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AbstractOurs case study is about Bharti Airtel Ltd in African country.
(BAL), the market leader in the Indian telecommunicationindustry and its globalization strategy. BAL's telecom model wasconsidered as the new model for telecom and effective foremerging markets like India, according to experts. More and moreplayers were eyeing the fast-growing Indian mobile market which
was experiencing high growth, BAL put its sight on foreign shores.
The acquisition of Zain Group's telecom business in fifteen Africancounties in 2010 gave it a footprint in the African continent. Whileconcerns regarding whether BAL had overpaid for the dealremained, industry observers were keenly observing to see whetherthe company could replicate its successful telecom model in these
developing and emerging markets. Africa posed an intriguingenvironment with different cultures, political forces and socio-economic environment. After completing the deal, BAL was in theprocess of giving shape to its strategy for the African markets.
Keyword: Airtel, Africa, India, Bharti, Telecom Market.
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history
On 14, February 2010 a statement issued by Zain Ghana, said "the Board of
Directors of Kuwait's Zain Group, after its meeting on February 14, 2010,issued a resolution to accept a proposal received from Bharti Airtel Limited(Bharti) to enter into exclusive discussions until 25 March 2010, regardingthe sale of its African unit, Zain Africa BV." The offer was for $10.7 billion.The deal would provide Bharti access to 15 more countries in the region,
adding around 40.1 million subscribers to its already 125 million-plus userbase. The combined revenue of the two entities would be around $12 billion.
The deal ran into hurdles after the government of Gabon had come outagainst the deal, but later approved the sale. The government of CongoRepublic had also said Bharti-Zain deal broke law. There was also a dispute
about minority ownership of Zain's operations in Nigeria, the biggestmarket in the deal. Minority shareholder Econet was seeking to overturn a2006 deal by Zain - then called Celtel - in which it bought a majority stakein Nigerian mobile operator Vee Networks Ltd, now Zain Nigeria. On 8,
June 2010, Bharti said the Nigeria ownership dispute had been settled.
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verview
Bharti Airtel Limited, together with its subsidiaries,
provides telecommunication services in India, southAsia, and Africa. Its Mobile Services segment offers GSMmobile services; and post-paid, pre-paid, roaming,Internet, and value added services. The companys
Enterprise Services segment provides data, voice, andmanaged and long distance telecommunication servicesfor BFSI, IT, ITeS, manufacturing and distribution,media, education, telecom, government and PSUs, and
retail industries. The company was formerly known asBharti Tele-Ventures Limited and changed its name toBharti Airtel Limited in April 2006. Bharti Airtel Limited
was founded in 1995 and is based in New Delhi, India.
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INTRODUCTION
Airtel acquired control of Skycell Communications, in Chennai. In
2001, the company acquired control of Spice Cell in Calcutta.Bharti Enterprises went public in 2002, and the company waslisted on Mumbai Stock Exchange and National Stock Exchange of
India. In 2003, the cellular phone operations were rebrandedunder the single Airtel brand. In 2004, Bharti acquired control of
Hexacom and entered Rajasthan. In 2005, Bharti extended itsnetwork to Andaman and Nicobar.In 2009, Airtel launched its first international mobile network inSri Lanka. In 2010, Airtel began operating in Bangladesh and 16
African countries.
Today, Airtel is the largest cellular service provider in India andfifth largest in the worldThey are one of worlds leading providers of telecommunicationservices with presence in all the 22 licensed jurisdictions (also
known as Telecom Circles) in India, and operations in Srilanka,
Bangladesh and in Africa.
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The rapid growth of the African telecom industry overthe past few years, has remarkably transformed
communication infrastructure on the continent. Just a
decade ago, Africa telecom industry accounted for only2% of the World phone lines. Fast forward to the 21stcentury and the continent is almost unrecognizable.
Mobile phones are ubiquitous and if current trends are
anything to go by, 2010 is the year in witch the continents nascent but burgeoning mobile telecom industry
receives a massive technological upgrade.
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Telecom Market Spotlight : Africa
Like that of the Middle East, with witch it is oftencoupled by analysts, Africa telecom environment
has become hugely active in recent years. Thisactivity has been largely triggered by the rapid takeup of mobile services in many African countries. A
rapid growth in mobile subscribers has led to aflurry of interest in the acquisition of African
mobile assets by various operators, both fromwithin and without Africa, as they perceive theregion to be one of last remaining big potential
telecom markets.
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Dependence on 2G
However, like the middle East, much of the currenttelecom interest still lies in 2G and 3G mobile. In
terms of impact in developing mass-markettelecom in the region, 2G has had more effect thanany other technology. This market spotlight
consequently concentrates on this current aspect
of mobile. And it is important to understand howmassively dominant mobile is in African markets
typically, it accounts for about 70 percent to 80percent-plus of telecom revenues.
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Market Rankings
The apparently anomalous appearance ofNigeria of second place is due to the largenumber of subscribers there nearly 63
million. This is the largest in Africa, despitea relativity low penetration rate of 43percent and it is the result of Nigeria havingby far the largest population in Africa and
having experienced a huge surge in thenumber of mobile subscribers recently.
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Scenarios for African Market
This section of the report highlights the future scenariosand developments in the evolution of telecom sector
in Africa.
There are three main macroscopic trends in the telecommarket :
1. A focus improving the reach and profitability ofexisting network in developed countries like south
Africa, especially with the advent of inexpensivemobile data, and new methods of monetizing the
network trough whosale option, value-addedservices and better segmentation;
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2. Deployment of next-generation very high-speed broadband, and the building of
business models and services to supportthis investment, typically involving videoand/or state backing for nationality-
critical infrastructure projects;3. Continued steady rolloutof broadband in
Africa, balancing theoretical gains in social
and economic utility against the practicalconstraints of affordability, PC/devicepenetration and the need for substantialinvestment.
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Maturing products and business
modelsThe global telecom market is maturing
fast. Baseline penetration rates will
start to level off as saturationapproaches. Coupled with price erosionand increasing capacity demands, this
deceleration will pressuremargins,especialy in the recession.
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Convergence of fixed and mobile
technology and product offerings
The impact of mobile broadband, either
as a substitute or a complement to fixedbroadband. This will go hand-in-hand
with the advent of more powerful
personal devices such as Smartphoneand netbooks.
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Greater state intervention in deploying
and controlling broadband accessIncreasing intervention of African
government in areas, such as broadband
roll-out and strategy, outside the scope ofthe regulatory authorities, will help the
telecom companies. This will be conducted
either through subsidy and stimulusprogrammes, or broader initiatives relating
to national efforts on energy, health,education and the like.
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Strategies for African MarketThe split that emerged between the broadly more andless developed mobile markets presents operators with
different issues and challenges. The more developedmarkets, such as south Africa, Botswana, and those of
north Africa, are beginning to face a challengecommon to mature or maturing markets everywhere.
However as far as internal instability of the entirecontinent is concerned, these are the market best
suited for Airtel to begin their operations with.
l
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Conclusion
India is the fastest growing telecom market in the world. Themobile subscriber base of Bharti Airtel in India is growing at
a scorching pace of 3 million subscribers per month. Thecompany also has the largest number of active customers(92%) among all mobile telecom operators. The expectedbroadband revolution is set to boost the revenues of the
companys telemedia services arm, going further. ThoughBhartisARPUs have been declining, they are expected tostabilize at the present levels.
The price to book value stands at 3.0. The stock is an attractive
buy considering the growth prospects of the industry as wellas the company.
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Daily IndependentRwanda: Airtel appoints country managerUSD10m plan for Airtel Seychelles; Bharti announces commitment to
SEAS cable: CommsUpdate : TeleGeography ResearchMC certifies Airtel Sierra LeoneAirtel Tanzania plans to expand network - Telecompaperhttp://www.itweb.co.za/index.php?option=com_content&view=article&id
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g-servicesAirtel launches 3G service in CongoOmbok, Eric (21 July 2011). "Bharti Airtel's Kenyan Unit to Start 3G
Services in September, Daily Says" Bloomberg.http://www.bloomberg.com/news/2011-07-21/bharti-airtel-s-kenyan-unit-to-start-3g-services-in-september-daily-says.html
Airtel net falls 31% on Africa operations, 3G payments - Home -livemint.com
Aim in Africa is affordability, not tariff war: BhartiOne Network Countries | Africa
Airtel Money launched in Kenya-->
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