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Mrinal Sharma (419)
Aliasgar Navagharwala (425)
     Shikhar Tyagi (423)
    Jai Awatramani (402)
Index
•   Introduction to Indian Telecom Industry
•   Introduction to Bharti Airtel
•   Financial Analysis
•   Marketing Analysis
•   Porters 5 forces analysis
•   BCG, GE Matrix
•   Future
INTRODUCTION
Evolution of Telecom In India

                                                                        ILD services was
                                                       BSNL was                                                                                            Number portability
                                 Independent                            opened to                                           Intra-circle merger
                                                       established by                                                                                      was proposed
        Private players          regulator, TRAI,                       competition                                         guidelines were
                                                       DoT                                          Calling Party Pays
        were allowed in          was established                                                    (CPP) was
                                                                                                                            established       Attempted to (pending)
        Value Added                                                                Go-ahead to      implemented                               boost Rural
        Services                                                                   the CDMA                                                   telephony
                                                                                   technology
                          1994                  1999                      2002                                                                      2005                  2007
                                                                                                          2003            2004
INDIA




          1992                                                2000                  Internet           Unified Access                                         2006
                                    1997
                                                                                    telephony          Licensing (UASL)
                                                                                    initiated          regime was           Broadband
                                                                                                       introduced           policy 2004 was
                 National Telecom                                                                                                                               Decision on 3G
                                           NTP-99 led to                  Reduction of                                      formulated—
                 Policy (NTP) was                                                                                                             FDI limit was     services (awaited)
                                           migration from high-           licence fees           Reference                  targeting 20
                 formulated                                                                                                                   increased from 49
                                           cost fixed license fee                                Interconnect               million
                                                                                                                                              to 74 percent
                                           to low-cost revenue                                   order was                  subscribers by
                                           sharing regime                                        issued                     2010




         Department of Telecommunication (DoT) is the main body formulating laws and
         various regulations for the Indian telecom industry.
          ILD – International Long Distance
Changing Demographics

Demand for VAS & Broadband
services Among Youth

28 % Urban Population

Rapid Urbanization

Rising Income level
                              Source: Mckinsey Report
Technologies
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
Telecom Ecosystem
                                   Indian Telecom Industry Framework
                                  Indian Telecom Industry Framework

       Indian Government Bodies                                           Independent Bodies




Wireless Planning
                      Handles spectrum allocation      Telecom Regulatory
and Coordination                                       Authority of India (TRAI)     Independent regulatory body
(WPC)
                      and management

                      DoT – Licensee and               Telecom Disputes
Department of
Telecommunications    frequency management             Settlement and Appellate
                      for telecom                      Tribunal (TDSAT)               Telecom disputes
                                                                                      settlement body

Telecom               Exclusive policy making body     Association of
      Commission
                      of DoT                           Unified Telecom
                                                       Service
                      Handles ad hoc issues of
                                                       Providers(AUSPI)
Group on Telecom
and IT (GoT-IT)       the telecom industry
Regulatory framework
              74% FDI Investment

              Lack of Transparency in
               Spectrum & License
               Allocation

              3G Policy & MNP still
               Pending


        GROUP 7                          8
Industry
•   Subscriber base- 330m
•   Wireless penetration- 14.7%
•   CAGR (wireless)- 68%
•   Second Largest Telecom Market
     – Lowest tariff charges in the world
     – Wireless Subscribers – 315.3 Mn
     – Wireline Subscribers – 38.4 Mn
     – Teledensity – 30.6
     – Share in Asia Pacific mobile phone market- 6.4
     – Mobile subscriber base growth rate- 82.2%, 42% of the population
       below 20
•   9 GSM and 5 CDMA players in 19 circles and 4 metro cities connecting
    2000 towns
•   Bharti Airtel largest player with presence in all 23 circles
Vision 2010
• By 2010 Airtel will be the most admired brand
  in India:
  – Loved by more customers
  – Targeted by top talent
  – Benchmarked by more businesses
Vision 2020
• To build India's finest business conglomerate
  by 2020
• Supporting education of underprivileged
  children through Bharti Foundation
• Strategic Intent:
  – To create a conglomerate of the future by
    bringing about “Big Transformations through
    Brave Actions.”
Mission
• “ We at Airtel always think in fresh and
  innovative 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 delight the customer with a little bit
  more”
Organization Structure
Company History
• 1995 – mobile service brand in Delhi and HP and BT
  acquires a stake
• 1996-97 – Formed Bharti BT VSAT Ltd
• 1999-2000 Acquires JT Mobiles in Karnataka, AP and
  Punjab
• 2001-02 – Launches IndiaOne , 8 new licenses in the
  East, becomes largest operator, launches Airtel tune
• 2003-04 – Association with Ericsson, IBM, RIM
• 2006-07 – Forays into Sri Lanka and US, tie up with
  Google and Microsoft
Subsidiary Companies
•   Bharti Hexacom
•   Bharti Comtel
•   Bharti Aquanet
•   Bharti Broadband
•   Bharti Infratel
•   Bharti Telemedia
•   Bharti Airtel(UK,US,Canada, Hongkong, USA,
    Lanka)
Airtel- SBUs
Mobile
• Service across 23 circles
• 4676 census towns and 207327 non-census towns and villages
  covering 59% of population
• Market share- 22.9%
• 85mn subscribers from 25m in Jul 2006
Airtel- SBUs contd.
Broadband & Telephone Services (B&TS)
• Service across 94 cities across 16 circles
• 1.75 m voice and 0.59 m broadband customers
Airtel- SBUs contd.
Enterprise Network
-Carriers
• 49000 kms of fiber
• Submarine cable landing station at Chennai
• Association with SEA-ME-WE-4 with 15 more operators
Contd.
-Corporates
• Deep domain knowledge exploitation for Banking, BFES,
  IT/ITES, Media, Education, Retail
• Integrated services for key corporate accounts
FINANCIALS
Share Capital
• Rs 8,340.15 million raised through the IPO
• 2002 Went Public
• Shares in issue
  – 1,898,101,604 as at September 30, 2008
• Market Capitilization
  – Approx. Rs. 1,371 billion
• P/E
  – 19.98
• EPS
  – 36.16
Some Key highlights…
Balance Sheet         Amount in Rs. Cr
Total Share Capital             1897.91
Net Worth                      20241.49
Total Debt                      6570.34
Net Block                      19030.65
Investments                    10952.85
                                          Income
Net Current Assets             -5922.94                (Sep '08)       (Mar '08)
                                          Statement
Total Assets                   26811.84                    Quarterly         Annual
                                          Net Sales         8274.37        25703.51
                                          Other
                                                               28.43         235.86
                                          Income
                                          PBDIT             3151.06        10736.89
                                          Net Profit        1604.78         6244.20
Key Ratios
    Key Ratios - Airtel       Mar-08 Mar-07 Mar-06 Mar-05           Mar-04
     Debt-Equity Ratio           0.38      0.54    0.83     0.6      0.07
Long Term Debt-Equity Ratio      0.35       0.5    0.76     0.5      0.03
         ROCE (%)             34.88        34.07   22.55   23.96     0.16
        RONW (%)              39.53        43.04   31.82   23.88    -0.27


      Key Ratios - Industry        2007      2006 2005 2004        2003
        Debt-Equity Ratio          0.35      0.21 0.27 0.34        0.36
   Long Term Debt-Equity Ratio      0.3      0.19 0.24 0.29        0.33
            ROCE (%)               9.72      10.28 8.25 8.43       3.07
           RONW (%)                10.11     10.62 10.87 6.76      0.18
GROWTH!!!!!!!!!
Subscriber Growth
          Group Company wise % market share - Nov'2008

Sr, No.        Name of Company    Total Sub Figures    % Market Share

  1            Bharti Airtel             8,29,20,593      33.25%
  2            Vodafone Essar            5,87,64,164      23.57%
  3            BSNL                      4,04,87,511      16.24%
  4            IDEA                      3,28,09,720      13.16%
  5            Aircel                    1,53,75,258       6.17%

  6            Reliance Telecom           95,82,695        3.84%
  7            Spice                      37,05,894        1.49%
  8            MTNL                       38,21,277        1.53%
  9            BPL                        18,82,324        0.75%
               All India               24,93,49,436       100.00%
Customer Growth across the years
                                   Airtel Subscriber
 Year    Overall Subscriber Base          Base         Market Share

Mar-04         2,61,54,405            42,16,317          16.12087

Mar-05         4,10,25,940            1,04,78,585        25.54136

Mar-06         6,91,93,321            1,95,79,208        28.29638

Mar-07        12,14,31,166            3,71,41,210        30.58623

Mar-08        18,44,13,702            6,19,84,721        33.61178
Income and Expenditure(Rs. Cr)
Operating Profit (Rs. Cr.)
Stock Movement
Share Price Competitors Differentials

Company Name      Last Price   % Chg    52 wk     52 wk    Market Cap
                                         High      Low      (Rs. cr)
 Bharti Airtel     722.30      -2.69   1,063.00   484.00   137,107.31
Reliance Comm      249.20      4.18    844.00     148.60   51,435.55
 Idea Cellular      53.50      0.09    148.90     34.05    16,585.51
 Tata Comm         495.15      0.53    783.00     320.00   14,111.78
    MTNL            74.85      -2.54   219.45     51.75     4,715.55
TataTeleservice     20.15      2.03     65.00     12.50     3,822.84
 Spice Comm         36.00      10.43    77.30     23.25     2,483.73
Tulip Telecom      501.20      15.66   1,225.00   385.00    1,453.48
 HFCL Infotel       7.45       6.28     59.70      5.55      391.51
Net Sales(Rs. Cr)
Net Profit(Rs. Cr)
For the current year
MARKETING
Core Values of AirTel
• Performance

• Dynamism

• Leadership
TARGETING
•   Elite
•   Up market professionals
•   Entrepreneur with business plans
•   Low income mass category
•   Youth
•   Women and senior citizens by post paid
    connection
POSITIONING
•   “Power to keep in touch”
•   “Touch tomorrow”
•   “Live every moment”
•   “Express yourself”
TIME LINE
“Power to keep in touch”
• Positioned in premium category aimed at elite class of
  society
• Convey power of instant communication
• Perception of aspirational and lifestyle brand
• Airtel decided that the brand should always connote
  leadership–be it in network, innovations, offerings,
  services
• Sponsored games like Golf
TIME LINE
“Touch tomorrow”
• New campaign launched to facilitate entry into new markets

• Started to capture mass market

• A new logo for Airtel- Red , black and white colors with ‘Airtel’
  enwrapped in an eclipse.

• Logo indicated core value of the brand: leadership, performance
  and dynamism
TIME LINE
“Live every moment”
• Launched to capture the imagination of the
  customer
• Projects a persons desire to spontaneously
  communicate through words, emotions,
  sights, sounds, thoughts and actions over
  boundaries, distances and geographies
TIME LINE
“Express Yourself”
• In 2003, Airtel repositioned its brand with
  “Express yourself” campaign
• Changed its logo to give more energetic and
  younger look
• Highlight capability of Airtel’s performance
  and network coverage
• Launched in regional language
Bharti airtel20122008-1232180760609748-1
THE FIRST MOVER ADVANTAGE
•   Electronic recharge
•   Hello tunes
•   Airtel Live!
•   Portfolio manager
•   Song catcher
•   Easy music
•   Black berry handsets
•   M-cheques
First Mover Advantage
RURAL STRATEGIES
• Airtel follows “Match-box strategy”
• The firm expands regularly in Bihar,
  piggybacking on 300 distributors and more
  than 50,000 retail outlets selling Airtel prepaid
  cards
• Covers over 4,00,000 villages and hopes to
  expand to other 1,00,000 by 2009
IMC TOOLS
• Advertisements
• Sales promotion
• Publicity and events
AIRTEL ADVERTISEMENT
• Airtel basically uses two appeal to connect to
  the users
  – Emotional
  – Humorous


• Total advertising budget of Airtel is Rs. 150
  crore
The Ad diagnostics
score helps to
understand how far
the Ad has been able
to break the clutter
INTERNET ADVERTISING

Massive advertising through
• Google AdSense
• BidVertisers
• Sponsor online games at Zapak.com
SALES PROMOTION
• “Friendz” pre-paid plan
• “Ladies special” plan
• “Senior citizen” plan
Youtopia
• Special tariff plan for youth- Youtopia
• Reduced tariffs, 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 0.25 for 30 seconds- night!, special bidding
  portal, music download facilities, SMS at
  affordable prices
PUBLICITY AND EVENTS
Sponsored events
• Delhi half marathon
• Delhi golf tournament
Sponsored TV shows
• Big Boss
• KBC
• Indian Idol
OUTCOME OF THE CAMPAIGN


                    Addition of 2.7
                      Million
                      customers in
                      a month
PORTERS 5 FORCES, GE MATRIX
Porters Generic Strategy
Narrow
Market
Scope




 Broad
 Market
 Scope    Differential Strategy   Cost Leadership



          Uniqueness              Low Cost
          Competency              Competency
Porter’s 5 forces
1. Threat from Competition
Wireless Market – Top 4 garnering 75% market share



                                                     HIGH
Competitor Analysis




Best OP Margins &
Net Profit Margins
  among Peers




                     Source: CMIE November 2008
AMOU & ARPU Stats
                                    Minutes of Usage per Month – Mobile Services

                             USA                                                          838
                                                                                                    Despite a low teledensity of
                            India                                  461                              approximately 19 percent, India has
                            China                      303
                                                                                                    the second highest minutes of
                                                                                                    usage per month. This offers huge
                        Russia            88
                                                                                                    growth opportunity to telecom
                                                                                                    companies.

                               ARPU* in India – Mobile Services
                       10                                                                                  The declining ARPU implies
ARPU (USD per month)




                       8                                                                                   that India Inc. is tapping a
                       6                                                                                   large market at the bottom of
                       4
                                                                                                           the pyramid by reducing
                       2
                                                                                                           tariffs; thereby, enhancing
                       0
                                Q1 2006          Q2 2006       Q3 2006          Q4 2006         Q1 2007    affordability.
                                                             GSM         CDMA
2. Customer Bargaining Power
• Lack of differentiation among Service
  Providers                                  HIGH

• Cut throat Competition
• Low Switching Costs
• Attractive Schemes for new connection
• Availability of all operators everywhere
• Difficulty to differentiate Brand
• Number Portability will have –Ve Impact
• Businesses & Consumers
Market Scenario


  Postpaid Vs Prepaid               Customers & Market Share




Q207   Q307   Q407   Q108   Q208   Q207   Q307   Q407   Q108   Q208
3. Suppliers Bargaining Power
                                LOW
4. Threat of Substitutes
• Landline
                       DIMINISHING MARKET
• CDMA


• World Phone
• Video Conferencing
                                            •BROADBAND
                                            SERVICES
• VOIP - Skype, Gtalk, Yahoo Messenger
• e-Mail & Social Networking Websites


    HIGH
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 Previously Low,
                                               Now High
• Infrastructure Setup Cost - High
• Rapidly changing technology
5. Threat of New Entrants
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 competiton from
  Foreign players
• New Entrants from Non telecom companies with
  the ease of Outsourcing
                                            Previously Low,
                                               Now High
HIGH   BCG Matrix for Bharti Airtel


               Mobile Services
                                 DTH & IPTV

                                 Broad Band
LOW




        HIGH                                  LOW
GE Matrix Classification
                                                 Business Strength
                                        Strong           Medium          Weak
                                                                                5.00
                        High
Market Attractiveness




                                                                                3.67
                        Medium




                                                                                2.33
                        Low




                                 5.00             3.67            2.33          1.00
Factors Underlying Market
Attractiveness
Factors Underlying Market/Biz Strength
Airtel’s GE Matrix
                        High                                              Low
                                             Business Strengths
    High                  Attractive                                            5.00

                                        Airtel   Enterprise
Market Attractiveness




                               Mobile

                                                                                3.67

                                                 Moderate
                         TeleMedia
                                                 Attractive
                                                                                2.33


                                                                 Unattractive

  Low
    5.00                                 3.67                 2.33              1.00
SWOT
SWOT
Strengths     Weakness
              • Outsourcing of Core
                Systems
              • Network Coverage (earlier)
SWOT
Opportunities                   Threats
• Bharti Infratel – Cutting     • India centric – Major
  Down cost in Rural area         revenues from India
• Match Box Strategy – Scale    • Falling ARPU & AMOU
  of Penetration
                                • Intense Competition &
• Current Tele-Density – 30.6
  is still low among              Shortage of Bandwidth
  developing countries          • New Players coming in India
• Low Broadband                 • Uncertain Economic
  Penetration, Rural              conditions
  Telephoney
AIRTEL FUTURE STRATEGY
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.
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
Operational Strategies.
• Higher emphasis on ARPU/min – stark contrast
  with other operators who concentrate on ARPU
  only.
• 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.
Performance till date
• Bharti Airtel has enjoyed an excellent run ever
  since the telecom sector opened.
• It has managed to hold on to its leadership
  position inspite of the presence of other
  players with deep pockets – Ambani’s, Tata’s,
  Birla’s and Vodafone.
• Has coped well with regulatory changes.
• Continues to attract and delight customers.
FUTURE STRATEGIES
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 technology does
  not render it obsolete.
• Indian market inspite of being the worlds largest
  is still not matured. Opportunities abound in the
  hinterland which must be exploited.
Growth Factors
Road Map – Growth Path

         VPN & VoIP


          WiMAX




            3G




          2G/2.5G
Airtel - Strategy




MANTRA : Focus on Core Competencies and
 Outsource the rest!
Thank You!!!!!!!

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Airtel
 

Bharti airtel20122008-1232180760609748-1

  • 1. Mrinal Sharma (419) Aliasgar Navagharwala (425) Shikhar Tyagi (423) Jai Awatramani (402)
  • 2. Index • Introduction to Indian Telecom Industry • Introduction to Bharti Airtel • Financial Analysis • Marketing Analysis • Porters 5 forces analysis • BCG, GE Matrix • Future
  • 4. Evolution of Telecom In India ILD services was BSNL was Number portability Independent opened to Intra-circle merger established by was proposed Private players regulator, TRAI, competition guidelines were DoT Calling Party Pays were allowed in was established (CPP) was established Attempted to (pending) Value Added Go-ahead to implemented boost Rural Services the CDMA telephony technology 1994 1999 2002 2005 2007 2003 2004 INDIA 1992 2000 Internet Unified Access 2006 1997 telephony Licensing (UASL) initiated regime was Broadband introduced policy 2004 was National Telecom Decision on 3G NTP-99 led to Reduction of formulated— Policy (NTP) was FDI limit was services (awaited) migration from high- licence fees Reference targeting 20 formulated increased from 49 cost fixed license fee Interconnect million to 74 percent to low-cost revenue order was subscribers by sharing regime issued 2010 Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry. ILD – International Long Distance
  • 5. Changing Demographics Demand for VAS & Broadband services Among Youth 28 % Urban Population Rapid Urbanization Rising Income level Source: Mckinsey Report
  • 6. Technologies 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
  • 7. Telecom Ecosystem Indian Telecom Industry Framework Indian Telecom Industry Framework Indian Government Bodies Independent Bodies Wireless Planning Handles spectrum allocation Telecom Regulatory and Coordination Authority of India (TRAI) Independent regulatory body (WPC) and management DoT – Licensee and Telecom Disputes Department of Telecommunications frequency management Settlement and Appellate for telecom Tribunal (TDSAT) Telecom disputes settlement body Telecom Exclusive policy making body Association of Commission of DoT Unified Telecom Service Handles ad hoc issues of Providers(AUSPI) Group on Telecom and IT (GoT-IT) the telecom industry
  • 8. Regulatory framework  74% FDI Investment  Lack of Transparency in Spectrum & License Allocation  3G Policy & MNP still Pending GROUP 7 8
  • 9. Industry • Subscriber base- 330m • Wireless penetration- 14.7% • CAGR (wireless)- 68% • Second Largest Telecom Market – Lowest tariff charges in the world – Wireless Subscribers – 315.3 Mn – Wireline Subscribers – 38.4 Mn – Teledensity – 30.6 – Share in Asia Pacific mobile phone market- 6.4 – Mobile subscriber base growth rate- 82.2%, 42% of the population below 20 • 9 GSM and 5 CDMA players in 19 circles and 4 metro cities connecting 2000 towns • Bharti Airtel largest player with presence in all 23 circles
  • 10. Vision 2010 • By 2010 Airtel will be the most admired brand in India: – Loved by more customers – Targeted by top talent – Benchmarked by more businesses
  • 11. Vision 2020 • To build India's finest business conglomerate by 2020 • Supporting education of underprivileged children through Bharti Foundation • Strategic Intent: – To create a conglomerate of the future by bringing about “Big Transformations through Brave Actions.”
  • 12. Mission • “ We at Airtel always think in fresh and innovative 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 delight the customer with a little bit more”
  • 14. Company History • 1995 – mobile service brand in Delhi and HP and BT acquires a stake • 1996-97 – Formed Bharti BT VSAT Ltd • 1999-2000 Acquires JT Mobiles in Karnataka, AP and Punjab • 2001-02 – Launches IndiaOne , 8 new licenses in the East, becomes largest operator, launches Airtel tune • 2003-04 – Association with Ericsson, IBM, RIM • 2006-07 – Forays into Sri Lanka and US, tie up with Google and Microsoft
  • 15. Subsidiary Companies • Bharti Hexacom • Bharti Comtel • Bharti Aquanet • Bharti Broadband • Bharti Infratel • Bharti Telemedia • Bharti Airtel(UK,US,Canada, Hongkong, USA, Lanka)
  • 16. Airtel- SBUs Mobile • Service across 23 circles • 4676 census towns and 207327 non-census towns and villages covering 59% of population • Market share- 22.9% • 85mn subscribers from 25m in Jul 2006
  • 17. Airtel- SBUs contd. Broadband & Telephone Services (B&TS) • Service across 94 cities across 16 circles • 1.75 m voice and 0.59 m broadband customers
  • 18. Airtel- SBUs contd. Enterprise Network -Carriers • 49000 kms of fiber • Submarine cable landing station at Chennai • Association with SEA-ME-WE-4 with 15 more operators
  • 19. Contd. -Corporates • Deep domain knowledge exploitation for Banking, BFES, IT/ITES, Media, Education, Retail • Integrated services for key corporate accounts
  • 21. Share Capital • Rs 8,340.15 million raised through the IPO • 2002 Went Public • Shares in issue – 1,898,101,604 as at September 30, 2008 • Market Capitilization – Approx. Rs. 1,371 billion • P/E – 19.98 • EPS – 36.16
  • 22. Some Key highlights… Balance Sheet Amount in Rs. Cr Total Share Capital 1897.91 Net Worth 20241.49 Total Debt 6570.34 Net Block 19030.65 Investments 10952.85 Income Net Current Assets -5922.94 (Sep '08) (Mar '08) Statement Total Assets 26811.84 Quarterly Annual Net Sales 8274.37 25703.51 Other 28.43 235.86 Income PBDIT 3151.06 10736.89 Net Profit 1604.78 6244.20
  • 23. Key Ratios Key Ratios - Airtel Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Debt-Equity Ratio 0.38 0.54 0.83 0.6 0.07 Long Term Debt-Equity Ratio 0.35 0.5 0.76 0.5 0.03 ROCE (%) 34.88 34.07 22.55 23.96 0.16 RONW (%) 39.53 43.04 31.82 23.88 -0.27 Key Ratios - Industry 2007 2006 2005 2004 2003 Debt-Equity Ratio 0.35 0.21 0.27 0.34 0.36 Long Term Debt-Equity Ratio 0.3 0.19 0.24 0.29 0.33 ROCE (%) 9.72 10.28 8.25 8.43 3.07 RONW (%) 10.11 10.62 10.87 6.76 0.18
  • 25. Subscriber Growth Group Company wise % market share - Nov'2008 Sr, No. Name of Company Total Sub Figures % Market Share 1 Bharti Airtel 8,29,20,593 33.25% 2 Vodafone Essar 5,87,64,164 23.57% 3 BSNL 4,04,87,511 16.24% 4 IDEA 3,28,09,720 13.16% 5 Aircel 1,53,75,258 6.17% 6 Reliance Telecom 95,82,695 3.84% 7 Spice 37,05,894 1.49% 8 MTNL 38,21,277 1.53% 9 BPL 18,82,324 0.75% All India 24,93,49,436 100.00%
  • 26. Customer Growth across the years Airtel Subscriber Year Overall Subscriber Base Base Market Share Mar-04 2,61,54,405 42,16,317 16.12087 Mar-05 4,10,25,940 1,04,78,585 25.54136 Mar-06 6,91,93,321 1,95,79,208 28.29638 Mar-07 12,14,31,166 3,71,41,210 30.58623 Mar-08 18,44,13,702 6,19,84,721 33.61178
  • 30. Share Price Competitors Differentials Company Name Last Price % Chg 52 wk 52 wk Market Cap High Low (Rs. cr) Bharti Airtel 722.30 -2.69 1,063.00 484.00 137,107.31 Reliance Comm 249.20 4.18 844.00 148.60 51,435.55 Idea Cellular 53.50 0.09 148.90 34.05 16,585.51 Tata Comm 495.15 0.53 783.00 320.00 14,111.78 MTNL 74.85 -2.54 219.45 51.75 4,715.55 TataTeleservice 20.15 2.03 65.00 12.50 3,822.84 Spice Comm 36.00 10.43 77.30 23.25 2,483.73 Tulip Telecom 501.20 15.66 1,225.00 385.00 1,453.48 HFCL Infotel 7.45 6.28 59.70 5.55 391.51
  • 35. Core Values of AirTel • Performance • Dynamism • Leadership
  • 36. TARGETING • Elite • Up market professionals • Entrepreneur with business plans • Low income mass category • Youth • Women and senior citizens by post paid connection
  • 37. POSITIONING • “Power to keep in touch” • “Touch tomorrow” • “Live every moment” • “Express yourself”
  • 39. “Power to keep in touch” • Positioned in premium category aimed at elite class of society • Convey power of instant communication • Perception of aspirational and lifestyle brand • Airtel decided that the brand should always connote leadership–be it in network, innovations, offerings, services • Sponsored games like Golf
  • 41. “Touch tomorrow” • New campaign launched to facilitate entry into new markets • Started to capture mass market • A new logo for Airtel- Red , black and white colors with ‘Airtel’ enwrapped in an eclipse. • Logo indicated core value of the brand: leadership, performance and dynamism
  • 43. “Live every moment” • Launched to capture the imagination of the customer • Projects a persons desire to spontaneously communicate through words, emotions, sights, sounds, thoughts and actions over boundaries, distances and geographies
  • 45. “Express Yourself” • In 2003, Airtel repositioned its brand with “Express yourself” campaign • Changed its logo to give more energetic and younger look • Highlight capability of Airtel’s performance and network coverage • Launched in regional language
  • 47. THE FIRST MOVER ADVANTAGE • Electronic recharge • Hello tunes • Airtel Live! • Portfolio manager • Song catcher • Easy music • Black berry handsets • M-cheques
  • 49. RURAL STRATEGIES • Airtel follows “Match-box strategy” • The firm expands regularly in Bihar, piggybacking on 300 distributors and more than 50,000 retail outlets selling Airtel prepaid cards • Covers over 4,00,000 villages and hopes to expand to other 1,00,000 by 2009
  • 50. IMC TOOLS • Advertisements • Sales promotion • Publicity and events
  • 51. AIRTEL ADVERTISEMENT • Airtel basically uses two appeal to connect to the users – Emotional – Humorous • Total advertising budget of Airtel is Rs. 150 crore
  • 52. The Ad diagnostics score helps to understand how far the Ad has been able to break the clutter
  • 53. INTERNET ADVERTISING Massive advertising through • Google AdSense • BidVertisers • Sponsor online games at Zapak.com
  • 54. SALES PROMOTION • “Friendz” pre-paid plan • “Ladies special” plan • “Senior citizen” plan
  • 55. Youtopia • Special tariff plan for youth- Youtopia • Reduced tariffs, 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 0.25 for 30 seconds- night!, special bidding portal, music download facilities, SMS at affordable prices
  • 56. PUBLICITY AND EVENTS Sponsored events • Delhi half marathon • Delhi golf tournament Sponsored TV shows • Big Boss • KBC • Indian Idol
  • 57. OUTCOME OF THE CAMPAIGN Addition of 2.7 Million customers in a month
  • 58. PORTERS 5 FORCES, GE MATRIX
  • 59. Porters Generic Strategy Narrow Market Scope Broad Market Scope Differential Strategy Cost Leadership Uniqueness Low Cost Competency Competency
  • 61. 1. Threat from Competition Wireless Market – Top 4 garnering 75% market share HIGH
  • 62. Competitor Analysis Best OP Margins & Net Profit Margins among Peers Source: CMIE November 2008
  • 63. AMOU & ARPU Stats Minutes of Usage per Month – Mobile Services USA 838 Despite a low teledensity of India 461 approximately 19 percent, India has China 303 the second highest minutes of usage per month. This offers huge Russia 88 growth opportunity to telecom companies. ARPU* in India – Mobile Services 10 The declining ARPU implies ARPU (USD per month) 8 that India Inc. is tapping a 6 large market at the bottom of 4 the pyramid by reducing 2 tariffs; thereby, enhancing 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 affordability. GSM CDMA
  • 64. 2. Customer Bargaining Power • Lack of differentiation among Service Providers HIGH • Cut throat Competition • Low Switching Costs • Attractive Schemes for new connection • Availability of all operators everywhere • Difficulty to differentiate Brand • Number Portability will have –Ve Impact • Businesses & Consumers
  • 65. Market Scenario Postpaid Vs Prepaid Customers & Market Share Q207 Q307 Q407 Q108 Q208 Q207 Q307 Q407 Q108 Q208
  • 67. 4. Threat of Substitutes • Landline DIMINISHING MARKET • CDMA • World Phone • Video Conferencing •BROADBAND SERVICES • VOIP - Skype, Gtalk, Yahoo Messenger • e-Mail & Social Networking Websites HIGH
  • 68. 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 Previously Low, Now High • Infrastructure Setup Cost - High • Rapidly changing technology
  • 69. 5. Threat of New Entrants 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 competiton from Foreign players • New Entrants from Non telecom companies with the ease of Outsourcing Previously Low, Now High
  • 70. HIGH BCG Matrix for Bharti Airtel Mobile Services DTH & IPTV Broad Band LOW HIGH LOW
  • 71. GE Matrix Classification Business Strength Strong Medium Weak 5.00 High Market Attractiveness 3.67 Medium 2.33 Low 5.00 3.67 2.33 1.00
  • 74. Airtel’s GE Matrix High Low Business Strengths High Attractive 5.00 Airtel Enterprise Market Attractiveness Mobile 3.67 Moderate TeleMedia Attractive 2.33 Unattractive Low 5.00 3.67 2.33 1.00
  • 75. SWOT
  • 76. SWOT Strengths Weakness • Outsourcing of Core Systems • Network Coverage (earlier)
  • 77. SWOT Opportunities Threats • Bharti Infratel – Cutting • India centric – Major Down cost in Rural area revenues from India • Match Box Strategy – Scale • Falling ARPU & AMOU of Penetration • Intense Competition & • Current Tele-Density – 30.6 is still low among Shortage of Bandwidth developing countries • New Players coming in India • Low Broadband • Uncertain Economic Penetration, Rural conditions Telephoney
  • 79. Airtel – Strategy MANTRA : Focus on Core Competencies and Outsource the rest!
  • 80. 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.
  • 81. 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
  • 82. Operational Strategies. • Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only. • 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.
  • 83. Performance till date • Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened. • It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone. • Has coped well with regulatory changes. • Continues to attract and delight customers.
  • 85. 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 technology does not render it obsolete. • Indian market inspite of being the worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.
  • 87. Road Map – Growth Path VPN & VoIP WiMAX 3G 2G/2.5G
  • 88. Airtel - Strategy MANTRA : Focus on Core Competencies and Outsource the rest!

Notas del editor

  1. 2003 – VaS explosion 0.75 % of revenue removed as ADC, only termination fees halved to 50 paise/min NTP 1999- Convert PCO’s, wherever justified, into Public Teleinfo centres having multimedia capability like ISDN services, remote database access, government and community information systems etc.
  2. The CDMA subscriber base has reached 74.36m in the quarter ending June 2008 as against 68.37m at the end of the previous quarter. The growth in this quarter is 8.76% as against 11.37% for the previous quarter. Reliance remains the largest CDMA mobile operator followed by Tata Teleservices and BSNL with subscriber base of 42.71m, 26.33m and 4.59m respectively. Wimax – This is a disruptive technology facing Indian telecos VoIP – This will put pressure on the Telecos since ISP can offer virtually free internet based mobile phones – Also License fees is 2 Cr against 1650 Cr for telecom operators 4 G – people are already talking about it
  3. They undertake various research activities and monitor the quality of service provided in the Indian telecom industry. They also provide various recommendations to improve the status of telecom operations in India.
  4. MNP – Mobile Number Portability
  5. Growing per capita disposable income increase from Rs.12000 to Rs. 33000 Falling handset prices
  6. Best service provider, good call center serice esp. in local languages, good service even in the remote areas, emphasis on “barriers break when people speak”, new initiatives like google search on airtellive, downloads etc 2. Long term HR strategy, Gallup Great Workplace Award, Both internal development as well as external hiring, development programs with iims etc, Young leader development program for top 18 MBA prog 3. retail, insurance, realty
  7. Pg 9
  8. Bharti comtel - Bharti Comtel Limited, a wholly owned subsidy of Bharti Airtel Limited, [providing front end HR services,] has been recheristened as "BHARTI AIRTEL SERVICES LIMITED”. Bharti Airtel Services will provide recruitment, payroll & performance management support to all Airtel verticals. Satcom Broadband- Ccom to Satcom providing broadband solutions to SMEs Bharti boradband- Comsat ( max india ltd) after merging woth bharti airtel ltd, VSAT and broadband overseas
  9. Pg 8 76 5 of consolidated revenues Census town 1. A minimum population of 5,000 2. At least 75% of male working population engaged in non-agricultural pursuits 3. A density of population of at least 400 persons per sq. km.
  10. Pg 8 Reduction in ADC
  11. High debt to equity means the co has been aggressive in financing its growth ROCE =PBIT/Total Assets RONW= PAT/Net worth
  12. campaign celebrates a person’s inherent need to communicate spontaneously and grab that moment to live it completely.
  13. Airtel recharge available wherever match boxes can be found
  14. "Friendz" pre-paid connection would attract those between 15-19 years of age that had several interesting features. Similarly, the "Ladies Special" plan was to allow more and more women to use mobile phones that had become a necessity today, said Mr. Bindal, adding that the new scheme would give them special discounts. The plan also offers women the option to club the monthly bills with that of their spouses. 60 years of age, Airtel has new post-paid plan, Seniors, where subscribers get discount on one STD number and one local Airtel number. Besides, subscribers of this plan would get special discounts for health check-ups and would have a facility to club bills with that of their children
  15. Cellular Services address the communication needs and staying connected. Hence a necessity There is no substitute that can replace it completely.
  16. What they are doing in retail for last 4 years. What to put in Cash Cow. Bharti Infratel The Company has entered into a joint venture agreement with Vodafone Essar Limited (Vodafone) and Idea Cellular Limited (Idea) to form an independent tower company (“Indus Towers Limited” or “Indus Tower”) to provide passive infrastructure services in 16 circles of India. The Company and Vodafone will hold approximately 42% each in Indus Tower and the balance 16% will be held by Idea. Pursuant to the aforesaid agreement, Bharti Infratel Limited has subscribed 50,000 equity shares of Rs. 10 each in Indus Towers Limited on December 17, 2007 for an aggregate value of Rs. 500 thousand. For this purpose, Bharti Infratel Ventures Limited has been incorporated as a wholly owned subsidiary of Bharti Infratel Ltd. The telecom passive infrastructure will be transferred to Bharti Infratel Ventures for ultimate merger in Indus Towers Limited. The Company’s 61,984,721 mobile customers accounted for a 23.8% of wireless (GSM + CDMA) market share as on March 31, 2008. The revenues from the mobile services for the financial year were Rs. 218,697 mn., a growth of 55% over the revenues in the previous financial year. The mobile services business contributed 80% to the consolidated revenues. Telemedia Services During the year, the Broadband and Telephone Services business was renamed as Telemedia Services in line with the Company’s growing focus on new media solutions and foray into IPTV and DTH businesses. The Company provides broadband (DSL) and telephone services (fixed line) in 15 circles spanning over 94 cities across India. As on March 31, 2008, the Company had 2,283,328 customers (a growth of 22%), of which 34.8% (~795,000) were subscribing to broadband / internet services. The Company’s strategy for Telemedia business is to focus on the cities with high revenue potential, excepting for DTH which will be an all India offering. The product offering in this segment includes supply and installation of fixed-line telephones providing local, national and international long distance voice connectivity and broadband Internet access through DSL. The business also provides value added services such as intelligent network Passive Infrastructure Services The undertaking relating to the entire assets and liabilities of telecom passive infrastructure was transferred from Bharti Airtel Limited to Bharti Infratel Limited pursuant to a scheme of arrangement sanctioned by the Honble High Court of Delhi. Bharti Infratel provides passive infrastructure services on a non-discriminatory basis to all telecom operators in India. Bharti Infratel deploys, owns and manages passive infrastructure on an all India basis. The Company has approximately 52,000 towers as on March 31, 2008, of which approx 30,000 towers will be transferred to Indus Towers Ltd (a Joint Venture between Bharti Infratel, Vodafone and Idea Cellular) for 16 circles.
  17. Telemedia – Airtel Industry % BroadBand - 0.2 4.5 4 Fixed Line 1.2 40 3 Broadband ..HP and Airtel had a deal … As on March 31, 2008, the Company had 2,283,328 customers (a growth of 22%), of which 34.8% (~795,000) were subscribing to broadband / internet services. Broadband subscribers - 4.38 million at the end of June 2008 as compared to 3.87 million at the end of March 2008 (growth rate @ 13.18%) Out of total 4.38 million broadband subscribers, 3.72 million are DSL based; 0.42 million Cable Modem; 0.11 million Ethernet LAN; 0.045 million Fiber; 0.057 million Radio, Leased Line 0.018 million and 0.005 million use other technologies. The key financial results of the Long Distance Services division for the year ended March 31,2008 are presented below. About 25% growth .. Enterprise Services – Corporates--- 49% growth ….