2. Contents
1 Executive Summary............................................................................................................................................................................................4
2 Industry Overview...............................................................................................................................................................................................5
2.1 Nature and Size of the Industry.................................................................................................................................................................5
2.2 Key Growth drivers for the Industry...........................................................................................................................................................7
2.3 Identification of Critical Success Factors (CSF) ......................................................................................................................................8
2.4 Industry Benchmarks...................................................................................................................................................................................9
2.5 PESTEL Analysis...........................................................................................................................................................................................13
2.6 Porter’s Five Forces Analysis.....................................................................................................................................................................19
2.7 Strategic Group Mapping .......................................................................................................................................................................22
2.8 Competitive Landscape..........................................................................................................................................................................23
2.8.1 Competitive Strength Assessment (Normal and Weighted): ......................................................................................................24
2.9 Market Segmentation ..............................................................................................................................................................................27
2.10 Buying Criteria Analysis of the Industry...................................................................................................................................................28
2.11 Key trends and future developments....................................................................................................................................................29
3 Company Overview ........................................................................................................................................................................................31
3.1 Company background............................................................................................................................................................................31
3.2 Timeline with key milestones and their strategic impact ....................................................................................................................32
3.3 Vision, Mission, Goals, and Strategic Themes .......................................................................................................................................33
3.4 Key Product and Service Portfolio..........................................................................................................................................................34
3. 3.5 Core Competencies of the firm..............................................................................................................................................................35
Strategic approach:............................................................................................................................................................................................35
3.6 Business Model of the organization........................................................................................................................................................36
3.7 SWOT Analysis............................................................................................................................................................................................49
4 Future Growth Strategy for the organization................................................................................................................................................51
4.1 Portfolio Analysis........................................................................................................................................................................................51
4.1.1 Based on BCG Matrix........................................................................................................................................................................52
4.2 Re-imagining the organization with the transformed Business Model ..............................................................................................53
4.3 Conclusion.................................................................................................................................................................................................54
4. 1 Executive Summary
The Telecommunication Industry is booming and has immense potential for investment in India. India has witnessed exponential
growth in Telecommunication services especially in the last decade. It is further expected to soar in the next few years. Since the
Indian economy was opened to the private sector in 1990, the industry has matured from initial euphoria, to subsequent despair, and
then hope in recent times in the wake of the move of revenue sharing. Telecommunication sector bears a close relationship with GDP
growth of the country. The Indian market is still in the developing stage and the country can expect to witness a robust rate of growth
as India’s economy expands and continue to grow at a high rate over a next few years.
The major players in Indian Telecommunication Industry are Airtel, Vodafone, Idea, Reliance communication, Tata and BSNL. The
project on Telecommunication industry with focus on Bharti Airtel highlights the important issues that have been in the lime light since
the very long time. The report captures the history and Indian scenario, industry structure, market share of different companies,
important regulatory bodies, analysis of future challenges of telecommunication industry etc. This report also focuses on the strategic
approach by Bharti Airtel to stand strongly in the competitive telecom market. Airtel’s marketing strategies are analyses using various
models like SWOT analysis, BCG Matrix, Ansoff’s matrix, porter’s five forces etc. The outcomes of these models are analysed to find out
the various aspects like companies position and competitors position in the market. The report also analyses the different strategic
options available to the company under the different market condition.
5. 2 Industry Overview
2.1 Nature and Size of the Industry
History and
Evolution of
the industry
Indian telecom sector is more than 165 years old. Telecommunications was first introduced in India in 1851 when the
first operational land lines were laid by the government near Kolkata (then Calcutta), although telephone services
were formally introduced in India much later in 1881.
The Indian telecom sector was entirely under government ownership until 1984, when the private sector was allowed
in telecommunication equipment manufacturing only.
The entire evolution of the telecom industry can be classified into three distinct phases.
Phase I- Pre-Liberalization Era (1980-89)
Phase II- Post Liberalization Era (1990-99)
Phase III- Post 2000
Until the late 90s the Government of India held a monopoly on all types of communications – as a result of the
Telegraph Act of 1885. Government policies have played a key role in shaping the structure and size of the Telecom
industry in India. As a result, the Indian telecom market is one of the most liberalised market in the world with private
participation in almost all of its segments. The New Telecom Policy (NTP-99) provided the much needed impetus to the
growth of this industry and set the trend for liberalisation in the industry.
Key
Consumers of
this industry
2 types of customers:
Individual customers
Businesses
Stage in the
Industry Life
cycle
The telecom industry in India is entering the maturity stage of the industry life cycle.
7. Market size in India:
The total mobile services market revenue in India is expected to touch US$ 37 billion in 2017, registering a CAGR of 5.2
per cent between 2014 and 2017.
India's mobile subscriber base is expected to cross 500 million! Subscribers by the end of FY2015.
The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to
GSMA.
2.2 Key Growth drivers for the Industry
Key Growth drivers Rationale
New Revenue Stream through Next Gen
Services
Focus on Rural
Highly price sensitive market, there has been significant uptake of Value Added Services,
particularly that of entertainment and social networking applications.
The Indian market is very price sensitive and characterized by high volumes and low
margins. Since the launch of 3G, the Government of India has focused on
Increasing broadband connectivity throughout India to provide e-learning, tele-medicine
and government services. Operators are also exploring new business model
Like mobile money, M2M, surveillance, cloud Storage, OTT messaging, authentication
services and mobile advertising.
While voice revenues stagnate, video, data and other new business models will keep on
balancing the revenue streams for operators.
The next wave of growth will come from rural areas and it looks most likely to happen going
by the current trends. Hence, mobile operators are expected to focus more on
programs targeted at improving penetration in rural markets. We may see
resurgence of Rural focused campaigns and first time internet users on mobile may
surprise the industry with data and VAS consumption. Operators will adopt
innovative strategies to reach out to rural population through public/private,
profit/non-profit and organized/unorganized organization networks.
8. Regulatory Support
Advanced Technologies
Data Analytics for specialized customer
services
Transparent policy on license and spectrum, and support for opening of new business
models and segments will be of importance to this. A government
staged/supported
FDI in telecom will revive the sectors uncertain outlook.
The market is likely to move towards adoption of LTE and 4G over the coming year.
Enhanced bandwidth, flexibility, and agility provided by technology adoption
will enable an advanced telecom ecosystem.
As the number of connected devices and transactions multiple, the market will move to
the big data era, where high volume transaction processing, warehousing and
analytical capabilities will matter. Big data analytics will provide immense
opportunities to enhance customer experience, and thus to differentiate in a highly
competitive market.
2.3 Identification of Critical Success Factors (CSF)
Critical Success Factor identified Rationale
CSF 1 Churn Rate The annual percentage rate at which customers stop subscribing to a service
CSF 2 Average Revenue per User in
Telecom
The total revenue generated by user making impact to industry and organization
CSF 3 Call Quality People choose operators over the call quality
CSF 4 R&D Performance Major new services and Quality control mechanism are developed from R&D
9. CSF 5 Rural Market Focus The reach to the end consumers. Very few operators had done it and intense competition.
CSF 6 Network Coverage The network coverage in the rural areas and self-dependency of the network
CSF 5 Product Offerings (VAS) The number and variety of Additional value added service.
CSF 6 Quality of Service Major reason for people to buy services other than call as Data etc.
CSF 4 Proper Speed and Bandwidth With respect to data the speed of data to do essential tasks.
2.4 Industry Benchmarks
Category Indicator
Industry Average of Top 5 Firms or players
serving 75-80% of the market
Market Leader
2011-12 2012-13 2013-14 2014-15
(till Q3)
2011-12 2012-13 2013-14 2014-15
(till Q3)
Industry Level
(National)
Market Size
1342058 1462932 1610274 2020383 416038 453509 499185 626319
Size as % of
GDP Overall
2.1 2.07 1.93 1.94 NA NA NA NA
Activity Ratios
Inventory
turnover
838.48 730.12 645.56 537.4 321 21 11 94
Receivables
turnover
20673.88 23290.84 25498.06 23664.8 41756 44561 46635 58115
Asset 0.296 0.3294 0.30766 0.3511 0.461 0.45575 0.4451 0.38405
11. (P/E Ratio) /
Projected
Annual
Growth in
Earnings per
Share
Valuation Ratios or
Price Ratios
Price to Cash
Flow
0.0008 0.0676 0.880 0.0371 0.0005 0.0802 0.0641 0.0890
Price to Book
(P/B)
1.104 1.016 1.134 1.088 2.6 2.05 1.9 2.01
Price to Sales 0.0006 0.0005 0.0007 0.0005 0.0008 0.0006 0.0003 0.0007
Dividend
Yield
6.73 11.42 17.009 29.274 0 10.21 11.30 14.82
Dividend Pay-
out Ratio
5.0 5.6 8 16.6 20 20 36 77
Enterprise
value (EV is
market
capitalisation
plus debt
minus cash)/
EBITDA
7178971 5641004 6583556 5052775 8709421 7200610 7147652 6201392
12. Staff Cost/
Salary as
percentage
of Sales
NA NA NA NA 1,391.50 1,511.30 1,648.10 1,691.50
Operating
Expenses as
percentage
of Sales
0.43 0.47 0.5 0.49 0.67 0.70 0.67 0.65
Competitive Ratios
Depreciation
as
percentage
of Sales
7.9% 34.1% 23.7% 1.9% 0.14 0.15 0.14 0.14
Fixed Assets
to Sales
Revenue
17.9% 19.5% 18.9% 18.4% 14.2% 15.1% 14.5% 13.6%
Ads As % of
Sales
4.9% 4.95% 5.9% 5.4% 4.2% 4.2% 3.9% 4%
13. 2.5 PESTEL Analysis
Category Description Key factors for analysis Rationale
Political National Telecom
Policy 1994
New Telecom
Policy 1999
Attractive FDI and stimulating domestic
investment
Universal availability of basic telecom
services to all villages
Private sector participation
Strengthening of Regulator.
National long distance services opened
to private operators.
International Long Distance Services
opened to private sectors.
Private telecom operators licensed on a
revenue sharing basis, plus a one-time
entry fee.
Resolution of problems of existing
operators envisaged.
Direct interconnectivity and sharing of
network with other telecom operators
improving India's competitiveness in global
market and promoting exports
ensuring India's emergence as major
manufacturing / export base of telecom
equipment
restructuring the departmental telecom services
to that of a public sector corporation to
separate the licensing and policy functions of
the Government from that of being an operator
Improve the investment climate
restore confidence of operators
14. Telecom
Regulatory
Authority of India
(TRAI)
Conflicts
within the service area was permitted.
Spectrum Management made
transparent and more efficient.
Department of Telecommunication
Services (DTS) corporatised in 2000.
Regulate telecom services
Fixation/revision of tariffs for telecom
services
Interconnection and quality of service
Mobile number portability
Internal political conflict
The entry of private service providers brought
with it the inevitable need for independent
regulation.
provides a fair and transparent policy
environment
promotes a level playing field and facilitates fair
competition
Conflicts hampers investing environment as
government stability is not very strong
Economic Global revenues in
2008 were USD 4
trillion, expected to
grow at a steep
11% p.a. CAGR
over the next 2
years.
India’s telecom
service revenue
The Indian Telecom industry has been
playing an important role in the world
economy
Increase in disposable incomes.
Greater network coverage.
Greater affordability.
Falling mobile phone prices.
The Indian Telecom Industry manufacturing
contributes about two-thirds of the total exports
of the country.
15. was ~USD 30 billion
in 2008, and Ernst
and Young analysts
believe it is
projected to almost
double to ~USD 55
billion by 2012. GDP
contribution – 2%.
Output per annum
- 136,833 crores per
annum &
Increasing 20% for
every month.
Falling call charges.
Social Change in lifestyle
Mobile Gramin
Sanchar Sewak
Scheme (GSS)
Mobile Public Call
Office (PCO)
service is provided
at the doorstep of
villagers.
Several career
paths lead to the
Indian Telecom
Industry.
The Certificate
Joint ventures in the entertainment
sector to add more services.
The rural Indian consumer managed to
remain an attractive proposition,
especially in the demand for consumer
goods and telecom services
Fast-changing lifestyles are forcing telecom
companies to enlarge the breadth and depth
of their services.
For instance, companies now offer a basic fiber-
optic service which includes digital television,
voice and high-speed internet services.
The telecom sector offers a variety of career
options where there is room for everyone a
degree holder or a diploma holder, a candidate
with a part-time certification course or one with
a full-time degree.
3 lakh PCOs are providing community access in
the rural areas.
16. Courses for
employment in the
industry are:
Certificate in
Telecom
Engineering.
Certificate in
Information
Technology.
Certificate in
Computer Science.
Certificate in
Management
Information
Systems.
Certificate in
Computer
Forensics.
Technological Total spending on
Research &
Development
Global system for
mobile
communication
Focus of technological efforts
Productivity improvement
17. (Gsm)
Code division
multiple access
(Cdma)
Wireless local loop
(WLL)
3G Technology
4G Technology
Environmental ISO 14004:2004
provides guidelines
on the elements of
an environmental
management
system and its
implementation.
The strong growth of the telecom
industry, and cooperating more closely
with telecom equipment manufacturers.
International regulations on
environmental protection, especially
those for telecom operations and
manufacturing, are widely recognized
and followed.
increased equipment obsolescence have
caused a dramatic rise in the amount of
electronic waste worldwide.
Operators are paying increasing attention to
their environmental performance
The process includes choosing the proper
products and networking solutions to reduce
negative impact on the environment.
Legal Indian Legal
framework with
respect to telecom
infrastructure is
made up of five
main acts:
The Indian
Telecommunications falls under the
legislative competence of the Union and
not the States.
In India Legal framework, covering
telecom sector include various services
like internet, radio paging, voice mail, V
sat communications, ecommerce,
the Legal framework governing
Telecommunication Sector is within the control
of the Union Government and the Parliament.
In the late 1970s and early 1980s protests against
poor service by subscribers, politicians,
industrialists, and business leaders coincided
with global and national pressure for
liberalization. As a result, a parliamentary
18. Telegraph Act 1885.
The Wireless
Telegraphy Act
1933.
The Telegraph Wires
(Unlawful
Possession)
Act1950.
The Cable
Television Network
(Regulation)
Act1996.
The genesis of the
Telecommunication
Regulatory
Authority of India
(TRAI) lies in the
bidding process for
the grant of cellular
licenses.
According to the
TRAI act amended
in 2000, the
functions of the
original TRAI have
now been divided
broadcasting services etc.
Under these laws, posts and
telecommunications were combined in
one P&T department run by the Ministry
of Communications.
First major dispute, entered into by TRAI,
was between itself and The Central
Government.
The question of grant or amendment of a
license by the Central Government
acting in its capacity as the licensor falls
outside the jurisdiction of the powers of
TRAI.
The Recommendatory and Regulatory
functions are vested with the TRAI while
dispute settlement functions are handled
by the Appellate Tribunal
committee was established in 1981, which
recommended numerous structural and service
improvements.
India continues to be one of the fastest growing
telecom markets in the world. Reforms
introduced by successive Indian governments
over the last decade have dramatically
changed the nature of telecommunications in
the country. The sector ranks fifth in the world,
with over 103.2 million telephone subscriptions
by 2005-end.
19. between two
separate bodies.
The Telecom
Regulatory
Authority of India
(TRAI).
The Telecom
Disputes Settlement
and Appellate
Tribunal.
2.6 Porter’s Five Forces Analysis
Porter’s Five Forces Description Key factors for analysis Rationale
Buyer Power 2 categories of
buyers:
(i) Individual
(ii) Enterprise
Custome
rs
Product differentiation
Buyer switching cost
Bargaining power
Price sensitivity
Cost of product relative to total cost
High
Low
High
High
High
Supplier Power Just a few suppliers
in this sector
The supplier's bargaining power
Product differentiation.
Competition between suppliers.
High
Low
High
20. Size and concentration of suppliers
relative to products.
Cost of switching suppliers
Low
Low
Existing Competition There are around 6-
7 players in each
region leading to
intense
competition.
Infrastructure
equipment cost is
less compared to
few years ago
Exit Barrier
Market has more than 15 players
Airtel, Vodafone, Idea, RCom capture
more than 75%.
Average revenue per user (ARPU) is
Government has eased the rules
regarding inter circle and intra circle
mergers. This has led to slew of M&A in
recent past
Competition in this sector has brought
down tariffs.
High
Around Rs.110- Rs.120
Threat to new
entrants
Cost of active
equipment is 40%
of telecom
operator's total
capex.
Attractiveness to new entrant
Declining ARPU:
The market is maturing and new class
of consumers are mostly rural and
ARPU is well below $5($3-$3.5).
Managing such low levels of ARPU is a
challenge
Access to optical fibre network:
It is fairly difficult and cost- ineffective
for new entrants to lay down optical
High
Low
Low
21. fibre connecting remote places as
well.
Government and legal barriers:
Private operators will have to enter
into an arrangement with fixed-service
providers within a circle for traffic
between long-distance and short-
distance charging centres
Private operators to pay one-time
entry fee of Rs.25 million plus a
Financial Bank Guarantee (FBG) of
Rs.200 million
100% Foreign Direct Investment (FDI) is
allowed through automatic route for
manufacturing of telecom equipment
High
High
Threat to substitutes Hardly any threat
of substitute’s as
there is no
substitute available
in the market.
Buyer's propensity to substitute
Internet subscriber base increasing at
18%. This will open up India's domestic
voice market to all operators which
have an unified access service.
Relative prices
Internet telephony is eating into
the revenue of GSM/CDMA
performance of substitutes
Voice quality is an issue.
Internet voice services also currently
limited due to regulatory road blocks
High
Low
23. 2.8 Competitive Landscape
Value Proposition:
Customer Care and service assurance:
Churn reduction
Proactive monitoring and diagnostics
Network planning and management
Demand forecast
Capacity analysis
Capital efficiency
Engineering and construction
Optimized design
Fibre records management
Network Element management
27. Handling of
complaints
0.08 4 0.32 3 0.24 2 0.16
Total 1 3.04 2.28
2.9 Market Segmentation
Key Products and/or Services Regions
(i) Voice Plans
(ii) SMS Plans
(iii) Data Plans
(iv) Digital TV
(v) Broadband
(vi)Mobile Commerce
(vii) Enterprise business solutions
(viii) Cloud services
(ix) Entertainment
Pan India
28. 2.10 Buying Criteria Analysis of the Industry
Parameter Details End-user Segments Significance Attached (Low,
Medium, High)
Price of products
It is the price the customer
pays for the particular product
Individual Customers
Corporate
High
High
Product validity
It is the duration over which
the product is valid for the
customer
Individual Customers
Corporate
High
High
Type of product
Type of products/services
provided by the industry
Individual Customers
Corporate
High
High
Customer service time
Time taken to compete
customer request Individual Customers
Corporate
Medium
High
29. Network Coverage
Coverage area of the network
Individual Customers
Corporate
High
Medium
Impact of buying criteria on consumer choices
Listing of key buying criteria for different consumer segments
The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the current market
landscape. The magnitude of the impact has been categorized as described below:
Low - Negligible or no impact on the market landscape
Medium - Medium-level impact on the market
High - Very high impact with radical influence on the growth of the market
2.11 Key trends and future developments
Key Trend Impact on Industry (Low, Medium, High) Certainty of Impact (Low probability,
medium probability, high probability)
Integration with content service providers Being connected continues to become
cheaper. Connectivity is capturing a
smaller proportion of the information
value chain while content, service, and
High Probability
30. product deliverers capture more. By
2020, it is likely that one or more major
telecom companies will be acquired by
a content company.
Internet of Things The next major trend that will impact is
the explosion of connected devices. This
will add billions of new connected data
sources globally by 2020. The upswing of
all of these devices will be an
astronomical growth in data volumes; we
will quickly push through exabyte
volumes and enter the world of
zettabytes per year.
Medium Probability
Modify Growth of mobile connectivity is far
outpacing fixed line connectivity. This
makes sense, as most growth is occurring
in the developing world and amongst
poorer populations. For these people,
mobile are cheaper, convenient, and
more useful, even when landline
connectivity is an option.
High Probability
Security As custodians of the networks, carriers
play a pivotal role in fighting the new
threats that are emerging. Customers will
begin to expect, and then demand,
more proactive protection from the
entire internet value chain, and carriers
will be expected to support these
expectations with a range of technical
and operational innovations. The desire
for greater security may be a boon for
carriers, if they embrace the need.
Medium Probability
31. Analysis of Trends with High Impact and High Certainty to be carried out
Impact on strategies or business modMobilityels to be highlighted
3 Company Overview
3.1 Company background
Bharti Airtel Limited is an Indian global telecommunications services company headquartered in New Delhi, India. It operates in 20
countries across South Asia, Africa, and the Channel Islands. Airtel provides GSM, 3G and 4G LTE mobile services, fixed line
broadband and voice services depending upon the country of operation. It is the largest mobile network operator in India and the
third largest in the world with 325 million subscribers
Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and
finance and building the 'minutes factory' model of low cost and high volumes. The strategy has since been adopted by several
operators.
Airtel's equipment is provided and maintained by Ericsson and Nokia Solutions and Networks whereas IT support is provided by IBM.
The transmission towers are maintained by subsidiaries and joint venture companies of Bharti including Bharti Infratel and Indus
Towers in India.
Airtel business divisions:
mobile service, telemedia service, airtel business, digital TV services
33. 3.3 Vision, Mission, Goals, and Strategic Themes
Mission: Hunger to win customers for life.
Vision: Our vision is to enrich the lives of our customers. Our obsession is to win customers for life through an
exceptional experience.
Strategic Goals:
Goal 1: Provide the information and tools to maximize U.S. competitiveness and enable economic growth for American industries,
workers, and consumers
General Goal/Objective 1.1: Enhance economic growth for all Americans by developing partnerships with private sector and
nongovernmental organizations.
General Goal/Objective 1.2: Advance responsible economic growth and trade while protecting American security.
General Goal/Objective 1.3: Enhance the supply of key economic and demographic data to support effective decision-making of
policymakers, businesses, and the American public.
Goal 2:Foster science and technological leadership by protecting intellectual property, enhancing technical standards, and
advancing measurement science
General Goal/Objective 2.1: Develop tools and capabilities that improve the productivity, quality, dissemination, and efficiency of
research.
General Goal/Objective 2.2: Protect intellectual property and improve the patent and trademark system.
General Goal/Objective 2.3: Advance the development of global e-commerce and enhanced telecommunications and
information services.
Goal 3:Observe, protect, and manage the Earth’s resources to promote environmental stewardship
34. General Goal/Objective 3.1: Advance understanding and predict changes in the Earth’s environment to meet America’s
economic, social, and environmental needs.
General Goal/Objective 3.2: Enhance the conservation and management of coastal and marine resources to meet America’s
economic, social, and environmental needs.
3.4 Key Product and Service Portfolio
Voice service
Bharti Airtel became the first private fixed-line service provider in India. It is now promoted under the Airtel brand. Recently, the
Government opened the fixed-line industry to unlimited competition. Airtel has subsequently started providing fixed- line services in
the four circles of Delhi, Haryana, Madhya Pradesh, Karnataka, Tamil Nadu & UP (West)
These circles were strategically selected so as to provide synergies with Airtel’s long distance network and Airtel’s extensive mobile
network.
Mobile service
Airtel’s mobile footprint extends across the country in 21 telecom circles. It’s service standards compare with the very best in the
world. In fact, that’s how Bharti has managed to win the trust of millions of customers and makes it one of the top 5 operators in the
world, in terms of service and subscriber base. The company has several Firsts to its credit: The First to launch full roaming service on
pre-paid in the country. The First to launch 32K SIM cards. The First in Asia to deploy the multi band feature in a wireless network for
efficient usage of spectrum. The First to deploy Voice Quality Enhancers to improve voice quality and acoustics. The First telecom
company in the world to receive the ISO 9001:2000 certification from British Standards Institute
Satellite service
Satellite Services bring you the benefits of access in remote locations. Airtel Enterprise Services is a leading provider of broadband
IP satellite services and DAMA/PAMA services in India. Their solutions support audio, video and voice applications on demand.
35. Managed data and internet services
Managed Data & Internet services make our customers future proof. Managed Data & Internet Services include : MPLS ATM FR
Internet IPLC
Managed e-Business Services
Managed e-Business Services Airtel Enterprise Services, offers an internationally benchmarked, carrier class hosting, storage and
business continuity services. A range of services that help to keep your business running the way customers want- 24x7.Managed e-
Business Services include : Dedicated and Shared BCRS Services
3.5 Core Competencies of the firm
Strategic approach:
VISION Our vision is to enrich the lives of our customers. Our focus is to
win customers for life by offering an exceptional experience.
OBJECTIVES Grow revenue
Grow market share
Grow margins
VALUES Alive and optimistic
Inclusive culture
36. Strategy to win consumers:
1 Win through go-to-market
excellence
Quality customer additions
Revenue market share profile
Revenue market share profile
2 Win with data and digital
services
Prime spectrum to yield data growth
Data and digital revenue growth with industry-first initiatives
3G/4G network rollout
3 Win with valuable customers Post-paid and sticky user base
Company owned retail stores
Enterprise and DTH solutions through service excellence
4 Win with a war on waste Cost efficiencies
Subscriber acquisition and retention costs and reduce churn
5 Win with people High performance culture
Employee centricity
3.6 Business Model of the organization
Key Partners Who are our Key
Partners?
Who are our key
suppliers?
Which Key
Resources are we
acquiring from
partners?
Which Key
Ericsson:
Ericsson delivers full-scope managed services including network design, optimization,
operation and field maintenance. Ericsson manages Bharti Airtel’s GSM and WiMAX
simultaneously which simplifies operations and reduces opex.
Bharti Airtel has also entered into a deal with Ericsson to provide 3G and 4G networks
across India.
Nokia Siemens:
Airtel has also signed USD900mn deal with Nokia Siemens to roll out its 3G network in 5
new telecom circles and network expansion in 3 existing telecom circles. Under the 4-
37. Activities do
partners
perform?
year contract, the company will provide its radio elements and services expertise to
power Bharti Airtel’s infrastructure
China Mobile:
Airtel is also collaborating with China Mobile to set up a 4G LTE ecosystem and develop
mobile technology standards.
Subsidiaries:
The transmission towers are maintained by subsidiaries and joint venture companies of
Bharti including Bharti Infratel and Indus Towers in India.
IBM:
IBM provides global expertise to manage large infrastructure operations and application
management, coupled with the new IT (information technology) capabilities.
CISCO:
To focus on B2B segment, Airtel has collaborated with CISCO to provide services to small
and medium enterprises.
Vodafone and Idea:
To expand coverage into rural regions, Bharti Airtel is sharing passive infrastructure
services with Vodafone (42 percent ownership) and Idea (16 percent ownership)
Key
Activities
What Key
Activities do our
Value
Propositions
require?
Our Distribution
Channels?
Customer
Relationships?
Revenue
streams?
Categories
Production
Problem Solving
Platform/Network
39. CUSTOMER RELATIONSHIP MANAGEMENT – GIS
In today's competitive telecommunications market, for AIRTEL , customer service is the number one
differentiator for companies. Customer relationship management (CRM) applications improve the
relationship between the company and its customers. Timely service provisioning, response to customer
queries, and reporting on network performance are aspects of CRM. With GIS, call center operators can
access all the information on a customer and the associated network based on location. Databases
containing information on outside plant infrastructure, signal quality, and equipment can be integrated
using GIS and made available using a corporate Intranet.
In CRM, Tier 1 handling means the customer's issue is resolved with the initial call. Tier 2 calls require
initiating a trouble-ticket and obtaining additional information. Carriers who have successfully
implemented GIS support for CRM achieve higher Tier 1 handling and customer service is performed more
quickly and economically. With CRM contacts at an all-time high, improving CRM operations can make a
big impact on the bottomline of a carrier. In the wireless sector, "churn" refers to the rate that customers
jump from one service provider to another. For many carriers, customer churn is the single largest cost
factor. GIS improves the speed and quality of contact handling, augments customer satisfaction, and
reduces churn.
Providing Customer Value
There is 0.0026% of pending customer complaints as on March 31, 2015. Such complaints will be carried forward to
FY 2015-16. Over 70% of the 174 total legal/consumer cases received in FY 2014-15 are at various stages of
40. resolution/ closure, as on March 31, 2015.
During FY 2014-15, four (4) complaints were registered with Advertisements Standards Council of India (ASAI) and all
of them were resolved successfully.
Bharti Airtel has been transparent in communicating the mandatory information regarding enrolment and
deactivation, tariff, usage, contact and grievance information.
Enriching Customer Interaction
Airtel endeavours to engage with its customers to enhance their experience It conducts various consumer
education workshops and also engages with customer advocacy groups. The Company took various other
initiatives in this regard, which include:
1) Airtel introduced Mobile Broadband Charging (MBC) to make them aware of their data consumption in real-time,
thereby preventing bill shocks. On completion of the assigned quota, customers are diverted to an interstitial page
where they can upgrade and downgrade their quota for continued usage. This being a new initiative is under
process of rollout in different circles across the country and is to be completed in coming few months.
2) Airtel’s ‘Self-care’ service provides customers the option to manage their accounts through self-care channels –
IVR, USSD, Airtel app and website. Customers can check tariff details, balance information, bill details, payment
details, data usage and make payments, among others.
Bharti Cellular reduced its churn from 3 percent to 2 percent with immense positive impact on its bottom line after
deploying the churn management solution SAS. Today, they can predict with 80 percent confidence, which
customer will churn. Internationally they have reached accuracy levels of 90-95 percent. But customer variables
keep changing. Hence the solution has to be continuously fine-tuned to improve accuracy. SAS offers a total end-
41. to-end customer retention solution, which supports the whole process of managing churn—right from gathering and
warehousing data to predictive churn modeling to reporting and distributing actionable results to decision makers.
The solution enables an operator to gain a better understanding of the variables that influence customer churn. The
solution predicts a customer’s likelihood of cancellation or switchover by scoring them on a scale of 0 to 1. If a
customer scores 0.73 it means there’s a 73 percent chance of his churning. The lower the score, the more content
the customer. Once the scores are known, it is easy to figure out which customers are likely to switch.
The solution provides the telecom company with a sliced and diced view of the customer base, thereby
empowering it to treat each customer differently as per needs. The customer attributes typically considered in a
churn analysis can be broadly categorised into customer demographics, contractual data, technical quality data,
billing and usage data and events-type data. But the most commonly used historic variables include the time a
customer spends on air, the number of calls he makes and the revenue generated from that customer.
The predictive information becomes crucial as it gives the service provider a window to proactively fix the glitches in
service and contain churn, thereby improving bottom lines. The solution also helps identify cross-sell and up-sell
opportunities, which can have a further positive impact on the operator’s bottom line. Once they have identified
the customers who are likely to churn they can take immediate measures to retain at least 85 percent of them.
POSTPAID CHURN SOLUTIONS THAT WORK
Optimising subscriber acquisition costs
Managing retention costs healthily
How do you keep your customers with an effective pricing dimension?
Matching the right customer profile with the right marketing bundle creatively
Learning points from past campaigns
EFFECTIVE CHURN MANAGEMENT AND PERFORMANCE MEASUREMENT FRAMEWORK
42. Exploiting historical churn data and optimising the churn prediction
Structuring a strong churn management framework
Measuring the effectiveness of your churn management strategy in terms of:
Methodology
Results
MINIMISING CHURN & BUILDING CUSTOMER PROFITABILITY
POSTPAID CHURN SOLUTIONS THAT WORK
Optimising subscriber acquisition costs
Managing retention costs healthily
How do you keep your customers with an effective pricing dimension?
Matching the right customer profile with the right marketing bundle creatively
Learning points from past campaigns
COMPREHENSIVE APPROACH TO CHURN CONTROL IN HIGH GROWTH AND COMPETITIVE MARKETS
Acquiring quality customers
Using new customer induction and expectation management as a retention tool
Managing monthly payment cycles to minimise defaults
Engaging channels to expand your reach for your retention programs
Customer retention
Revenue stimulation
Direct customer communication
All these enhancements successfully changed the customer retention paradigm from a reactive to a proactive one
resulting in a continuous decline in postpaid churn over last year leading to an all time low churn.
43. For Airtel , Analytical customer retention solutions would help identify the high-, mid- and low-value
customers and the valuable ones who are most likely to cancel services, and their reasons for doing so.
They would also help in better campaign targeting and a more focused strategy.The multidimensional
data base (MDDB) that Airtel has, let internal sales and marketing groups research customer information
from their desktops .
CUSTOMER ACQUISITION
Steps:
Identification of potential customers
Influence the target customer buying behavior
Customer acquisition
STRATEGIES:
Introduction of a new tariff plan with different slots like leisure lifestyle, executive and premium for postpaid
customers. AirTel also offers different tariff plans to different segments like students, professionals, etc.
Airtel has also implemented an e-CRM platform to create a central database of customer information, to enable
pan-India access and service delivery.
Customer
Segments
Customer segment
On the basis of Geographic variables:-
Regionwise:
East Region (West Bengal, Assam, Arunachal Pradesh etc.)
44. West Region (Gujarat, Rajasthan, Maharashtra etc.)
South Region (Andhra Pradesh, Karnataka, Kerala etc.)
North Region (Punjab, Haryana, Himachal Pradesh etc.)
Central Region (Madhya Pradesh, Chhattisgarh, Jharkhand etc.)
Density of area:
Urban (Cities Such As Mumbai, Delhi, Pune, Jaipur etc.)
Semi-urban (Nasik, Aurangabad, Ahemadnagar etc.)
Rural (Baramati, Khed, Saswad etc.)
On the basis Demographic variables:-
Age:
1) From age group 18< 35
As most of the people start using a mobile from the age of 18, most of them will be students and remaining
will be young professionals working in the industry. So they need SMS/DATA plans for chatting and they
also need cheap calling rates. We may provide the FRINDZ card to them.
2) 35 and above
As mostof these groupwill be workingso this group needs the calling and DATA facility at a reasonable rate.
This Group may continue using the general plan.
45. Income
PREPAID &POSTPAID
Generally the mobile service providers plan their marketing strategies according to the prepaid market
and postpaid market. So it basically depends upon the income of the consumer that whether he selects
the prepaid or postpaid. Generally the consumers with low income choose prepaid and consumers with
high income choose postpaid.
On the basis of Behavioral variables
Brand Loyalty
We can also segment it on the basis of the loyal customers and non-loyal customers of the brand. We can
provide various schemes and offers to the loyal customers to retain him with our product.
Targeting ofAirtel
Airtel has targeted the premium and upper middle class. The motto behind this is only those segments
should be targeted who value time and have the paying capacity. During the introduction stage there
was a huge pressure to get consumers across to hook up with their brand, because getting them to Airtel
by their earlier brand and switching their brand loyalty was too tough. Airtel marketers have been
concentrating totally on the business executive class but now that the basic viable volumes has been built
up and prices have declined to a certain extent they are planning to venture further field.
46. Key
Resources
What Key
Resources do our
Value
Propositions
require?
Our Distribution
Channels?
Customer
Relationships?
Revenue
Streams?
Distribution Channel
Airtel has a wide and effective distribution channel structure spread across India. The channel
structure is simple to ensure that entire flow happens efficiently and effectively
The above structure can be scaled down as follows:
Territory Manager:
The distributors include one who handles 1) Provisioning 2) Documents 3) Operation
back up 4) Field sales executives.
47. Airtel has adopted a Second and Third Degree Distribution network to avoid channel
conflicts arising due to the competing goals of the channel members, different
perceptions of reality, clashes over domains i.e. intra and multi-channel competition, roles
un-clarity, expectations divergence and relationship disharmony.
Responsibilities and Functions of the dealers:
Airtel believes in Customer Loyalty and thus Airtel expects that their dealers apart from
selling paint products should perform the following functions for better customer relation’s
management
Sales promotion through regular promotional schemes, road shows, campaigns
etc. the expenses incurred by the dealers is shared by the company only if these
activities are for promotion of the company and not of the dealer
Recruitment- done under the guidance of certain Airtel officials
48. Training and development of manpower with company assistance
The dealer should be in regular touch with the customer, keep taking his feedback
and ensure maximum customer satisfaction.
Channels Through which
Channels do our
Customer
Segments want
to be reached?
How are we
reaching them
now?
How are our
Channels
integrated?
Which ones work
best?
Which ones are
most cost-
efficient?
How are we
integrating them
with customer
routines?
Channel phases
1. Awareness
How do we raise awareness about our company’s products and services?
2. Evaluation
How do we help customers evaluate our organization’s Value Proposition?
3. Purchase
How do we allow customers to purchase specific products and services?
4. Delivery
How do we deliver a Value Proposition to customers?
5. After sales
How do we provide post-purchase customer support
Cost
Structure
What are the
most important
costs inherent in
our business
model?
Which Key
Resources are
most expensive?
Is your business more
Cost Driven (leanest cost structure, low price value proposition, maximum automation,
extensive outsourcing)
Value Driven (focused on value creation, premium value proposition)
Sample characteristics
Fixed Costs (salaries, rents, utilities)
Variable costs
49. Which Key
Activities are
most expensive?
Economies of scale
Economies of scope
Revenue
Streams
For what value
are our
customers really
willing to pay?
For what do they
currently pay?
How are they
currently paying?
How would they
prefer to pay?
How much does
each Revenue
Stream
contribute to
overall revenues?
Types
Asset sale
Usage fee
Subscription Fees
Lending/Renting/Leasing
Licensing
Brokerage fees
Advertising
Fixed pricing
List Price
Product feature dependent
Customer segment
dependent
Volume dependent
Dynamic pricing
Negotiation (bargaining)
Yield Management
Real-time-Market
3.7 SWOT Analysis
Strengths:
Bharti Airtel has a customer base of 351 million customers making it the largest telecom operator in India.
It provides variety of services and offerings such as broadband and telephone services.
50. Alliances with foreign firms such as Sing Tel (2013) and Qatar Foundation Endowment (2014), the business has access to
knowledge and technology related to telecommunication industry from around the world.
It has a strong global as well as local presence. It has a strong rural penetration with over 27% market share.(September
2009)
With over 20+ years of experience in telecom sector, its brand equity is second to none.
Weakness:
Bharti Airtel has outsourced some of its operations (it doesn’t own a tower of its own) to reduce the overall cost. This has led
to higher dependency on other companies.
With its acquisitions turning out to bad investment, and credit being high and margins being low, Airtel group is under high
debt.
Opportunities:
With the advent of Mobile Number Portability, tying up with smart phone companies has provided a boost to increase the
customer base of Airtel
VAS (Value Added services) is going to future of the telecommunication industry & by specializing itself in this vertical Airtel
can differentiate itself in highly competitive market. With introduction of unique services, Airtel can avail higher margins.
Although it is currently providing 3G & 4G services, but these services are limited to specific geographical locations.
Expansion of these services to most of its regions will help the company get more margins and customers.
The rural market is still growing and Airtel can tap into the rural market with its strong infrastructure and distribution networks.
Threats:
Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move
into the Indian market.
With the auction of spectrum & change in the government policies on a regular basis, it is a potential threat to the stability &
existence of this industry thereby affecting the players.
Price war in the home market and declining margins due to this is adversely affecting the overall business of the group.
MNP gives the customer independence to change the service provider while retaining the number and as Airtel charges
are premium over other service providers, it can see slump in subscriber base
51. 4 Future Growth Strategy for the organization
4.1 Portfolio Analysis
SERVICES Products offered India and South Asia Africa Growth rate
FY 13-14 FY 14-15 FY 13-14 FY 14-15 India and
South Asia
Africa
Mobile Services Voice and data
categories
484228 535372 4434 4709 11% 6%
Telemedia Broadband, IPTV, MPLS,
internet leased line
services
39352 44325 13%
Digital TV Integration of television,
mobile and computer
20771 24759 19%
Airtel Business Voice, data, video,
network integration,
data centres, enterprise
mobility
63361 67130 6%
Tower Infrastructure Infrastructure solution
providers with over 83000
towers
51087 54282 6%
52. AIRTEL PORTFOLIO ANALYSIS
4.1.1 Based on BCG Matrix
Stars Question Mark
Digital TV Airtel Business
Mobile Services Tower Infrastructure
Cash Cows Dogs
Tele Media Services
Mobile services are stars, as it is operating in 22-telecom circles of India and is the largest mobile service provider in the
country, based on the number of customers & (22.7 %) market share.
Tele-media services – fixed-line services are dogs since there is a phenomenal decrease in the services in the industry as a
whole.
Digital TV services are stars, Airtel have 18% market share in the DTH services second to only Dish TV & have head on
competition with TATA sky.
Growth Rate Market Share
Mobile Services 11% 22.7%
Telemedia 13% 34.3%
Digital TV 19% 18%
Airtel Business 6% 45.2%
Tower Infrastructure 6% 37%
Market Share
Growth Rate
53. 4.2 Re-imagining the organization with the transformed Business Model
Intrinsic strengths to deliver value
Airtel is building on our core strengths to accelerate our core business growth and seek new vistas of opportunities to deliver on our
stakeholder commitments and thrive in the digital era.
Airtel positioned in key growth markets
Over 310 Mn people repose their trust in our brand everyday across Asia and Africa. These continents have vast potential with
huge aspirational population, growing economic strength and demographic advantage. India, one of Asia’s major economies,
has 73% mobile penetration while that of Africa is 63%, leaving significant headroom for growth. Sri Lanka and Bangladesh also
have considerable opportunities for market penetration.
Leadership in India: In 17 circles of the total 22 circles (rank 1 or 2) in India with average RMS of 36.4% in these circles
Leadership in Africa: Through organic as Airtel as in-country acquisitions Airtel is #1 or #2 in 14 markets in Africa
A global talent pool
Our people strengthen the differentiation of our brand. They are curious to learn, drive innovation and willing to seek new
opportunities to anticipate and lead change.
People strength: 19,564
In India and South Asia: 5,130
Large customer base with segmented focus
Airtel is catering to a diverse customer cross-section across geographies, providing a range of solutions and emerging as an end-
to-end global telecom company.
226 Mn+ Customers in India (mobile only)
76.3 Mn+ Customers in Africa
8.6 Mn+< Customers in South Asia (Sri Lanka and Bangladesh)
Large residual opportunity with bulk investments in place
Airtel is positioned to capture future growth through strong spectrum position, wide network and brand recall. India, Africa and
South Asia (Sri Lanka and Bangladesh) are witnessing one of the fastest growth rates in the data segment globally.
16.1%:- Total spectrum market share, 40% 900 MHz spectrum market share amongst private players - wide spectrum presence
54. 76.3 Mn+ Optical fibre network among private players
8.6 Mn+ Yield/MHz compare to cost/MHz - Industry leading
Financial acumen and operating efficiencies
During the year, Airtel met our long-term funding requirements through a strategic mix of debt and equity. Airtel have received an
investment commitment of up to USD 2.5 Bn from China Development Bank and Industrial and Commercial Bank of China,
enabling us to fulfil our digital commitments in the regions of our presence. Airtel is also achieving high operating efficiencies and
strengthening our war on waste by developing a prudent cost structure across geographies.
Revenue growth
12% India and South Asia revenue growth in FY 2014-15
6% African revenue growth in FY 2014-15 (on a constant currency basis)
4.3 Conclusion
The future growth prospects of Airtel hold that there are multiple opportunities in the Digital Tv and Mobile Services portfolio. This is
primarily due to the fact that they have had a high growth rate in the past couple of years. The portfolio of tower infrastructure can
show promising growth if it is able to leverage technology and implement 4G and 5G services within the country and overseas on
a wide scale. Airtel can also look at integrating its services with technology and aligning itself with the internet of things. Larger
penetration into markets within the country and in Africa can also have a major impact on Airtel’s future growth prospects.
Future outlook for Airtel will depend on following aspects:
1) Ability to sustain the fierce competitive environment with entry of new players.
2) Success on 3G services front.
3) Overseas expansion
4) Assistance in the form of diversification into new businesses under the Bharti Group.
As per our analysis of the company we can say that recent sharp correction in Bharti Airtel to be excessive and continue to view
the company positively, as we believe its mid- to long-term prospects remain intact.