Sie sind auf Seite 1von 91

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
established was proposed
Private regulator, competition merger
by DoT Calling Party (pending)
players were TRAI, was guidelines were
Attempted
Pays (CPP) was
allowed in established Go-ahead to established to boost
implemented
Value Added the CDMA Rural
Services technology telephony
1994 1999 2007
INDIA

2002 2003 2004 2005

1992 2000 Internet Unified 2006


1997
telephony Access
initiated Licensing Broadband
(UASL) policy 2004
National Decision on 3G
NTP-99 led to Reduction regime was was
Telecom FDI limit was services
migration from of licence Reference
introduced formulated—
Policy (NTP) increased (awaited)
high-cost fixed fees Interconnec targeting 20
was from 49 to 74
license fee to low- t order was million
formulated percent
cost revenue issued subscribers
sharing regime by 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
Source: Mckinsey Report
Rising Income level
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 Government Independent Bodies


Bodies

Telecom
Wireless
Planning and Handles spectrum Regulatory
Authority of India Independent regulatory
Coordination allocation and
(WPC) (TRAI) body
management
Department of DoT – Licensee and Telecom Disputes
Telecommunica Settlement and
frequency
tions Appellate Tribunal Telecom disputes
management for (TDSAT) settlement body
telecom
Telecom
Commissi Exclusive policy making Association of
on body of DoT Unified
Telecom
Group on Handles ad hoc
Telecom and IT Service
(GoT-IT) issues of the Providers(AUS
telecom industry
PI)
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 Amount in Rs.
Sheet Cr
Total Share 1897.91
Capital
Net Worth 20241.49
Total Debt 6570.34
Net Block 19030.65
Income (Sep '08) (Mar '08)
Investments 10952.85 Statemen
Net Current -5922.94 t
Assets   Quarterly Annual
Total Assets 26811.84 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- Mar- Mar- Mar-05 Mar-04
08 07 06
Debt-Equity Ratio 0.38 0.54 0.83 0.6 0.07
Long Term Debt-Equity 0.35 0.5 0.76 0.5 0.03
Ratio
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 0.3 0.19 0.24 0.29 0.33
Ratio
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
Year Overall Subscriber Base Airtel Subscriber Market Share
Base
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 Last Price % Chg 52 wk 52 wk Market Cap
Name 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 Year End 2008
Company Last Price Change % Change Net Sales
Name (Rs. cr)
Bharti Airtel 722.30 -20.00 -2.69 25,761.11

Reliance 249.20 10.00 4.18 14,792.05


Comm
Idea Cellular 53.50 0.05 0.09 6,719.99

MTNL 74.85 -1.95 -2.54 4,722.52


Tata Comm 495.15 2.60 0.53 3,283.30

TataTeleser 20.15 0.40 2.03 1,707.19


vice
Tulip 501.20 67.85 15.66 1,216.44
Telecom
Spice Comm 36.00 3.40 10.43 957.85
Net Sales(Rs. Cr)
Net Profit
Company Name Last Price Change % Change Net Profit
(Rs. cr)
Bharti Airtel 722.30 -20.00 -2.69 6,244.19
Reliance Comm 249.20 10.00 4.18 2,586.45
Idea Cellular 53.50 0.05 0.09 1,044.36
MTNL 74.85 -1.95 -2.54 406.82
Spice Comm 36.00 3.40 10.43 380.13
Tata Comm 495.15 2.60 0.53 304.46
Tulip Telecom 501.20 67.85 15.66 187.27
Goldstone Infra 17.55 -0.40 -2.23 10.01
Northeast Sec 12.08 0.57 4.95 5.25
TataTeleservice 20.15 0.40 2.03 -125.74
HFCL Infotel 7.45 0.44 6.28 -142.54
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
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
Cost Leadership
Strategy

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,
China 303
India has the second highest
Rus s ia 88
minutes of usage per month.
This offers huge growth
opportunity to telecom
companies.
ARPU* in India – Mobile Services
10 The declining ARPU
ARPU (USD per month)

8 implies that India Inc. is


6
tapping a large market
4
at the bottom of the
2

0
pyramid by reducing
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 tariffs; thereby,
GSM CDMA
enhancing affordability.
2. Customer Bargaining
Power
• Lack of differentiation among Service Providers
• Cut throat Competition HIGH
• 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 Customers & Market Share


Prepaid

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

• World Phone
• Video Conferencing
BROADBAND
SERVICES
• VOIP - Skype, Gtalk, Yahoo Messenger
• e-Mail & Social Networking Websites
5. Threat of New Entrants
Low Because
• Huge License Fees to be paid upfront &
High gestation period
• Entry of MVNOs & WiMAX operators
• Spectrum Availability & Regulatory Issues
Previously
Low, Now
• Infrastructure Setup Cost - High 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
BCG Matrix for Bharti Airtel
HIGH

Mobile Services
DTH & IPTV

Broad Band
LOW

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

3.67
Medium
Market

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 Enterpri
Market Attractiveness

Mobil se
e
3.67

Moderate
TeleMed
ia Attractive
2.33

Unattractive

Low
5.00 3.67 2.33 1.00
SWOT
SWOT
Strengths Weakness
• Largest Telecom Player in India - • Outsourcing of Core
~80Mn, 22.6%
• Market Leader Systems
• Strong Leadership – Sunil Bharti
Mittal • Network Coverage
• Recognized Globally
• Pan India Presence
(earlier)
• Strong Financials
• Focus on Core Activities – Outsource
the rest
• Strong Brand Image – Marketing
Team
• Strong New Business Development
team
SWOT
Opportunities Threats
• Bharti Infratel – • India centric – Major
Cutting Down cost in revenues from India
Rural area
• Falling ARPU & AMOU
• Match Box Strategy –
Scale of Penetration • Intense Competition &
• Current Tele-Density – Shortage of Bandwidth
30.6 is still low among • New Players coming in
developing countries India
• Low Broadband • Uncertain Economic
Penetration, Rural conditions
Telephoney
AIRTEL 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!!!!!!!