Industrial Unit Analysis

Parthiban.S RamaSubramanian.S Sabarish.V SenthilKumar.V Thirumurugan.S
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Evolution of the industry-Important Milestones
1851 1881 1883 1923 1932 1947 First operational land lines were laid by the government near Calcutta (seatof British power) Telephone service introduced in India Merger with the postal system Formation of Indian Radio Telegraph Company (IRT) Merger of ETC and IRT into the Indian Radio and Cable Company (IRCC) Communication

Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications Department of Telecommunications (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system) MTNL incorporated to provide fixed-line telephone services in Mumbai and New Delhi
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1985

1986

CONT
1986 1991 1994 VSNL incorporated to provide international telecom services DoT invites bids from Indian companies for cellular licenses in the four metropolitan circles Government announces the National Telecom Policy, opening up the basic service sector to private players ‡ SEP - Entry guidelines for basic services announced ‡ NOV - Licenses were issued to cellular operators in the four metros 1995 1995 1996 1997 January - Tenders floated for basic operators as well as cellular operators in non-metro sectors. March - Paging services by private operators commence Licenses for 20 cellular circles issued Telecom Regulatory Authority of India established by government
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CONT
1998 1999 1999 ISP business opened up to operators other than DoT and VSNL Government announces NTP 1999 DoT announces Migration Package for existing operators licensing costs, subject to compliance with certain conditions TRAI issues the first tariff order and cuts domestic and international long distance telephony charges and DoT becomes a corporation, BSNL DoT allows basic operators to provide WLL services on a restricted basis. Opening of National Long Distance Service to competition and Fourth Cellular licenses issued

2000 2001 2001

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End of VSNL monopoly. Government allows restricted IP Telephony May '02 . '02 .TRAI decides to 'forbear' from regulating cellular tariffs Express yourself Express yourself .ILD sector opened to competition.Government transfers control of VSNL to Tatas through sale of strategic holding April-02 .Bharti offers ILD services with sharp cuts in tariffs Sept.CONT 2002 Bharti starts cellular to cellular long distance services with sharp cuts in tariffs Feb. '02 .

Indian Telecom Express yourself Express yourself .

‡ The rule mandate that no company should have more than 6.4 Mhz and get 10 Mhz when they have 10 lakh subscribers.7216 crore annually. the cost of 4. but Bharti.Telecom Policy Spectrum Allocation ‡GSM operators initially get 4. Express yourself Express yourself . but allowed up to consolidated amount of 74% with others such as NRI s.1650 crores and in 2007 the cost remains same. FDI ‡FDI is allowed 49%. vodafone and BSNL have 10Mhz spectrum which will cost the nation Rs.2 Mhz.4 Mhz of spectrum was Rs. Financial Institutions. ‡In 2002.

Escotel Express yourself Express yourself . Idea cellular. BPL Mobile. Tata Teleservices FOREIGN INVESTED Bharti Airtel .TYPES OF PLAYERS STATE OWNED PRIVATE INDIAN OWNED BSNL & MTNL Reliance infocomm. Vodafone Essar .

3. 7.The top players in Telecom 1. 2. 5. 4. Bharti Airtel Vodafone Essar BSNL MTNL Reliance Communications Tata TeleServices Idea Cellular Limited Express yourself Express yourself . 6.

Maharashtra. Rajasthan. UPW. No.Areas of operation Sl. Himachal Pradesh. Gujarat. UP-E. J&K) 13 (Delhi. of Circles 21 23 23 23 22 20 13 1 2 1 1 . 1 2 3 4 5 6 7 Service Provider BSNL Bharti Reliance Aircel* Vodafone Tata Teleservices IDEA*** Licensed Service areas All India (except Delhi & Mumbai) All India All India All India All India (except MP) All India (except Assam. Haryana. Bihar) 8 9 10 11 BPL MTNL HFCL Shyam Telelink Mumbai Delhi. Andhra Pradesh. Mumbai. NE. Madhya Pradesh. Mumbai Punjab Rajasthan Express yourself Express yourself No. Kerala.

24 million customers as of end of August 2008.77 million mobile customers. ‡ ‡ Headquarters . ‡ Bharti Airtel is structured into three strategic business units ± ‡ Mobile services. consisting of 74. ‡ Telemedia services and ‡ Enterprise services. ‡ The company primarily operates in India.About .25.543 people (as on March 08) Express yourself Express yourself . ‡ The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles.Airtel ‡ Bharti Airtel Limited a group company of Bharti Enterprises.New Delhi Employees . India¶s leading integrated telecom services provider with an aggregate of over 77.

5% of Bharti¶s total subscriber base. an increase from 82.CONT ‡It has set a target of 125 million subscribers by 2010 ‡Prepaid customers account for 88.7% a year ago Express yourself Express yourself .

‡ In September 2007. a leader in providing next generation telecommunications network solutions for operators around the world.Mile Stones of Bharti Airtel ‡ Bharti Airtel was established as Bharti Tele-Ventures. in 2006. the company signed a managed networks deal for its Sri Lanka operations with Huawei Technologies Company. ‡ The company offered its initial public offering in 2002. ‡ In October 2007. ‡ During 2004. Express yourself Express yourself . the company delisted its shares from the Delhi Stock Exchange. Bharti Tele-Ventures renamed itself to Bharti Airtel Limited. in 1995. in 2005. ‡ Vodafone acquired a 10% stake in Bharti Tele-Ventures for around $1. Bharti Airtel and Indian Institute of Technology (IIT) Delhi announced their plans to establish the Bharti-IIT Delhi Telecom Centre of Excellence. It continued to trade on the National Stock Exchange and the Mumbai Stock Exchange.5 billion.

‡ Airtel launched its Iphone in august 2008. The company offered products and services under the Airtel-Vodafone brand to customers on the Island. launched its mobile services in Guernsey (Channel Islands. Mumbai and Bangalore and are waiting for the spectrum to be allocated. Europe). Express yourself Express yourself .CONT ‡ In March 2008. Guernsey Airtel. ‡ In the same month. a subsidiary of the Bharti Group.com. ‡ Also in the same month. the company launched Airtel CallHome service for calls made from US to India. ‡ Airtel successfully tested 3G services in Delhi. a private broadband and telephone service provider. an all-in-one internet portal for Airtel customers. Airtel Telemedia Services. launched airtellive.

Bharti Enterprises Express yourself Express yourself .

Bharti Airtel Express yourself Express yourself .

‡ Benchmarked by most businesses. Express yourself Express yourself .Objectives By 2010 Airtel will be the most admired brand in India: ‡Loved by more customers. ‡Targeted by top talent.

Subsidiaries of Bharati (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) Bharti Hexacom Limited Bharti Comtel Limited Bharti Aquanet Limited Satcom Broadband Equipment Limited Bharti Broadband Limited Bharti Infratel Limited Bharti Telemedia Limited Bharti Airtel (UK) Limited Bharti Airtel (Canada) Limited Bharti Airtel (Hongkong) Limited Bharti Airtel (USA) Limited and Bharti Airtel Lanka (Private) Limited Express yourself Express yourself .

239.703.585.213 ‡ Jammu & Kashmir .911.242.070 .100.218.001 ‡Chennai .3.067.838 ‡ Rajasthan .809.704 .3.Subscriber Base .900 .278 ‡Kolkata .2.1.4.824 ‡Gujarat ‡ West Bengal ‡Andhra Pradesh .016 ‡Mumbai ‡ Uttar Pradesh (West) .1.332 & Andaman and Nicobar .4.939.990 ‡ Haryana .084.823.945 .6.1.Cellular Operator Association of India as of May 2008 was: ‡ Punjab .004.3.Airtel The Airtel subscriber base according to COAI .746 ‡ Assam ‡ North Eastern States .500 ‡ Himachal Pradesh .852.316.912.1.3.4.516.4.069 Express yourself Express yourself .055.006 ‡Maharashtra & Goa .200 ‡Delhi .7.1.298 ‡Kerala ‡ Orissa .2.532 ‡ Uttar Pradesh (East) .776 ‡ Madhya Pradesh .4.624.106.897.829 ‡Tamil Nadu .705 ‡ Bihar .163 ‡Karnataka .1.468.1.345.

Customer base Express yourself Express yourself .

Growth in cutomer base Express yourself Express yourself .

Business Partners Express yourself Express yourself .

2. Telemedia & Enterprise services IBM Daksh.Partner s role Services Partners/Vendors Ericsson and Nokia Mobile services 1. TeleTech Mphasis Call center operations Role Network Equipment partners Siemens Nortel IBM Nortel Equipment suppliers IT Requirements Group wide technology req Call center tech req Express yourself Express yourself . Hinduja TMT. 4. 3.

‡ As part of the agreement.Other Alliances In 2007 . Express yourself Express yourself . Google will also incorporate advertising through its Mobile Ads product on the Airtel Live mobile portal. Airtel will bring Google search to the Airtel Live mobile WAP portal. ‡ A three-year contract with Nokia at an estimated value of US$ 400 mn to expand its managed GSM/ GPRS/EDGE networks in eight Airtel circles and deploy a pan India WAP solution across its networks.Bharti Airtel has entered into following major agreements and alliances: ‡ With Microsoft to offer software and services for the Small and Medium Business (SMB) market in India.

in the company. The investment made by SingTel is one of the largest investments made in the world outside Singapore.CONT ‡The company has a strategic alliance with SingTel. Express yourself Express yourself .

license fee. the cost of 4.1650 crores and in 2007 the cost remains same. continuously evolving technology and falling tariffs.Porters Five force model for the Industry Threat of new entrants : ‡In 2002. ‡Six new licences were given this year.4 Mhz of spectrum was Rs. Express yourself Express yourself . Threat of Substitute Products: Wimax allows VOIP which may be threat in future since ISP can operate it with low cost. older and well-established players who have a nation wide network. Barriers to entry ‡High capital investments.

Bargaining power of customers ‡ A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers. Express yourself Express yourself . Reducing tariffs will hurt the new entrants. Competition ‡ The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities.CONT Bargaining power of suppliers ‡ Improved competitive scenario and commoditisation of telecom services has led to reduced bargaining power for services providers. as they will be unable to recover their high capital investments.

SWOT Analysis: Strength: ‡ Operation in 23 circle in the country ‡ Higest no of towers (Around 80. ‡As an ISP.000) by airtel ‡ 22 million subscribers ahead of its nearest competitors. Bharti can roll out VOIP services if WiMax texhnology is rolled out. Weakness: Too much dependence on domestic market. Opportunities: A strong economy and a growing market: ‡ The Indian telecommunication industry is amongst the fastest growing telecom markets in the world and ‡ Higher per capita income and appetite for increased consumption is resulting in a greater-than-proportionate impetus for telecom growth. Express yourself Express yourself .

CONT Threats: ‡Dip in ARPU. ‡Taxation(30% of revenue). ‡Vodafone has the advantage in 3G services than Airtel since it has experience of running the 3G service in other countries. ‡Increased competition may reduce market share and/or revenue ‡Mobile Number portability may result in switch over of customers to competitors. Express yourself Express yourself .

Financial Analysis Express yourself Express yourself .

6 4.2 Express yourself Express yourself .5 5. FI¶s & Banks FII¶s Others % 66.7 23.Share holding pattern Share Holding patterns Promoters MF¶s .

4% Express yourself Express yourself .008 Increase in % from 2007 45.3 76.455 67.9% 55.249.1% 57.Revenues and Profits INR in millions (march 08) Revenues Operating Profit Net Profit 270.

Market Share Express yourself Express yourself .

517/34.Market Data ‡ ‡ ‡ ‡ 52-week range (INR) : 1.0 Makcap (INR bn/USD mn): 1.805 Avg. BSE ( 000) : 3.898.149 / 688 Share in issue (mn) : 1.5 As on 23/aug/08 Express yourself Express yourself . Daily vol.898.

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Economies of scale and efficient working capital management helped boost profit margin Express yourself Express yourself .

Company s policy of retaining entire profits helps in keeping the D/E low despite surging loan book Express yourself Express yourself .

Better controls helped check bad debt losses Express yourself Express yourself .

Increasing subscriber base caused higher fixed asset turnover ratio Express yourself Express yourself .

Economies of scale help reduce the percentage cost of advertisement expenditure Express yourself Express yourself .

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