Comparative analysis between Airtel & Videocon Mobile Services

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Airtel was Established in 1985, Bharti (Airtel) has been a pioneering force in the Telecom Sector. Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 66,689,943 customers Approx 64,370,434 GSM mobile subscribers. Approx 2,319,509 Bharti Telemedia subscribers. Bharti has recently entered into retail business as Bharti Retail Pvt. Ltd. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU’s) Mobile Services, Airtel Telemedia Services & Enterprise Services ON July 07,1995 it established as public ltd company Provides Telemedia services (fixed line) in 94 cities in India

Ab Vid ocon Mob Se ice out e ile rv s

The Videocon Group is a $4 billion, global business conglomerate with a strong presence in Household Consumer Goods, Oil & Gas, Retail, Telecom, DTH and the Power sector. Videocon Telecommunications Limited a Videocon group company, Offering GSM Mobile services under brand name Videocon. The Videocon Group became the 13th mobile operator in India with its launch of GSM services & currently providing Prepaid service. Providing the services in Tamil Nadu, Punjab, Haryana, Mumbai, Gujarat, Kerala, Madhya Pradesh & soon will be present across the country. The Videocon group envisages investment of Rs 14,000 crores in its mobile services over the next three years.

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intrepid entrepreneurship. improved technology. insightful marketing and inspired thinking about the future. innovative products.” Vision– “ To bring happiness in every home with global presence offering high quality e-products to ease & enrich human life”.Key steps towards Strategic Planning  Mission--“To delight and deliver beyond expectation through ingenious strategy.“To provide a much higher level of service to all those who seek information. Goal--.      .

59 unlimited local V to V calling & Sms for 30 days. On recharge of Rs.    .W h y Vid e o c o n ?      Offering Prepaid plans at competitive price. Under Special Tariff Benefits Pack cal rates are for V to V 20 paisa/sec & for V to other local cal 40 paisa/sec. For most of the current Prepaid plans the cal rates are 1 paisa/sec which will be reduced very soon.

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

BCG M a t r ix HIGH Stars Mobile Services ? Cows   Dogs  Fixed Line Services   LOW HIGH LOW 8 Market Share .

GSM Mobile Services.BCG M a t r ix            Consumer Electronics & home appliances. Colour Picture Tube Glass HIGH Television--Videocon LCD Stars ? Videocon D2h      Cash Cows Dogs Market . Mobile Phones. Oil & Gas.

PLC ( Product Life Cycle ) Mobile Service Fix line 3G Service In t ro d u c t io n Gro wt h Ma t u rit y De clin e .

Pr o d u c t Lif e Cy c le .

sales volume increases significantly. public awareness increases.Co n t in u e ………             costs reduced due to economies of scale. competition begins to increase with a few new players in establishing market. profitability begins to rise. . increased competition leads to price decreases.

This means that the business has access to knowledge and technology from other parts of the telecommunications world. and also supplies broadband and telephone services . with whom they hold a strategic alliance.  Ø Other stakeholders in Bharti Airtel include Sony-Ericsson.  .  Ø The company has covered the entire Indian nation with its well as many other telecommunications services to both domestic and corporate customers.S W O T A n a ly s is Ø Strengths Ø Bharti Airtel has more than 65 million customers (July 2008). Nokia and Sing Tel. It is the largest cellular provider in India. This has underpinned its large and rising customer base.

which was a particular strength of some of its competitors such as Hutchison Essar.We akne s s e s Ø An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago.  . Towers are important if your company wishes to provide wide coverage nationally.  Ø The fact that the Airtel has not pulled off a deal with South Africa's MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature.  Ø Until recently Airtel did not own its own towers. the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.

 Ø Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. and to question industry approaches and practices . and also provides advertising opportunities in Indian for Google. The tie-up with Google can only enhance the Airtel brand.O p p o r t u n it ie s Ø The company possesses a customized version of the Google search engine which will enhance broadband services to customers. The new iPhone will be launched in India via an Airtel distributorship.  Ø Despite being forced to outsource much of its technical operations in the early days. this allowed Airtel to work from its own blank sheet of paper. Another strategic partnership is held with BlackBerry Wireless Solutions. as the company .for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India.

000 small villages every year. This new business will control more than 60% of India's network towers.using its 'Matchbox' strategy. and also so that the business benefits are scalable .Co n t in u e ……  The company is investing in its operation in 120.000 to 160. IPTV is another potential new service that could underpin the company's long-term 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.    . It sees that less well-off consumers may only be able to afford a few tens of Rupees per call.

and instead invested in its rival Hutchison Essar. 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. Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market.Th r e a t s  Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5. 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.     . This opened the door for talks between Reliance Communication's Anil Ambani and MTN.6% stake in the Airtel business sold it back to Airtel. allowing a competing Indian industrialist to invest in the new emerging African telecommunications market.

S W O T A n a ly s is I te rn a l n Fa cto rs E xte rn a l Fa cto rs Po si ve ti N e g a ti ve .

67 2 . 00 3 . 67 Medium 2 . 33 Low 5 . 00 Market Attractiveness High 3 . 33 1 . 00 .GE Matrix Classification Business Strength Strong Medium Weak 5 .

Business Strength          Current market share Brand image Brand equity Production capacity Corporate image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness   .

20 0.8 0.20 1.5 Value = (Weight * Rating) 0.0 .5 4 4 4 4 4.6 0.0 Rating (1 –5) 3.4 0.20 0.10 0.15 0.6 0.7 0.15 0.Factors Underlying Market Attractiveness Factors Resource availability Overall market size Annual Market growth rate Profitability Competitive intensity Technological requirements Total Weight 0.9 4.

5 4 3 3 4.45 0.Factors Underlying Market/Biz Strength Factors Weight Rating (1 –5) 5 3.10 0.10 0.40 0.5 3 Value = (Weight * Rating) 0.15 1.15 0.10 0.75 Market share New product development Brand Image Sales force Pricing Distribution capacity Product quality R&D Performance Total 0.10 0.45 0.15 0.35 0.45 0.15 0.45 0.45 3.0 .5 4.75 0.

33 Unattractive 3 . 00 . 00 Attractive Market Attractiveness 3 . 67 2 . 67 TeleMedi a Moderate Attractive 2 . 00 1 . 33 GROUP 7 Low 5 .GE Matrix of Airtel High High Business Strengths Airtel Enterpri Mobile se Low 5 .

Gas TVs Electrolux Kelvinator Low Videocon Cassette AC Videocon Side by side Refrigerators Videocon Multimedia Speakers . Videocon Oil & Videocon LCD veness Mobile Services.GE Matrix of Videocon Company Business Unit Strength High High Industry Medium Low Videocon CTR Thomson CPT & Allwyn TVs Display Refrigerators Components Attracti MediumMobile Phones.

Porter ’ s Generic Strategy 25 GROUP 7 .

Porter’s 5 Forces .

Threat from Competition Wireless Market – Top 4 garnering 75 % market share HIGH .1.

00% 31.60% 26.90% t OP Margins & Net Profit Margins among Peers .90% 14.40% 23.50% 6.10% 7.083 38.00% 37.072 Sep .08 Sep .60% 22.70% November 2008 Net Margin 26.80% 23.20% 6.Competitor Analysis   Bharti Rcom IDEA MTNL Source: CMIE OP Margin 43.90% 32.30% 13.07 Sep .80% Company Sep .00% 19.

This offers huge growth opportunity to telecom companies. Minutes of Usage per Month – Mobile Services U SA 838 In d ia C h in a 461 Despite a low teledensity of approximately 19 percent. enhancing affordability. is tapping a large market at the bottom of the pyramid by reducing tariffs. India has the second highest minutes of usage per month. .Continue……. 303 R u s s ia 88 ARPU * in India – Mobile Services 10 8 ARPU (USD per month) 6 4 2 0 Q 1 2006 Q2 2006 Q3 2006 GSM CDMA Q 4 2006 Q1 2007 The declining ARPU implies that India Inc. thereby.

Customer Bargaining Power Ø Lack of differentiation among Service Providers Ø Cut throat Competition Ø Low Switching Costs Ø Number Portability will have –Ve Impact Ø Businesses & Consumers HIGH .2.

Market Scenario Postpaid Vs Prepaid Customers & Market Share .

Threat of New Entrants     Huge License Fees to be paid upfront & High Gestation period Entry of MVNOs & WiMAX operators Spectrum Availability & Regulatory Issues Infrastructure Setup Cost – High Rapidly changing technology         .

Suppliers Bargaining Power LOW 33 GROUP 7 .3.

Skype.4. Yahoo Messenger Ø e-Mail & Social Networking Websites HIGH BROADBAND SERVICES . Gtalk. Threat of Substitutes Ø Landline DIMINISHING MARKET Ø CDMA Ø Ø Video Conferencing Ø Ø VOIP .

High Ø Rapidly changing technology LOW Ø . Ø Huge License Fees to be paid upfront & High gestation period Ø Entry of MVNOs & WiMAX operators Ø Spectrum Availability & Regulatory Issues Ø Infrastructure Setup Cost .Continue….

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

TARGETING       Elite Up market professionals Entrepreneur with business plans Low income mass category Youth Women and senior citizens by post paid connection   .

POSITIONING Ø “Power to keep in touch” Ø “Touch tomorrow” Ø “Live every moment” Ø “Express yourself”   .

 . Ø Ø Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants. Ø Ø It has managed to work with the best of domain specialists globally and emerge as a world class entity.Strategy Ø Ø Airtel partnered with leading players in telecommunication players across the globe.

piggybacking on 300 distributors and more than 50.000 villages and hopes to expand to other 1.00.000 retail outlets selling Airtel prepaid cards Covers over 4.000 by 2009       .RURAL STRATEGIES  Airtel follows “Match-box strategy” § Advertisements § Sales promotion § Publicity and events The firm expands regularly in Bihar.00.

150 crore    .AIRTEL ADVERTISEMENT  Airtel basically uses two appeal to connect to the users  Emotional  Humorous Total advertising budget of Airtel is Rs.

SALES PROMOTION      “Friendz” pre-paid plan “Ladies special” plan “Senior citizen” plan  .

music download facilities. special bidding portal.Youtopia        Special tariff plan for youth.Youtopia Reduced tariffs. SMS at affordable prices      .25 for 30 seconds. access to cell phones 14-19 years of age Expand customer base (limited to the older age groups till now) Deviation from earlier positioning for older people symbolizing dignity and power Re 0.night!.

PUBLICITY AND EVENTS Sponsored events  Delhi half marathon  Delhi golf tournament Sponsored TV shows  Big Boss  KBC  Indian Idol   .

Outsourcing deals in 2004    Ericsson was given the mandate to provide. manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles.       IBM was given the mandate to handle the back office requirements of Airtel’s presence in India .

Continues to attract and delight customers. It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s. Birla’s and Vodafone. Has coped well with regulatory changes.Performance till date    Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened.      . Tata’s.

  Technology leadership is a must – Airtel must ensure that its reliance on GSM technology does not render it obsolete.   This could call for acquisitions globally.   Indian market in spite of being the worlds largest is still not matured.Future Strategies  Translate its expertise in Indian markets to other emerging economies.  . Opportunities abound in the hinterland which must be exploited.