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Indian Telecom Industry

History

1851 Introduction of Telegraph services

1947 Foreign Telecom Companies

nationalized to form PTT

1980’s: The Beginning Tele-density in 1980-81: 0.3%

Introduction of public pay phones

Private Sector allowed

DoT, MTNL and VSNL formed

Early to Mid 90’s: A Messy Affair Telecom policy 1994

- Basic telephony service to private

operators

- 49% FDI

- 8 licensees began operations in Aug

1995

Late 90’s Birth of a regulator: TRAI

NTP 1999

(New Telecom Policy)

2000+ CAGR of around 85% since 1999

FDI: 74% (2005)

2007-2009 having the world's lowest call rates the

fastest growth in the number of

subscribers (45 million in 4 months),

the fastest sale of million mobile

phones (in a week),

the world's cheapest mobile handset

the world's most affordable colour

phone

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Quick Facts

Total telecom subscribers : 429.72 million (March 2009)

Wireless subscribers : 391.76 million

Wire line subscribers : 37.94 million

Tele density : 36.98 per cent

India’s service providers revenue in Q1 (2009): $8.2 billion

India’s Rural Mobile Phone Users : 100 Million

Telecom services

Telecommunication sector in India is primarily subdivided into two segments, which are Fixed

Service Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some

essential telecom services like telephone, radio, television and Internet. Telecom industry in

India is specifically emphasizing on latest technologies like GSM (Global System for Mobile

Communications), CDMA (Code Division Multiple Access), PMRTS (Public Mobile Radio

Trunking Services), Fixed Line and WLL (Wireless Local Loop). India has a prospering market

specifically in GSM mobile service and the number of subscribers is growing very fast.

Internet

PMRTS

VSATs

Radio Paging

GMPCS

Basic Services

Mobile Services

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Industry Sectors

From holistic point of view telecom industry can be divided to four sub-sets. The major forces in

Indian telecom industry are Service providers. All major telecom equipment suppliers have their

R&D centers in India. In last 5 years, global giants in mobile devices have set up their manufac-

turing facitilities in India. The discussions in this document are mainly restricted to only Tele-

com Service Providers.

<

Growth Avenues

1. Managed Services: is another segment

that is attracting telecom companies. On

account of the rapidly growing sub-

scriber base, service providers find it dif-

ficult to manage their infrastructure and

network management operations. In such

Network Infrastruct

ure companies:

Cisco, Ericsson

Telecom Solutions Providers:Mahindra,Aricent,IB

M,Wipro

Telecom Service Provider: Airtel, Idea, Reliance,Vodafone

Telecom Equipment Manufactu

rer: Nokia,Mot

orola, Samsung

Telecom

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cases, they completely or partially outsource their infrastructure or network management op-

erations.

To reduce their network deployment costs, many service providers are considering infrastruc-

ture sharing offers the following advantages:

Improved service quality

Increased affordability for customers

Faster roll out of services in rural and remote areas

Significant reduction in initial set up costs

Increased environmental aesthetics

Lower operating costs for service providers

2. Enterprise Telecom Services: includes key services, such as voice over Internet protocol

(VoIP), dedicated telecom communication systems; IT infrastructure enabled unified com-

munication services, etc. Telecom service providers are increasingly targeting enterprises by

providing dedicated services and are expected to witness major developments in near future.

3. Virtual Private Network is a private data network that provides connectivity within closed

user groups via public telecommunication infrastructure. Competition is likely to heat up in

the VPN segment as DoT has relaxed the norms for private players.

4. 3G The Indian government plans to auction the spectrum for 3G services by inviting bids

from domestic as well as foreign players, and creating a competitive environment that offers

better services to consumers. Therefore, the 3G spectrum is among the major investment op-

portunities and growth drivers of the telecom industry.

The immense potential for 3G is reflected by the 30–40 percent annual growth in Value-

Added Services.

Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for the

Indian market.

India expects to replicate its 2G growth in 3G services.

5. WiMAX has been one of the most significant developments in wireless communication in

the recent past. Since this mode of communication provides network access in inaccessible

locations at a speed of more than 4 Mbps, it is expected to be a major factor in driving tele -

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com services in India, especially wireless services. Thus, it will lead to the increased use of

telecom services, Internet, value-added services and enterprise services. WiMAX is expected

to accelerate economic growth and assist in providing better education, healthcare and enter-

tainment services.

It is estimated that India will have 13 million WiMAX subscribers by 2012.

Aircel is the pioneer in WiMAX technology in India.

The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.

Bharti, Reliance and VSNL have acquired licenses in the 3.3GHz range to utilise the

opportunities offered by this domain.

6. Value Added Services:The VAS industry was worth USD 632 million in 2006–07. The in-

dustry is estimated to grow by 60 percent in 2007–08 and become an USD 1,011 million op-

portunity.

The VAS industry is currently focussing on the entertainment sector, such as the Indian film

industry and cricket; however, there is scope for growth in other avenues as utility-based ser-

vices, such as location information and mobile transactions.

7. Rural Telephony: As the government targets to increase rural teledensity from the current 2

percent to 25 percent by 2012, rural telephony will require major investments. This segment

will boost the demand for telecom services, equipment, Internet services and other value-

added services; thereby, offering great market opportunities for telecom players.

Industry Revenue (2002-2010)

According to a Frost & Sullivan industry ana-

lyst, by 2012, fixed line revenues are expected

to touch US$ 12.2 billion while mobile rev-

enues will reach US$ 39.8 billion in India. In-

dia has become the second country in the

world to have more than 100 million CDMA-

based (code division multiple access) mobile

phone subscribers after the US, which has 157

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million CDMA users. The Indian telecommunications industry is on a growth trajectory with the

GSM operators adding nearly 9 million new subscribers in April 2009, taking the total user base

to 297 million, a growth of 3.11 per cent over the additions made the previous month. The fig-

ures, however, do not include the GSM subscriber additions made by Reliance Telecom.

Year Revenue(US$ billion)

2002-03 9

2003-04 10

2004-05 11

2005-06 15

2006-07 20

2008-09 32

2009-10(forecasted) 43

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Subscriber Growth

India added 130 million new customers in 2008-09, the largest globally. The country’s cellular

base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added

every month. By April 2009, the total number of telephone connections reached 441.47 million.

With this growth, the overall tele-density reached 37.94 at the end of April 2009. According to

Business Monitor International, India is currently adding 8-10 million mobile subscribers every

month. It is estimated that by mid 2012, around half the country's population will own a mobile

phone. This would translate into 612 million mobile subscribers, accounting for a tele-density of

around 51 per cent by 2012.

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Bharti Airtel

Vodafone Essar

BSNL

IDEA

Aircel

Reliance GSM

MTNL

Loop Mobile

Tata Teleservices

Major Players

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Wireless Service Providers (Market share)

Handset Manufacturers (Market share)

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Major Investments

The booming domestic telecom market has been attracting huge amounts of investment which is

likely to accelerate with the entry of new players and launch of new services. Buoyed by the

rapid surge in the subscriber base, huge investments are being made into this industry.

The Russian government is likely to pick up equity amounting to US$ 670 million-US$

700 million in Sistema Shyam TeleServices Ltd (SSTL), a joint venture between Russia-

based telecom major Sistema and Shyam Group in India, by the end of this financial year.

SSTL is also planning to invest US$ 5.5 billion over the next 5 years in India.

Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wire-

less for US$ 1.23 billion.

Japanese telecom major NTT DoCoMo acquired a 27.31 per cent equity capital of Tata

Teleservices for about US$ 2.6 billion in November 2008.

Bahrain's Batelco has signed a deal to buy 49 per cent in Chennai-based S-Tel, a GSM

service provider, for US$ 225 million.

BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16 bil-

lion in its WiMax project.

Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its

mobile subscriber base from 40 million at present to over 100 million.

Telecom operator Aircel, which launched GSM mobile services in Bangalore in February

2009, plans to invest US$ 220.58 million over the next year to set up base stations across

the state.

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Telecom Regulatory Authority of India (TRAI)

1. Recommendatory Functions

Need and timing for introduction of new service provider

Terms and conditions of license to a service provider

Revocation of license for non-compliance of terms and conditions of license

Measures to facilitate competition and promote efficiency in the operation to facilitate

growth in industry

Technological improvement in services by service providers

Inspection of type of equipment used by service provider

Measures for Technological development

Efficient Management of available spectrum

2. Mandatory Functions

Ensure compliance of terms and conditions of license

Fix the terms and conditions of their inter connectivity between service providers

Ensure Technical compatibility and effective inter-connection between different ser-

vice providers

Regulate arrangements for sharing of revenues amongst service providers

Lay-down the standards of QoS to be provided by service provider, ensure this by pe-

riodical survey

Lay-down and ensure time period for providing local and long-distance circuits of

telecommunication between different service providers

Maintain inter-connect agreement register

Ensure compliance of USO(universal service obligation)

3. Other functions

Levy fees and other charges as determined by regulations

Perform administrative functions as entrusted to it by Central government or as per

TRAI act

Notify in Official Gazette the service rates and message rates within and outside India

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Evolution of Telecom in India

National Coverage

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Bharti Airtel

Type Public (BSE: 532454)

Founded 1995 as Bharti Tele-Ventures

Founder(s) Sunil Bharti Mittal

Headquarters New Delhi, India

Key people Sunil Mittal

(Chairman) & (CEO)

Industry Telecommunications

Products Wireless

Telephone

Internet

Satellite television

Revenue ▲ US$ 6.73 billion (2008)

Net income ▲ US$ 1.59 billion (2008)

Total assets ▲ US$ 12.28 billion (2008)

Owner(s) Bharti Enterprises

Website Bharti.com

Airtel.in

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Fact Sheet Of The Company

Name: Bharti Airtel Limited.

Business Description: Provides GSM mobile services in all the 22

telecom circles in India, and was the first pri-

vate operator to have an all India presence.

Provides telemedia services (fixed line and

broadband services through DSL) in 95 cities

in India. Also provides DTH service named

Airtel Digital TV

Established: July 07, 1995, as a Public Limited Company

Shares in Issue: 1,898,373,280 as at June 30, 2009

Listings: The Stock Exchange, Mumbai (BSE) The

National Stock Exchange of India Limited

(NSE)

Customer Base: 102,367,881 GSM mobile and 2,827,881

Telemedia Customers (status as on June 30,

2009)

Operational Network: Provides GSM mobile services in all the 22

telecom circles in India, and was the first pri-

vate operator to have an all India presence.

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Introduction

India's largest and world's third largest cellular service provider with more than 82 million sub-

scribers –Bharti Airtel is a merger between Bharti Group and Airtel it’s a well know Ned brand

in India as well as Asia . Owned by Mr. Sunil Bharti Mittal. Telecom giant Bharti Airtel is the

flagship company of Bharti Enterprises. The Bharti Group has a diverse business portfolio and

has created global brands in the telecommunication sector. Bharti has recently forayed into retail

business as Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It

has successfully launched an international venture with EL Rothschild Group to export fresh agri

products exclusively to markets in Europe and USA and has launched Bharti AXA Life Insur-

ance Company Ltd under a joint venture with AXA, world leader in financial protection and

wealth management.

Airtel comes to you from Bharti Airtel Limited, India’s largest integrated and the first private

telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its in-

ception has been at the forefront of technology and has steered the course of the telecom sector

in the country with its world class products and services. The businesses at Bharti Airtel have

been structured into three individual strategic business units (SBU’s) - Mobile Services, Airtel

Teliemedia Services & Enterprise Services. The mobile business provides mobile & fixed wire-

less services using GSM technology across 23 telecom circles while the Airtel Telemedia Ser-

vices business offers broadband & telephone services in 95 cities and has recently launched In-

dia's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services provide end-

to-end telecom solutions to corporate customers and national & international long distance ser-

vices to carriers. All these services are provided under the Airtel brand.

Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is the largest

mobile service provider in the country, based on the number of customers.

The group offers high speed broadband internet with a best in class network. With Landline ser-

vices in 94 cities we help you stay in touch with your friends & family and the world. Get world

class entertainment with India’s, best direct to home (DTH) service, digital TV in more than 150

cities.

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1. Enterprise Services- provides a broad portfolio of services to large Enterprise and Car-

rier customers. This division comprises of the Carrier and Corporate business unit. Enter-

prise Services is regarded as the trusted communications partner.

2. Diverse business portfolio- Mr. Sunil Bharti believe and adopt strategy of diversification

they always come with new product in new area like mobile, land line, DTH , and broad

band.

3. Operations in all 23 circles-In India there are 28 states and Airtel operate or rotate their

services in 23 states it’s a big achievement in itself and its also want to cover other re-

main state .

4. 2nd most trusted service brand in India by ET survey- when ET did survey at that

time they found that it’s a most trusted brand of India .After BSNL people trust at Airtel

Services.

5. Mr. Mittal awarded by Padama Bhashan in 2007 and GSM Association chairman’s

award in 2008

6. Bharti Airtel recognized as Best Global Wholesale Carrier for 2009 at Telecoms World

Awards Middle East

7. Airtel Call Home launches Pay per Second plan for its US customers

8. Airtel Customers to enjoy substantial advantage while roaming anywhere

9. Bharti Airtel launches Far-East Connect Network to serve global wholesale customers

across Asia and the Pacific

10. Airtel ‘Call Home’ announces calling from US to Gujarat, Maharashtra and Rajasthan at

1.25 c / min Flat

11. Bharti Airtel inaugurates its Center for Shared Services for Taxation in Delhi NCR

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Organizational Structure

As an outcome of a restructuring exercise conducted within the company; a new integrated orga-

nizational structure has emerged; with realigned roles, responsibilities and reporting relationships

of Bhartis key team players.

With effect from March 01, 2006, this unified management structure of 'One Airtel' will enable

continued improvement in the delivery of the Groups strategic vision

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VISION

By 2010 Airtel will be the most admired brand

in India:

Loved by more customers

Targeted by top talent

Benchmarked by more businesses

“We at Airtel always think in fresh and inno-

vative ways about the needs of our customers

and how we want them to feel. We deliver

what we promise and go out of our way to de-

light the customer with a little bit more”

MISSION

Recruit & Maintain Caliber Working Staff

Provides Customer Specific Software Solution

Continues Improvement in Software Quality

Not remain as Only Software Solution Provider, but be as Continues Service Provider

To empower stakeholders in services and inventories to deal with associated

Subsidiary Companies

• Bharti Hexacom

• Bharti Comtel

• Bharti Aquanet

• Bharti Broadband

• Bharti Infratel

• Bharti Telemedia

• Bharti Airtel (UK, USA, Canada, Hongkong, USA, Lanka)

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Products

Products and Services

Services offered by Bharti Airtel can be classified into:

Mobile services – Based on number of customers Bharti Airtel is largest mobile service

operator in India. This company offers mobile services based on GSM technology. For

convenience of its customers Bharti Airtel has both pre- paid and post paid facilities.

PRODUCT & SERVICES

Mobile Services

Enterprise Business

Telemedia Services

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Enterprise business – Bharti Airtel provides integrated services comprising mobile, tele-

phone, broadband, data and connectivity services internationally as well as nationally for

small, medium and large scale enterprises. Its carrier service provides network connectiv-

ity through optic fiber over a distance of more than 35,000 km. Bharti Airtel is a member

of South East Asia – Middle East – Western Europe – 4 consortiums which include 15

global telecommunication service providers.

Airtel Telemedia Services – This Company offers high speed broadband services

through landlines in 94 cities.

Subscriber Base

The Airtel subscriber base according to TRAI - Telecom Regulatory Authority of India as of

February 2009 was:

Chennai - 2,133,677

Delhi - 4,671,177

Mumbai - 2,791,963

Kolkata - 2,456,896

Madhya Pradesh - 7,690,609

Gujarat - 3,981,660

Andhra Pradesh - 8,892,353

Karnataka - 9,820,812

Tamil Nadu - 6,003,040

Kerala - 2,169,633

Punjab - 3,754,405

Maharashtra - 6,248,906

Uttar Pradesh (West) - 2,256,862 & (East) - 5,722,386

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Rajasthan - 6,704,274

West Bengal & Andaman and Nicobar Islands - 3,501,560

Himachal Pradesh - 951,121

Bihar - 7,152,245

Orissa - 2,811,453

Assam - 1,448,389

Other North Eastern States - 890,054

Jammu and Kashmir - 1,590,935

The total is 101,114,971 or 24.2% of the total 375,742,592 GSM + CDMA mobile connections

in India till February 2009; and presently the Airtel is Number 1 operator in India. In 2009 Airtel

also launched in Sri Lanka.

On the 9th of May, 2009 Airtel signed a major deal with Manchester United Football Club. As a

result of the deal, Airtel gets the rights to broadcast the matches played by the team to its cus-

tomers.

Corporate Governance

Bharti Airtel Limited firmly believes in the principles of Corporate Governance and is commit-

ted to conduct its business in a manner, which will ensure sustainable, capital-efficient and long-

term growth thereby maximizing value for its shareholders, customers, employees and society at

large. Company’s policies are in line with Corporate Governance guidelines prescribed under

Listing Agreement/s with Stock Exchanges and the Company ensures that various disclosures re-

quirements are complied in ‘letter and spirit’ for effective Corporate Governance.

During the financial year 2003-04, the Company was assigned highest Governance and Value

Creation (GVC) rating viz. ‘Level 1’ rating by CRISIL, which indicates that the company’s capa-

bility with respect to creating wealth for all its stakeholders is the highest, while adopting sound

Corporate Governance practices. This rating was re-affirmed by CRISIL on April 20,2006

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Corporate Responsibility at Bharti Airtel

Overview

At Bharti, CSR is a way of life. Each department and employee strives to be sensitive to the stakeholders and environment within their work context. Bharti encourages employees to take decisions and design business-linked processes that are sensitive to communities and environ-ment. 

Corporate Social Responsibility (CSR) in Bharti encompasses much more than only social out-

reach programs. It is an integral part of the way Bharti conducts its business. The essence of

Bharti’s commitment to Corporate Social Responsibility is embedded in the ‘Corporate Values’,

To be responsive to the needs of their customers.

To trust and respect their employees.

To continuously improve their services – innovatively and expeditiously.

To be transparent and sensitive in their dealings with all stakeholders.

They encourage their employees to take decisions and design business processes, keeping in

mind the following:

Ethics, fairness and being correct.

Meeting and going beyond compliances and legal requirements.

Showing respect and sensitivity towards stakeholders and communities.

Nurturing the environment.

They practice their CSR beliefs and commitments through a three-pronged approach:

Engaging with stakeholders.

Ensuring stakeholder sensitive policies and practices.

Bharti Airtel sensitizes its employees towards CSR issues at various forums. They feel that it is

important that each employee should understand the importance of environmental, social and

economical aspects while taking business decisions. At Bharti, each employee is sensitized to-

wards CSR issues and thus operations at the ground level are influenced. Such sensitization exer-

cises have resulted in many socially and environmentally sensitive decisions on the ground. For

example, Confidence Plan for hearing impaired people, covers noise-making DG sets at extra

cost, investing in consumer awareness campaigns to ensure safe use of mobile are some exam-

ples of the above.

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Community Initiatives

Overview

Corporate Social Responsibility is embedded in, and built upon, the stated ‘values’ of Bharti –

the institution. These values guide all their activities and each employee is encouraged to take

decisions and design business-linked processes that are sensitive to communities and environ-

ment.

“We have an obligation to fulfill to society and the communities in which we operate, and

help improve the quality of life for everyone, today and in the future.”

Based on the basic guidelines and direction provided in the Code of Conduct, Bharti has under-

taken many community programs.

a) Bharti’s contribution to society is structured through two channels, namely,

Bharti’s Corporate Social Responsibility (CSR) Initiatives, including initiatives under-

taken by way of employee mobilization as well as running environment related programs;

and

b) Bharti Foundation, a separate vehicle established in 2000 to lead the CSR agenda of

Bharti Group of Companies

c) CSR Initiatives @ Bharti Airtel: Bharti Airtel has a nation-wide presence that has

grown at an exponential rate in the recent years. Each local office undertakes special pro-

grams for the local community, thereby reaching out to people. Many projects like mate-

rial collection drive and blood donation camps are organized for the welfare of the under-

privileged community. Bharti constantly searches for new, innovative ways of reducing

the consumption of resources, with the aim of leaving a better and greener earth for future

generations.

d) Response to Disaster

Bharti Airtel’s response to Tsunami Disaster: Bharti Airtel undertook the fol-

lowing initiatives for immediate relief and rehabilitation to Tsunami victims:

Built a mobile network in Andaman & Nicobar islands in less than 3 months to

aid rapid rehabilitation of the island

Donated Rs. 1 Crore to the Prime Minister’s Relief Fund, in addition to contribu-

tions from employees.

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e) Airtel Experience Centre by Access MP… for the benefit of the benefit of visually im-

paired people as well as people from deprived section of society.

Created 29 Airtel Crisis Communications centres in Tamil Nadu.

Raised resources for Tsunami victims by initiatives such as a ‘Benefit Cricket

Match’.

f) Employees of Bharti Airtel also contributed through a Donation Collection Drive, with a

difference. All employees were not only given the freedom to choose the amount they

wished to donate, but also the agency they wished to donate to.

One of the most memorable actions was the heroic way in which Bharti employee re-es-

tablished connections after Tsunami hit Tamil Nadu. After being washed away by the

wave, this employee went back to work on restoring connectivity for the struck region.

Word of his dedication spread within Bharti and he received tremendous response from

his fellow Bhartians. Over 80 emails were addressed to him and presented to him in

recognition.

g) Bharti Airtel’s response to Assam, Bihar and West Bengal floods: Bharti Airtel also

partnered with an NGO to provide relief to the flood victims in the flood hit areas of As-

sam, Bihar and West Bengal. A ‘Material Collection Drive’ was undertaken across Bharti

offices, for collection of material such as clothes, utensils, footwear, blankets, dry ration

and monetary donations. 55 cartons of clothes and 65 kilos of ration were dispatched, in

addition to monetary contributions.

h) Bharti Airtel during Mumbai Floods: Bharti Airtel employees climbed up the towers to

restore the networks so that their customers could conveniently reach its employees.

i) Bharti Airtel’s response to Kashmir earthquake: Bharti Airtel’s ‘Rapid Response

Team’ responded to the Kashmir earthquake by bringing more than 2000 food packets

and water bottles to the affected area. Money, clothes, woolens and blankets were also

collected from employees to distribute among earthquake victims.

j) Other initiatives of Bharti Airtel: Bharti Airtel employees have undertaken varied ini-

tiatives to reach out to the local community. Some of such initiatives are listed below:

Airtel Ashiana for underprivileged children at the Mohali office of Airtel.

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BIL North tied up with an NGO to distribute daily surplus food to needy children.

k) Bharti Foundation: Although CSR is executed at all levels in the organization, the Pro-

moters of Bharti Enterprises established Bharti Foundation in 2000 with a vision,

“To help underprivileged children and youth of our country realize their potential.”

Bharti Foundation’s mission is to create and support programs that bring about sustain-

able changes through education, use of technology and information and best practice

sharing.

Bharti Foundation has established itself the goals of improving accessibility and quality

of education at the school level for underprivileged children, and to provide education

and training opportunities to youth

Awards And Recognition

Bharti Airtel has received recognition for its innovative practices across the world, some

are as follows:

3rd Largest Wireless Operator In The World

Largest Private Integrated Telecom Company In India

Largest Wireless Operator In India

Largest Private Fixed Line Operator In India

Largest Telecom Company Listed On Indian Stock Ex-

changes

Sunil Bharti Mittal - Gsm Association Chairman’s Award 2008

Sunil Bharti Mittal - Chosen For Padma Bhushan Awards In 2007

Airtel Was Chosen As The 2nd Most Trusted Service Brand In India In The ‘Most

Trusted Brands 2008 Survey’ Conducted By The Economic Times - Brand Equity

Awarded With Top Honors At The Gsma Mobile World Congress Conference 2008 In

Barcelona For The Category “Best Billing/ Customer Care Solution.”

Adjudged As The ‘Best Carrier India‘ At The Telecom Asia Award 2008

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Adjudged As ‘Company Of The Year’ At The Cnbc India Business Leader Awards 2007

Economic Times ‘Company of the Year 2007’ Award For Corporate Excellence Gallup

Great Workplace Award For 2008 -Airtel is one of the only 20 companies worldwide and

the only company from India to receive the prestigious award. The other winners include

companies like Standard Chartered, Qwest Communications and Campbell Soup Com-

pany etc. Airtel is one of the only 20 companies worldwide and the only company from

India where Organization engagement score is higher in more than 50% of the population

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7 P’s of Airtel

1. Product

Airtel Pre-paid

Airtel Post-paid

Business Solutions

Blackberry Wireless Handheld

Value Added Services (VAS)

The different value added services provided by Airtel are-

Instant Balance Enquiry

24Hr recharge Facility

Caller line identification

Call divert, Call wait & Call Hold

Multimedia messaging service (MMS)

Airtel Live Portal

SMS based Information Service

Hello Tunes & Ring Tones

Voice Mail Service

Easy Post-paid bill collection

Gifting of Ring Tones & Hello Tunes

GPRS

2. Price

Customer based pricing strategies.

Flexible pricing mechanism

Controlled by TRAI.

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3. Place

It has wide and extensive presence even in the remotest areas

Airtel Customer Care Touch Points

Distributors like E.g. Pan shops, grocery stores, chemists, outlet etc.

4. Promotion

Large scale print and video advertising.

Big celebrities like SRK and Sachin are roped in to endorse the product because it

In 2002 Airtel got its Signature tune from A.R.Rehman, this signature tune is the

most downloaded tune in India.

Provides innovations such as Bollywood movie premiers, music services such as ring

back tones & many more.

Some promotional activities

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5. People

Total Employees 25616 (Bharti Airtel consolidated) as per Q3 08.

Dedicate and passionate workforce.

One of the best customer supports.

Have won 2nd Best employer award in 2004.

6. Process

Process for services is very easy and customer can avail it very easily.

121 is the customer support no. which can be dialed from anywhere in India.

7. Physical Environment

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The First Mover Advantage

• Electronic recharge

• Hello tunes

• Airtel Live!

• Portfolio manager

• Song catcher

• Easy music

• Black berry handsets

• M-cheques

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Porter’s 5 Forces Model

1. Threat from Competition

Wireless Market – Top 4 garnering 75% market share

  OP Margin Net Margin

Company Sep-07 Sep-08 Sep-07 Sep-08

Bharti 43.00% 38.00% 26.40% 19.30%

Rcom 37.90% 31.60% 23.90% 13.20%

IDEA 32.80% 26.60% 14.10% 6.50%

MTNL 23.70% 22.90% 7.00% 6.80%

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The threat of competition is very high as there is more number of competitors prevailing in the telecom sector, showing head to head competition among themselves. Best OP margins & net profit margins among peersHIGH

Bharti Rcom IDEA MTNL 0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

OP Margin

Sep-07 Sep-08

Bharti Rcom IDEA MTNL 0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Net Margin

Sep-07 Sep-08

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2. Customer Bargaining Power

Lack of differentiation among Service Providers

Cut throat Competition

Low Switching Costs

Attractive Schemes for new connection

Availability of all operators everywhere

Difficulty to differentiate Brand

Businesses & Consumers

Number Portability will have negative Impact

3. Suppliers Bargaining Power

4.

Threat of Substitutes

Customer Bargaining

Power is High

LO

W

Suppliers Bargaining Power is low as there are more number of suppliers prevaling to supply raw material

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Landline

CDMA

World Phone

Video Conferencing

VOIP - Skype, Gtalk, Yahoo Messenger

e-Mail & Social Networking Websites

5. Threat of New Entrants

Low Because

• 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

DIMINISHING MARKET

BROADBAND SERVICES

Threat of Substitutes is High

LO

W

Threat of New Entrants is Low because of above reasons

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High Because

• Entry through 3G

• New Entrants are ready to enter with Huge Capital Considering the attractiveness

of the market

• Increase of FDI to 76% bringing competition from Foreign players

• New Entrants from Non telecom companies with the ease of Outsourcing

Porters Generic Strategy

Threat of New Entrants is High because of above reasons

High

Cost Uniqueness

DifferentiationCost LeadershipBroadTarget

NarrowTarget

Competitive Advantage

CompetitiveScope

Focused Differentiation

Focused Cost Leadership

Institute of Excellence in Manage-ment Science, Hubli.

MARKET PENETRATIONENTERED IN BROADBAND AND FIXED LINE MARKET

PRODUCT DEVELOPMENTIPLC PRODUCTS

MARKETDEVELOPMENTLOOKING FOR OVERSEAS MARKET

DIVERSIFICATIONOUTSOURCING

51

Ansoff Matrix

To portray alternative corporate growth strategies, Igor Ansoff conceptualized a matrix that focused

on the firm’s present and potential products and markets / customers. He called the four product-mar-

ket strategic alternatives

market penetration [existing market + existing product],

market development [existing product + new market],

product development [existing market + new product], and

Diversification [new product + new market].

The company should follow all four strategies depending on the demand and product as indicated in

the matrix. The company perhaps needs to focus more on the comparatively neglected area of diversi-

fication.

Market Penetration: Airtel entered in broadband and fixed phone line market.

Product Development: IPLC products. [An IPLC (international private leased circuit) is

a point-to-point private line used by an organization to communicate between offices that

are geographically dispersed throughout the world. An IPLC can be used for Internet ac-

cess, business data exchange, video conferencing, & any other form of telecommunica-

tion.]

Market Development: Airtel is now looking for overseas market. Company has already

make his presence in Nigeria and Seychelles

Diversification : Airtel has now outsourcing sum of its services like customer services

with IBM

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Detailed Value Chain

PEST ANALYSIS

Political:-

Governmental and legal issues affecting how the company operates

Regulation - Dominating Brand

Infrastructure - First mover Advantage

Banning of phone use in certain circumstances

Supplier

Input Process Output Customer

OEM1-NORTEL

OEM2-CISCO

EV-NOKIA-SEMIENS

ERRICSON

ISV-IBM

3APP- AFFLE

CA- INDIA TIMES

ASP-INFY

Network Infrastruct

ure

Spectrums

Technology

Finance

Licenses

GSM Services

VAS

Fixed Lines

Broadband

DTH

IPTV

Public

Corporate

Businesses

SME’s

Institutes

Customer

Importance

Technology

Competitive

Position

CapableSupplier

Start

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Health issues - Heath Ministry

Economic:-

Factors influencing the purchasing power of customers and the company are cost of capital.

Cost of 3G licenses - Lowering down

Cost of calls being driven down

Worldwide recession - Both Boon and Bane

Third world countries - New opportunity

Social:-

Demographic and cultural aspects of the environment which influence customer needs and market size

Health Issues

Demographics

Social Trends

Picture phones

Mobile Etiquette

Saturation Point

Technological

Strong connect

Technological:-

Equipped with new technology

Fastest to launch new Services

Serves high quality Fixed line and Broadband services

Strong NLD optical fiber network

E-commerce portal

Efficient customer care service

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SWOT Analysis

OPPORTUNITIES

Low Broadband Penetration, Rural

Telephony

Huge market

Current Tele-Density – 30.6 is still low among developing countries

Untapped rural market

THREATS

Falling ARPU (Avg Rev per user)

Intense Competition & Shortage of Bandwidth

New Players coming in India

Uncertain Economic Condition

STRENGTHS

Market Leader

Recognized Globally

Strong Brand Image

Strong New Business Development team

Strong Financials

Pan India presence

Pan India presence

WEAKNESSES

Outsourcing of core system

Network Coverage

Untapped Rural market

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STEEP Analysis

Social Factors

Demand for VAS & Broadband services Among Youth

28 % Urban Population

Rapid Urbanization

Rising Income level

Out of town employment

Outstation trips

Technology

CDMA – Already there are big players in this segment Reliance , Tata

3G – Value added services potential still to be tapped fully

2G/3G – GSM Currently commands 70% of mobile subscribers in India

Threat from VOIP

Next Generation Network

Infrastructure sharing

Economic Factors

GDP growth rate - Averaged around 7.9 % from 2002-2008

Growing per capita income/disposable Income

o Rs 18,885 in 2002 to Rs 38,084 in 2008

Falling Handset Prices (ASP= INR 3150)

Falling Tariffs

38%

41%

21%

Classification of Indian Popula-tion

Aspires

Seekers & Strivers

Global Indians

Technology

2G/3G

CDMA

WIMAX

VoIP

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Regulatory Framework

TRAI, DoT, TDSAT

74% FDI Investment

High taxes etc in the telecom industry : 17-26%

Lack of Transparency in Spectrum & License Allocation

3G Policy & MNP still Pending

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EXTRERNAL

FACTORS

WEIGHT RATING

( 1-5)

WEIGHTE

D SCORE

COMMENTS

OPPORTUNITIES

O1 Low Broadband Penetration

0.10 4 0.40 It is already penetrating

O2 Telephony 0.05 2 0.10 There is less scope for

telephony

O3 Huge market 0.10 4 0.40 There is huge untapped

market yet to targeted

O4 Current Tele-Den-sity – 30.6 is still low among developing countries

0.05 4 0.20 It is still in developing

stage so there is a chance

of improvement

O5 Untapped rural market

0.30 4 1.20 It is already penetrated

but still 82% of rural mar-

ket is yet to be captured

THREATS

T1 Intense Competition & Shortage of Band-width

0.25 3 0.75 There are stiff competi-

tion between the competi-

tors

T2 New Players com-ing in India

0.10 2 0.20 There is entrance of new

players with new plans

which will have threat on

Airtel

T3 Uncertain Economic Condition

0.05 3 0.15 There is uncertain eco-

nomic condition which

will have indirect effect

on Co

TOTAL SCORES 1 3.40

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EXTERNAL FACTORS ANALYSIS SUMMARY

INTERNAL FACTOR ANALYSIS SUMMARY

INTERNAL FACTORS

WEIGHT RATING( 1-5)

WEIGHTED SCORE

COMMENTS

STRENGTHS

S1 Market Leader 0.25 5 1.25 It is the main strength as it has more market share

S2 Recognized Glob-ally

0.20 3 0.60 It is recognized globally by tie up between different foreign companies

S3 Strong Brand Image 0.25 4 1.00 The Airtel stands 2nd posi-tion in brand, so it has well positioned

S4 Strong Financials 0.10 3 0.30 Due to increased market share it has able to main-tain revenue, which shows Strong Financials

S5 Pan India presence 0.05 2 0.10 Airtel offers the most ex-pansive roaming network with its Pan-India presence and across the globe with International Roaming spread in over 240 net-works.

WEAKNESSES

W1 Outsourcing of core system

0.10 3 0.30 They are going for out-sourcing of core system which built internally

W2 Network Coverage 0.05 3 0.15 Due to increased market share & subscription there is need of more network towers

TOTAL SCORES 1 3.70

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Note:

Weights are assigned: Factors probable impact on company’s current strategies.

Ratings are assigned: How well company’s management is currently dealing with each

external factors.

Ratings: 5 for most important & 1 for least important

From the above table both EFAS & IFAS the Airtel is in the favorable condition in the

market (i.e. 4.05 & 3.70 is greater than 3)

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STRATEGIC FACTOR ANALYSIS SUMMARY

EXTRERNAL

FACTORS

WEIGHT RATING

( 1-5)

WEIGHTE

D SCORE

COMMENTS

O1 Low Broadband Penetration

0.05 4 0.20 It is already penetrating

O2 Untapped rural market

0.20 4 0.80 It is already penetrated

but still 82% of rural mar-

ket is yet to be captured

T1 Intense Competition & Shortage of Band-width

0.15 4 0.60 There are stiff competi-

tion between the competi-

tors

T2 New Players com-ing in India

0.05 3 0.15 There is entrance of new

players with new plans

which will have threat on

Airtel

S1 Market Leader 0.20 4 0.80 It is the main strength as it has more market share

S2 Strong Brand Image 0.20 4 0.80 The Airtel stands 2nd posi-tion in brand, so it has well positioned

W1 Outsourcing of core system

0.10 3 0.30 They are going for out-sourcing of core system which built internally

W2 Network Coverage 0.05 3 0.15 Due to increased market share & subscription there is need of more network towers

TOTAL SCORES 1 3.80

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TOWS Matrix

Strengths (S)

S1 Market Leader

S2 Recognized Globally

S3 Strong Brand Image

S4 Strong Financials

S5 Pan India presence

Weaknesses (W)

W1 Outsourcing of core system

W2 Network Coverage

Opportunities (O)

O1 Low Broadband Penetra-tion

O2 Huge market

O3 Current Tele-Density - 30.6 is still low among devel-oping countries

O4 Untapped rural market

With Strong financials & Brand image there is a chance of capturing the urban & rural market.

It can also go for diversifica-tion of product

Construction of tow-ers

Reducing the out-sourcing & producing it in house

Threats (T)

T1 Intense Competition & Shortage of Bandwidth

T2 New Players coming in India

T3 Uncertain Economic Condition

Providing different forms of scheme to different targeted customers

Giving better offers & prices than the competitors

Providing VAS to attract cus-tomers

Going for tie up with telecom companies

Internal Factors

External Factors

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Airtel – Strategy

“MANTRA: Focus on Core Competencies and outsource the rest!”

Strategy

• Partner with leading players in telecommunication across the globe.

• Managed to work with the best of domain specialists globally and emerge as a world

class entity.

• Operational contracts with marquee vendors and strategic investors ranging from private

equity investors to global telecom giants.

Operational Strategies

• Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on

ARPU only.

Core Competencies

Product Innovation

VAS

Marketing and Branding

Pricing

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• Aim to be become a one stop shop for all telecommunication services under the Bharti

umbrella.

• Exploring opportunities in international markets.

• Hived off tower infrastructure into a separate entity.

Strategic partnerships/ Shareholders – Technology

• Warburg Pincus – a celebrated PE investor held a stake for a substantial period of time

and was instrumental in providing Airtel support in its early stages.

• Vodafone was a strategic investor in Airtel.

• Temasek – the Singapore based investor holds a considerable stake in it.

• Was also affiliated with Singapore Telecom.

Future Strategies

• Translate its expertise in Indian markets to other emerging economies.

• This could call for acquisitions globally.

• Technology leadership is a must – Airtel must ensure that its reliance on GSM technol-

ogy does not render it obsolete.

• Indian market in spite of being the world’s largest is still not matured. Opportunities

abound in the hinterland which must be exploited.

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Factors & Strategies Responsible For Market Success of Airtel:-

According to my analysis, the Airtel is very keen with their marketing strategy in the competitive world.

There r certain parameters which tell us about that how Airtel became the market leader

1. First mover advantage:

In the initial days due to high tariff rates cellular players had to impose high call

charges on their customers and the handsets were costly.

Naturally, they targeted the elite, up market professionals and entrepreneurs as

customers. Airtel was positioned as an asp rational and lifestyle brand.

It was pitched not merely as a mobile service, but as something that gave consumer a

badge value. The Brand was developed to connote leadership in network, innovations,

offerings and services.

The taglines like "Airtel celebrates the spirit of leadership" and "The first choice

of the corporate leaders" emphasized that stance.

The Leadership campaign was reportedly successful and resulted in a marginal

improvement in Airtel performance.

2. Highly Focused On Telecom

Bharti Airtel is largely focused on the telecom; around 93% of the total revenue comes from

telecom (Total telecom revenue Rs 3,326).

3. Leadership in Fast Growing Cellular Segment

Airtel is holding leadership position in cellular market.. Bharti Airtel is one of India's leading

private sector providers of telecommunications services based on an aggregate of 27,239,757

customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071

broadband & telephone customers.

4. Pan India Footprint

Airtel offers the most expansive roaming network. Letting you roam anywhere in In-

dia with its Pan-India presence, and trot across the globe with International Roaming

spread in over 240 networks.

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The mobile services group provides GSM mobile services across India in 23 telecom

circles, while the B&T business group provides broadband & telephone services in 92

cities.

5. Heavy Brand Promotion Strategy

Hence Bharti decided to humanize the brand Airtel to gain competitive advantage.

In august 2000 Bharti launched its new “Touch Tomorrow” campaign which aimed

at strengthening its relationship with its customers and make the brand „softer‟ to

cater a wide variety of people across the society.

Promotional Effectiveness: Most of the respondents said that Promotional campaign

influenced their decision to shift to the Airtel

Airtel basically uses two appeal to connect to the users

o Emotional

o Humorous

o Attracting

Brands stray when they try to be different for the sake of being different. The de-

sire to be different is pretty common in advertising.

In 2002, Airtel signed on music composer A.R.Rehman and changed its tune to

"live every moment": rah man’s signature tune for Airtel is the most down-

loaded ringbone in India. But that was just part of the ongoing communication.

The following year Airtel adopted the "express yourself" positioning, which is

also its current tagline.

Youth icons like Shahrukh khan and Sachin Tendulakar were brought in as

brand ambassadors to attract youngsters

Add campaign with an eye on the rural market

6. Huge Network Coverage:-

A combination of the following 4-key performance indicators largely determines the overall

service quality: system coverage; call blockage; voice quality; and dropped call rate.

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System coverage

Call blockage

Voice quality

Dropped call rate

Source: - According to the national survey report Airtel minimum complaints of all of these

above stated problems were found to be minimum in case of Airtel. So we can say that Airtel

is providing comparatively far better service to the users.

7. Proactive and Innovative Services:-

According to the responses obtained the most critical factor in this regards is the fresh experi-

ence which Airtel provides to its consumers time to time.

Black berry

Start or stop service at any time

Facilities provided

News services

Car insurance

Fund transfer

Bill payment system

Payment for ticket

Payment of electricity bills

Bharti Airtel Launches “Special Five” to Empower Its Customers*

*NOTE: - Bharti Airtel, Asia’s leading integrated telecom services provider announced a

new add-on feature called “Special 5” for all its 100 million customers. The consumer usage

analysis indicates that our customers make majority of their calls to a very few numbers

which are the most special, near & dear in their lives.

8. Mission of Airtel

Mission of the company very well states that it caters to meet the need of its customers by

providing error free service delivery, innovative products and cost efficiency.

9. Vision of Airtel

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“To be the most admired brand by 2010”

10. Value Added Services

Airtel provides various value added services like instant balance enquiry, 24 hr recharge fa-

cility, caller line identification, call divert, call hold, Airtel Live Portal, Hello Tunes & ring

tones, Voice mail service, GPRS.

11. Schemes

Airtel has been promoting various schemes to attract various segments consumers by launch-

ing various plans, which offer discounts and reduced rates.

12. Pricing

The pricing strategy of Airtel is customer based, there are various tariff plans being intro-

duced to cater to flexible pricing requirements

13. Airtel's strategy for getting into new areas

The company is focusing its attention towards youth, women, and senior citizens by intro-

ducing new prepaid and post paid plans which offer lower call rates and more value added

services with affordable payment plans.

Company’s “Friendz” prepaid plan is focused on younger generation the two post paid plans

among which by name “Ladies Special” are meant for women would allow more women to

talk for longer hours as there are some attractive discounts being given and the next for se-

nior citizens by name “Senior”, discount will be allowed for one STD no and one Airtel local

no.

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Conclusion

In the next two years, India is expected to become the 3rd largest mobile market in the world,

after the US and China and soon be in a position to overtake the US as well. The number of

service provider might come down to around five from the present six to seven as the next

phase of consolidation will take place shortly. I see a buoyant and strong Indian telecom sec-

tor in the coming years and every major player in the world in the telecom space trying to

take his share in this pie.

Some businesses think it is best to get on with their own plans and ignore the competition.

Others become obsessed with tracking the actions of competitors (often using underhand or

illegal methods). Many businesses are happy simply to track the competition, copying their

moves and reacting to changes. Competitor analysis plays an important role in strategic plan-

ning. It is helpful for the management to understand their competitive advantages/disadvan-

tages relative to competitors and to generate understanding of competitors past, present and

future strategies. So competitive move decides your position in the market.