BY GROUP 1

Strategy Analysis of Bharti Airtel

K I R A N J A G TA P J A I S H R E E V I S H WA N AT H A N CHANDAN LUTHRA PA L L AV I M O H A D I K A R NAMIT JAIN

Telecom sector: Brief Timeline

National Telecom Policy (NTP) is formulated

TRAI is established

NTP-1999, high cost fixed license fee to low cost revenue sharing

Communication BSNL established by Convergence Bill introduced DoT

ILD opened to competition CDMA introduced

Calling Party pays Unified Access Licensing Regime

FDI limit increased from 49 to 74 percent

100 million mobile subscribers Fastest 500 million growing subscriber market

3G licenses auctioned 650 million subscriber

MNP introduced

1994
0.8 % Teledensity 8 mn Total Phone, 2.5 mn waiting

1997

1999

2000

2001

2002

2003

2005

2006

2009

2010

2011

Source: TRAI

Indian Telecom Sector

919.17 million active

mobile phone connections as of Mar 2012

Growth in Subscriber Base

Growth of Teledensity

Source: TRAI Annual Report Source: TRAI Annual Report Telecom penetration rate from less than 3% in 1999 to over 78% as of Mar 2012

Telecom Sector : Environment Analysis

Economic
Telecom accounts for 2.8% of Indias GDP 10% increase in broadband penetration leads to 1.3%increase in GDP

Social
Lifestyle changes- people have become more connected Younger generations are more tech savvy and more informed Consumer Activism- Consumers have become more aware about their rights Internet is seen as a knowledge repository

Employees 20million people

Telecom Sector : Environment Analysis

Technology
3G data services are growing and 4G services are soon to be launched More that UD$ 100billion have been spent on acquiring 3G license and spectrum Exponential growth in the value added services Increased computing power of hand held devices

Telecom Sector : Environment Analysis

Porters Analysis
Threat of substitutes Low switching cost MNP provides seamless transition IP telephony provides better quality at cheaper rates Applications like Skype, viber, whatsaap
Entry Barrier Rivalry Buyer power

Bargaining power of supplier High switching cost for suppliers Backward integration by telecom companies

High initial capital investment Brand identity Low switching costs Huge untapped rural market(40%pen etration)

6-8 service providers in every circle Over capacityleading to price wars Average revenue per user is low Almost no differentiation High exit costs

No switching cost Small volume MNP makes switching easier

Telecom Sector : Environment Analysis

Opportunity

Untapped Landscape New Technologies Strong Strategic Partnerships

Threats

Regulatory & Economic Environment Hyper Competition

Bharti Airtel : Brief History

Acquired JT Mobiles, entered Ktk., AP. Acquired Skynet to enter Chennai Wireline services in Delhi, Haryana, KTK & TN First to launch ILD services Bharti, Idea, Vodafone formed Indus Towers Easy Day Received DTH retail store license to opened in operate Ludhiana Acquires Zain Telecom (15 African countries) 70% stake in Wahid Telecom Bangladesh

Launches services in India, Delhi

Entered in HP

First SP to operate in 23 circles

Bharti Axa Life Insurance launched

Airtel Money services

First SP to launch 4G services

1995

1996

19992000

2002

2005

2006

2007

2008

2010

2011

2012

Source: Telecommunication Industry in India, Rajkumar Upadhyay

Bharti Airtel
Businesses as % in Revenue Ownership
Promoters Group Bharti Telecom Limited Pastel Limited Indian Continent Investment Limited Viridan Limited Total Promoters Share Public holding more than 1% shares LIC ICICI Prudential Life Insurance National Westminster Bank % Holdings 45.70 % 15.57% 7.00% 0.22% 68.49% % Holdings 4.98 % 1.68% 1.07%

Mobile Services

Telemedia Services

Airtel Business

Bharti Airtel: Internal Analysis

Poor Infrastructure

Highly Competitive Industry

Price Wars

2G Spectrum Scandal

Bharti Airtel: Internal Analysis

CAGR of 17%

Poor Infrastructure

Highly Competitive Industry

Price Wars

2G Spectrum Scandal

Bharti Airtel: Strengths

Strategic Alliances Wide Network Coverage Infrastructure Focus on Core Activities

CAGR of 17%

Poor Infrastructure

Highly Competitive Industry

Price Wars

2G Spectrum Scandal

Bharti Airtel: Strengths

Strategic Alliances
World renowned partners Pay per Usage

Wide Network Coverage

Network in all circles of India

Infrastructure
Owns tower business Shares towers with other operators

Focus on Core Activities

Sales & Marketing Financials

CAGR of 17%

Poor Infrastructure

Highly Competitive Industry

Price Wars

2G Spectrum Scandal

Bharti Airtel: Weakness

Poor Customer Service
Inability to Contain Costs

Lack of Integrity

Not well Diversified

Involvement in 2G scandal can dent investor confidence

Customer service is not a necessity anymore, but a differentiator

Costs have not come down significantly over the years

Airtel is still the biggest revenue generator for Bharti group

Bharti Airtel: Core Competencies

Low Cost Product Innovation Strategic Alliance High Quality

Better Brand Image Infrastructure Customer Experience

Increased Market Share

Focus on core activities

Sales & Marketing

Financials

Wider Distribution

Bharti Airtel: Strategy

international Strategy Venturing in emerging markets

Corporate Strategy Diversification Business Strategy Innovative Business Model Building on strengths Focus on high growth areas Improving weakness Leveraging core competencies to succeed in new sectors Currently operating in 5 Sectors

Focusing on telecom sector for now

Following inorganic route Present in Africa, Sri Lanka and recently Bangladesh International acquisitions also make it 5th largest player worldwide

Bharti Airtel: Future

Internet Apps Support other sectors Cashless Banking Healthcare

Acquisitions

Zain Warid

Improved Services

New Technologies

3G 4G

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