategy Conclusion Bibliography 20 21 9 11 12 14 3 5 7

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How we keep them at bay is the challenge. “What the future holds for Bharti?” He replied. The telecommunication sector has emerged as one of the key sectors responsible for India’s resurgence and economic growth. “We have out-played a good many and a good many will out-play us. of Bharti Airtel was asked. 4|Page . Tele-Communication Scenario In India The Indian Telecommunications network is the third largest in the world and the second largest among the emerging economies of Asia.to devise and pursue a strategy that will keep Bharti Airtel ahead of its competitors.Introduction In a recent TV interview (CNBC-TV18) Sunil Mittal. the CEO & MD.” What he probably meant is .

05 million at the end of March 2011.59 Million at the end of March 2011.32%).06 and Rural tele-density increased from 31.21 million to 273. the overall Tele-density in India reaches 70. The growth of Rural Subscription (2.64% to 33.25 Million at the end of February 2011.65% from 66. Wireless subscription in Urban Areas increased from 525. Wireless Segment (GSM.55%.32 and Rural tele-density increased from 32.27 million in February 2011 to 564. thereby registering a growth rate of 2.32 Million at the end of March 2011 from 826.38 Million in February 2011 to 811.72 to 150.17 million in February 2011 to 538. The share of Urban Subscriber has declined to 66.64%) is higher than the Urban Subscription (2. The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provide easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at an affordable prices. registering a growth of 2. With this. Subscription in Urban Areas grew from 551.98.45%).Growth This rapid growth has been possible due to various proactive and positive decisions of the Government and contribution. The overall wireless Tele-density in India reaches 67.98 million to 282. both by the public and the private sector.35. This shows higher growth in Rural Subscription (2.95 to 33. 5|Page .90 to 32.36% where as share of Rural Subscribers has increased from 33. Industry Overview Total Telephone Subscribers The number of telephone subscribers in India increased to 846.35%. Rural subscription increased from 266.75.70%.23 million. There is a genuine commitment to creating a modern and efficient communications infrastructure that takes account of the convergence of telecom. The overall Urban tele-density has increased from 154.08 million at the end of March 2011.72% where as share of Rural Subscribers has increased from 33.30% from 66.28% to 33.89. Rural subscription increased from 274.01 to 157. The Urban wireless tele-density has increased from 146. CDMA & FWP) Total Wireless subscriber base increased from 791.54 million.75%) than Urban Subscription (2. IT and media. The share of Urban Subscriber has declined to 66.43%.

Private operators hold 88.99% market share. two PSU operators hold only 11.01% of the wireless market share where as BSNL and MTNL. The graphical presentations of market shares and shares in net additions of all the service providers during the month of March 2011 are given below 6|Page .

Airtel is the fifth largest telecom operator in the world with over 207. Niger. It operates a GSM network in all countries. providing 2G or 3G services depending upon the country of operation. Coverage map of Bharti Airtel across 19 countries Airtel is the 5th largest mobile operator in the world in terms of subscriber base and has a commercial presence in 19 countries and the Channel Islands. which operates in 16 African countries: Burkina Faso. in Sri Lanka Airtel Africa. Sierra Leone.About Bharti airtel Bharti Airtel was established as Bharti Tele-Ventures Limited in 1985. commonly known as airtel. under the brand name Airtel-Vodafone. Democratic Republic of the Congo. through an agreement with Vodafone 7|Page . It is a joint stock holding enterprise headquartered in New Delhi. Ghana.8 million subscribers across 19 countries at the end of 2010. Airtel is the 3rd largest in-country mobile operator by subscriber base. Uganda and Zambia. Kenya. Tanzania. Gabon. Chad. in Bangladesh Airtel. is an Indian telecommunications company that operates in 19 countries across South Asia. behind China Mobile and China Unicom. Bharti Airtel Limited. Malawi. Seychelles. The British Crown Dependency islands of Jersey and Guernsey. Nigeria. Madagascar. Republic of the Congo. in India Airtel Sri Lanka. Africa and the Channel Islands. Its area of operations include: The Indian Subcontinent : Airtel Bangla.

high speed broadband Internet access(DSL)in 96 cities in India. dth and turnkey telecom solutions for enterprises.It is the largest cellular service provider in India.By 2015.Committed to creating and supporting programs that bring about sustainable changes through education and use of technology. the submarine cable connecting Chennai and Singapore. Bharti airtel’s businesses can be categorised broadly under three strategic business units (SBU’s) Mobile telephony Telemedia Enterprises The mobile business is the major revenue earner(star) where as the other two SBUs are in different stages of their business cycles. It also acts as a carrier for national and international long distance communication services. Vision of Bharti Airtel . Airtel will be the most loved brand. The company has a submarine cable landing station at Chennai. fixed line. The company offers mobile voice and data services. 8|Page .61 million subscribers at the end of 2011 April and a presence in all the 23 telecom circles. enriching the lives of million. IPtv. with over 164. Mission of Bharti Airtel .

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02/minute).Increased sharing of passive infrastructure -reduced Capex spend -Enhanced & consistent customer experience -Common platform across the group -Scalable business model to met business needs 10 | P a g e . Bharti has roped in a strategic partner Alcatel-Lucent to manage the network infrastructure for the Telemedia Business. in India). In the year 2009-10. microwave links. platform enabling delivery of content to end user. INDUS Power) Call Centre Outsourcing(IB M DAKSH. Warburg pincus. . . etc. Ericsson agreed for the first time. NokiaSiemens) Strategic investor (Temasek. Singtel) Passive Infrastructure(B harti Infratel.Pricing and Payment as a % of revenues.WP was instrumental for Providing support at the Early stage -SingTel had 50:50 JV in Chennai landing station .Deliver service delivery. Call rates have come down much further. 1/minute (U$0. sales and finance. device like mobile. Mphasis.Value Chain Analysis Of Airtel Airtel is the first telecom company in the world to outsource everything except marketing. Value chain of Bharti Airtel Value Chain Information Technology (IBM) Network Outsourcing & Maintenance(Erics son.Pricing linked to capacity + -Payments linked to uses & network quality (Assured network quality) -Service level agreement . to be paid by the minute for installation and maintenance of their equipment rather than being paid up front. Nortel) . thus reducing fixed cost.) are maintained by Ericsson. This enabled the company to provide pan-India phone call rates of Rs. Its network (base stations. Nokia Siemens and Huawei business support by IBM and transmission towers by another company (Bharti Infratel Ltd. etc.Service level agreement for quality deployment . Voda fone. PC’s.

2. The Equity:Debt structure is also sound. Hence the physical resources is a source competitive advantage.Resources & Capabilities. Innovation & Creativity: Airtel combines telecom services. Though valuable. valuable and costly to imitate. Financial : Bharti has strong balance sheet with a good cash and reserves. its not a rare resource that gives Bharti a competitive edge. Physical : Airtel has the state-of-the art – towers and networking infrastructure that use the latest software to provide best services at lower cost. This places Bharti a notch above the rest. It is valuable as well as rare. Bharti had been the front runner in product innovation and always enjoyed the first mover advantage. 11 | P a g e . giving it a competitive advantage. Thus it has innovative processes that rare. It has the Largest market share in GSM segments. It has a proven track record of high profit generation.Bharti Airtel 1. Technological : It has a major network outsourcing and maintenance deal with NOKIA-Siemens and Ericsson. 4. It has a stake in INDUS towers and long term customer support outsourcing deal with IBM. 3. Reputation: Airtel enjoys a good Brand equity in India. 5. istribution of products as well as after sales services. Its successful fund raising through debt in 2009 and through equity in 2010 is the testimony of these facts.

26% 16.72% Vodafone 17.03.03.03.99% Reliance 18.Industry Analysis (Porter’s Five force model) Threat From Competition: HIGH Companies like BSNL. Vodafone.03. As compared to its nearest competitor. Idea & Reliance continuously engage themselves in aggressive marketing and expansion and thus trying to capture Bharti’s market share. MTNL.53% 16.58% 12 | P a g e .2010 31.2011 Bharti Airtel 23.03.97% 21.2011 is given below: FY ending on 31.84% 19.55% 17.55% 17.2009 to 31. Reliance & Vodafone the market share of three companies in wireless telecom as on 31. TATA.2009 31.

Lower prices are enjoyed by the customers due to the severe service competition in the Telecom Market. 13 | P a g e . There are many companies to provide the customer services at lowest prices. therefore bargaining power is low for them and these networks cannot be put into other profitable investments. Declining ARPU & MoUs in India Threat From Suppliers: LOW Long term contracts ensuring future supply of Handsets and SIM cards. Customers can easily switch to another firm.Threat From Customers: HIGH Since Similar type of services are providing by all the major Telecom Market players. of major telecom software companies compete for software develop thereby pushing the prices low for these software. Suppliers are dependent on few telecom operators for revenue because of their high investment. With a number of portability in a reality it further gives theme power to dictate. No.

Social networking web sites and Skype are reducing the necessity for mobile services. It also earns higher profits because either the profit margins are greater or the sales volume has increased. By bringing down its operational costs. 40 30 20 10 0 Bha rti Airtel Voda fone O Profit-2011 P N Profit-2011 et 14 | P a g e . Analysis of competitive Advantage Cost leadership Advantage A firm gains cost leadership in an industry when its cost of production is lower than that of its competitors. Airtel has gain cost leadership by managing its processes and resources efficiently and effectively. Introduction of new strategies by the existing firms and availability of low spectrum.Threat From New Entrance: LOW Initial Investments are very high and also high gestation period. Telecom Industry is highly regulated and very dynamic in nature. Threat From Substitutes: HIGH Fixed line services are in the declining stage. Video conferencing. giving operators run for money. However internet telephone is increasing. Airtel offers its products and services at lower prices compared to it’s competitors.

Airtel is providing free digital EPABX with free leased lines (no connectivity charges). the entry of a new competitor into that area becomes difficult.38% Mar-11 10.OP Profit Margin Company Bharti Rcom Vodafone Mar-10 25. Of late. Airtel has extended it’s focus to the rural customers having much less ARPU.So the firm is providing latest EPABX to the customer which is costing approx Rs 50.17% 5. Firms that adopt the differentiation strategy successfully have access to advanced scientific research. emphasis on “barriers break when people speak”. or a particular product or service line. Airtel is focusing on the customers who is having more than Rs10000 monthly landline billing.000. from Dahisar to Churchgate in western region & Thane to Panvel in eastern region. Airtel is offering landline services which consist of PRI (Primary Rated Interface). effective customer communication strategies.32% Mar-11 16. The customers will also be loyal to the company and therefore. a highly skilled labour force. in local languages.e.82% 17. a specific geographic area. etc. Best service provider.03% 19.15% Differentiation Advantage The differentiation strategy adopted by the firms needs to possess sufficient skills and abilities to differentiate the product from that of the competitors based on some attributes that allow the consumers to perceive the product as different from that of the competition. good service even in the remote areas.04% 33. This segment may be a special group of customers.45% 21. downloads etc Focus strategy A firm pursuing a focus strategy tends to serve a specific segment instead of catering to the entire market.41% 37. good call center service esp. Airtel can provide its service to a specific geographic area i.05% 12.30% 21. new initiatives like google search on airtel live.20% Net Profit Margin Mar-10 21. 15 | P a g e .

this figure has moved considerably during the last couple of years. This network presently spans 16 | P a g e . customers have a notion regarding brand and status symbol. This political factor forbids the entry of new companies in to 3G services.PESTEL Analysis Political / Legal Factors: In Telecom Sector of India. etc. Advertisements plays very important role in selecting network. so the company will have to try its best to meet both the requirements. Most of the customers are influenced by the latest fashion trend. Also this sector accounts for 1 percent of India’s GDP. Economical factor: Indian telecom was growing approximately in a range of 20 to 30 % in year 2002 – 2003. which proves to be in favour of Bharti Airtel as this auction is not available to the new entrants. International and long distance communication services and Value Added Services. Likes and dislikes of a teenager and adult might not be same. This implementation may affect Bharti Airtel as customers would keep switching to any possible networks available. Foreign Direct Investment (FDI) in Manufacturing is 100%(through automatic route). Approximately 30% of the service tax revenue is contributed by telecom sector. Due to rising terrorist activities and hacking of confidential data on air. Mobile number portability (MNP) implementation would enable subscribers to move to different service provider retaining the original number. roaming facility. Cost factor is also major concern to customers for example calling rates. India’s Department of Telecommunication (DoT) has made amendments related to security features which states that telecom companies should have good policies for security and they should be responsible for the security of the network. In India legal obligations are defined regarding 3G auction and bidding. Demographic factor play an important role in selecting a product. Technological factor: Bharti Airtel is first wireless service provider which supplies roaming services. Customers have become cautious regarding choosing of telecom network. It is also considered to be one of the major sectors which provide direct employment which indirectly helps in economic growth of India. Bharti Airtel has high-speed optic fibre network. A company needs to be updated with the latest technology and fashion trend. Social factor: Now a day. FDI ceiling in the telecom sector has been raised from 49% to 74% which would help the Indian telecom sector immensely.

6% market share and around 80 Mn Customer base) Pan-India (Present in all the 23 Telecom circles). Opportunities • • • • Bharti Infratel – Cutting down cost in rural area. especially in rural areas. 17 | P a g e . disclosing the quantum of radiation has been made mandatory.357 kms all over India. Low Broad band Penetration. This is not yet proved that such changes were risk to human health. Environmental factors: Radio frequency waves emitted from the mobile phones harms body cells and damages the DNA. Bharti Airtel's international network infrastructure includes ownership of the i2i submarine cable system and consortium ownership in five global undersea cable system. Partnership with Leading Telecom Players across the Globe. Strong Financial Technological Leadership Strategic Investors Weakness • • Outsourcing of Core Systems.126. However. Match box strategy –Scale of Penetration Comparatively low Tele density. SWOT ANALYSIS Strengths • • • • • • Largest Telecom Player (With 22. Lack of emerging market investment opportunity.

Weakness • • India Centric (Major Revenue from India) Falling ARPU & Revenue 18 | P a g e .• Rural Telephony.

with 70% of the Indian populace in rural India (1. With an ARPU of less than $2 per month. Under these partnerships. a pioneer its own field.Business Strategy of Airtel Rural strategy of airtel As the urban Tele density about to reach its point of saturation.1 Bn) and a tele density of only 18. and “help line” services. In addition. To expand coverage in to rural areas. To counter this challenges. farming techniques. Nokia provides subsidised Hand Sets and SKS offers Micro financing. It also helps Bharti Airtel to identify and acquire suitable locations for deploying its cell sites. Bharti Airtel is focusing on innovative initiatives.5% as of September 2009. Serving rural India was a challenge in itself. By sharing infrastructure cost and usage between multiple operators. New market Existing Market 19 | P a g e . INDUS towers will control more than 60% of India’s network towers. Rural users low income. it offers tailored services including voice-based updates on crop prices. Bharti entered into an aggrement with Nokia and SKS Microfinance. it had a huge potential for growth.s rural presence (80% of Indian villages) and appeal among the rural agricultural community to market and distribute Bharti’s products. Bharti also formed a joint venture with IFFCO (named IFFCO Kishan sanchar) and thus benefiting from IFFCO. profitability of Rural operations was always under a Question mark. Bharti provides subsidised tariffs and SIM cards to rural users. Bharti Airtel was able to reduce its operating and capital expenses. Bharti Airtel is sharing passive infrastructure services with vodafone and Idea through its joint venture INDUS towers. widely dispersed population. expanding its distribution network via partnerships and customized content and tarrifs. less than ideal public infrastructure were some of the deterentes. rural health initiatives. Bharti Airtel. Bharti Airtel adopted a slew of strategiesAlliance / Partnership To extend its reach to rural India. IFFCO Kisan Sanchar provides subsidized handsets and connections at competitive rates in rural areas. looked to rural India as its next growth engine. On the other hand. including efficient infrastructure deployments.

"If anything. For this matter. Bharti would be marrying up. both sides emphasize the tentative nature of the talks." as MTN has more subscribers. The economic growth prospects in these geographies prompted Airtel to devise its “Look Africa” strategy. Acquisitions and Mergers Bharti Airtel aggressively pursued the to expand its base in markets which have less teledensity to maintain its strategic positioning. led by 7. Africa was a lucrative market where the company entered through mergers & acquisitions. With the morphing of the emerging economies (India. Both Africa and Asia are expected to be the fastest growing regions with 7% and 5. the talks fell apart as MTN group tried to reverse the negotiations by making Bharti almost a subsidiary of the new company. 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". China etc. 2009. In May 2009.4% per annum growth respectively in real GDP between 2010 and 2050.New Product ? Rural Telephony. MTN In May 2008. Africa. The Financial Times reported that Bharti was considering offering US$45 billion for a 100% stake in MTN. Talks eventually ended without agreement. which would be the largest overseas acquisition ever by an Indian firm. due to the South African government opposition. African Venture Tele media business Enterprise business Mobile & Land Line Telephony Existing Product ANOFF’s MATRIX Africa Strategy According to IMF the world economy grew by 5% in 2010.) from the worlds back office to nerve centre of activities. However.1% growth of emerging economies and a 3% growth of advanced economies. ZAIN 20 | P a g e . while The Economist magazine noted. However. it emerged that Bharti Airtel was exploring the possibility of buying the MTN Group. Bharti Airtel again confirmed that it is in Talks with MTN and companies have now agreed discuss the potential transaction exclusively by July 31. higher revenues and broader geographic coverage. a South Africa-based telecommunications company with coverage in 21 countries in Africa and the Middle East.

"In Africa. which stood at $289 million. improving distribution width and increasing our efficiency and productivity standards".3 percent increase in consolidated revenues.467 crore for the year ended March 31. As part of our innovative model we have also successfully set up the Tower Co.2 billion compared to the previous year. which will not only enable us roll out our network with great speed but also provide potential cost efficiencies arising from site sharing. MNP in Kenya to just mention a few.319 million grew by 42. Airtel has reported that its revenues for the fourth quarter of 2010 grew by 53% to US$3. Economies of scale and efficient working capital management helped boost profit margin.In March 2010. Magic number in all the OpCos. which is an improvement of 7. we are rapidly expanding our network coverage. providing a total revenue of Rs 59. in India's second biggest overseas acquisition after Tata Steel's $13 billion buy of Corus in 2007.7 billion in Zain Africa. Loba Nayo in DRC. This is another great opportunity. Besides working as smart penetration tools. newly acquired Zain Africa division contributed US$911 million to the total. The consolidated total revenues for the full year ended March 31. 21 | P a g e . has made up for it with its 51. the initiatives have helped us to keep our existing consumers excited and glued to our networks. 2011. 2011 of $13. Product innovation remains a key driver of our market penetration strategy in Africa. Bharti Airtel completed its $9 billion acquisition of African operations from Kuwait's Zain. which will run as a separate business in our countries of operation and will be responsible for managing the end to end process and operations of our sites.354 million from $1.1 percent y-o-y lifted by the African operations. and later rebranded its logo to signify its international operations in 19 countries. contributing to a total net income of $314 million for Q4 FY 11 for Bharti Airtel.5 percent from its last quarter. has reaped the rewards of its investments this year. Bharti Airtel which began its Africa operations last year. net profits dropped by 41% from US$470 million last year to US$291 million this year due to a US$188 million increase in radio spectrum charges in India and an increase of US$106 million in debt interest. making the firm the world's No. with the largest-ever Indian operator investment of $10. Bharti Airtel. Bharty Airtel said.6 percent decrease in net profit in fiscal 2010-11 at $1. Economies of scale help reduce the percentage cost of advertisement. Africa continued its upward trend with revenues of $924 million.989 million in the previous fiscal. However. Sunil Bharti Mittal. Bharti struck a deal to buy the Kuwait firm's mobile operations in 15 African countries. 5 wireless carrier by subscribers. We have successfully launched attractive propositions such as 2Good in Nigeria. Speaking about its success in Africa. chairman and MD. which registered a 32.

voice. Enterprise business Enterprise services delivers end-to-end telecom solutions to large Indian and global corporates by serving as the single point of contact for all telecommunication needs across data.... network-integration and managed services requirement.. Kohli admitted that the company is having supply constraints in Africa but assures that it will be taken care of... The international infrastructure includes ownership of the i2i submarine cable system connecting Chennai to Singapore. Unity North.292 Mn and represented a year on year decline of 8%... Besides. the company had completed the acquisition of Zain's African operations in 16 countries for an enterprise value of $10. the company said. 41.. EIG (Europe India Gateway) and East Africa SubmarineSystem (EASSy) expanding the Company’s global network to over 225.. Airtel Africa will make a capital expenditure in the range of $1-1.. Revenues from enterprise services for the financial yearended March 31. andinvestments in new cable systems such as Asia America Gateway (AAG).Last year. giving the customers freedom to watch TV anywhere in their homes.. DTH service is the culmination of airtel’s “three screens” strategy. The Government regulations are stringent but are now going down.. it launched airtel broadband TV enabling the customers to watch live TV on their computers or Laptops.. For FY'12.. 2011 were Rs... covering50 countries across 5 continents.. 2011. while watching one can multi task like browsing the Net or working on the laptop/computer.. indicating a shift in strategy from three screen to multi screen convergence. Tele media strategy Bharti airtel forayed into television space... 2011 22 | P a g e . Enterprise services owns a state-of-the art national and international long distance network infrastructure.. With the launch of its DTH satellite television service offering 175 channel across the country... Airtel incurred a capital expenditure of $382 million on its African arm. On march 14th 2011..... Key financial results for the year ended March 31. The service is available to customers through 21000 retail points including Airtel relationship centre in 62 cities.. consortium ownership of theSMW4 submarine cable system connecting Chennai and Mumbai to Singapore and Europe.2 billion..7 billion. enabling it to provide connectivity services both within India and connecting India to the world.. He added that the company expected operating margins of the African arm to increase in the coming quarters.000 Rkms. During the quarter ended March 31.... Airtel broad band TV also works on Wi-Fi. to be present across Mobile phone. computer and TV screen.. that is. Further.... India Middle East andWestern Europe (IMEWE)...

Conclusion With the 3G auction over and the tariff already bottomed-out. in financial terms. for Airtel. Airtel is well poised to retain it’s leader status in future. the segment is well placed to be back on the growth trajectory. All this had attributed to the decline in revenues in FY11.in  www. With clear signs of revival world wide and the Company’s growing focus of being global network solution provide.html  Contemporary Strategy Analysis – By Robert M. backed by dynamic management and clear vision.writework.Particulars Financial Year 2010-11 2009-10 44.wikipedia.com/economy-of-india/telecom-industry. this segment witnessed the entry of some of the established mobile players in this segment resulting in increased competition and aggressive pricing. customer support and satisfaction.292 5. Grant 23 | P a g e .328 Y-o-Y Growth -8% -41% Gross revenues (Rs Mn) EBIT (Rs Mn ) 41.798 9.com/airtel  http://www. there is very limited downside. Bibliography  www.iloveindia.536 While the Indian economy has been relatively insulated from the global economic slowdown.org  http://www. Cost advantage. Additionally.airtel. With its networking competency. Consolidation/ M&A of smaller players in the telecom industry is more or less a certainty. large corporate did however exercised caution in IT and Telecom spends which had its impact in FY11. This might present a unique opportunity for Airtel.