Telecom Sector in India

One of the fastest growing sectors in the world- Number of subscriber additions showed a growth of 3.25% from March to April, 2009 Key Highlights attributable to the Sector are : Subscriber base- More than 330Mn Second Largest Telecom Market 9 GSM & 5 CDMA players in 19 circles and 4 metros connecting 2000 towns Lowest tariff charges in the world

Bharti Group - Overview

Bharti Airtel
Airtel is the flagship company of Bharti Enterprises Asia s leading integrated telecom services provider with operations in India and Sri Lanka Businesses at Bharti Airtel have been structured into three individual Strategic Business Units (SBUs): - Mobile Services - Airtel Telemedia Services - Enterprise services VISION: To make Airtel India s most admired brand that will be : Liked by more customers, targeted by top talent, benchmarked by more businesses MISSION: We will meet global standards for telecom services that delight customers through Customer service Focus, Empowered Employees, Innovative Services and cost efficiency

Porter s 5 Forces Analysis of Industry

Threats from Competitors: High
Large number of players in the Indian market poses a serious threat Average Revenue Per Unit (ARPU) in India is decreasing each year due to intense competition faced in the market

Customer Bargaining Power: High

Cut throat competition proving as advantage for Customers Low Switching Costs Number Portability option in near future Lack of differentiation among service providers

Threat of Substitutes: High

Better services of International players entering India viz. Vodafone VOIP- Skype, Gtalk, Yahoo Messenger

Porter s 5 Forces Analysis Cont ..

Threat of New Entrants: Low
Huge License fees to be paid for entry Spectrum Availability and Regulatory Issues High Setup Cost of Infrastructure Rapidly changing technology

Suppliers Bargaining Power : Low

Outsourcing Deals Networking and Maintenance Vendors/ Suppliers Ericsson, Nokia Siemens Network IBM Features

yEase of Network Planning yPayment linked to service quality and network quality yPayment as a % of revenues yService Level Agreement for quality and deployment

Information Technology

Passive Infrastructure Call Centre Outsourcing

Indus Towers, Bharti Infratel IBM Daksh, Aegis BPO, Hinduja TMT

yReduced CAPEX spending yIncreased focus on sharing infrastructure yEnhanced and consistent customer experience yCommon platform across groups

SWOT Analysis
Strengths
- Largest cellular provider in India, also big share in broadband services - Strategic Alliance with Sony-Ericsson, Nokia - and Sing Tel - Has covered the entire Indian nation with its network - Has a good hold over Financial resources

Weaknesses -Airtel does not has hold over infrastructure eg. own towers - MTN failure: lack of any real emerging market investment opportunity Opportunities
-Still there is untapped market local as well as other emerging markets -Embarking joint venture to create a new independent tower company -To change the revenue-per-minute model to pulse model

Threats
-Entry of Foreign players in India with 3G tech. eg. Aircel -Knowledge and technology moved to one of its competitors- Vodafone

Strategic Decisions: Operations Front

Suggestions to Increase Customer Base

Suggestion
Airtel to Airtel calls, Group packs etc. basically volume based games Marketing (event sponsors), CSR initiatives Taking advantage of Melas Doordarshan enjoys maximum viewership Strategic alliances and acquisitions

Resources
Not much and which can be recovered with increased customer base Not a problem. Rs 150 -200 Crores

Acceptability
Will capture new markets and also established ones Will be more if campaigns are attractive, creative and more retainable in customers mind

Effectiveness
Will be really effective if they satisfy different customers with different needs Help in brand awareness and brand recall

Sustainability
High with more profits

High

Heavy investments (capital and human)

Lesser competition and more resources in pool (human, suppliers etc)

Innovative value adds can be designed to cover more customers Access to established network and distribution chain. Ease of availability

High

Infrastructure Front
Challenge
Country wide expansion but requires huge investment to set their own towers

Decisions Taken
Sharing of Towers (INDUS): - Rapidly increasing subscriber base - Emerging technology - Sharply rising site rentals - Need for denser coverage due to spectrum constraints - Regulatory and planning authorities - New Tower Restrictions

Infrastructure Front
Decisions taken Contd .
- Nokia-Siemens as service partner - Huawei Technologies to manage Airtel s core network - Ericsson to design, plan, deploy and optimize Airtel s GSM network - IBM to transform its processes and take on the management of its IT infrastructure.

Benefits
- Ability to process 1.5 million new customers per month - Optimization of business processes through exible, standardized integration framework - Outsourcing of technology enables Airtel to focus resources on growing the business - Tie ups enables Airtel to avoid major increases in capital expenditures

Technology Front
3G
- Spectrum and licensing - Infrastructure - Pricing - User Conversion - 4G?

Mobile Number Portability

IPTV

FINANCIAL ANALYSIS
EBTDA Rs. 151 billion up by 33% Negative only for digital TV (strong competition by sun TV) Revenue Rs. 369 billion up by 37% Cash profit Rs. 140 billion up by 27% Capital Expenditure Rs. 140 billion Average Revenue Per User Rs 305 down from Rs. 324 Net profit Rs. 84 billion Earning per Share Rs. 44.67

FINANCIAL ANALYSIS- Contd..

Strategic Decisions- HR Front

Problems
Most of Youngsters leaving within 2 years of joining Tata Telecom largest talent competitor 28% of people joining them

Strategies
Revamping of PMS- employee to decide Flexi-benefits, increased Takehome Rotation policy: Atul Bindal- Telemedia to Telecom Business; Creation of new position of Deputy CEO; Sanjay Kapoor- Mobile to Telemedia & DTH

Suggested Strategies
Inclusion of Sub-ordinates in PMS Proper timing of Bonus and Incentive

Strategic Decisions- International Front

Key Trends
2007 ( Year of iPhone) 2008 ( Touch Phones) Mobile Industry- more than 1 Trillion USD : 80% services & 20% infrastructure 50% worldwide penetration- 4 B worldwide ( 600 M China & 330 M Ind) 3G penetration ( Japan 85%); Mobile Web penetration- 25%

Developed Economies- European Union

- European telecom sector- major contributor in economy - Highly concentrated: 4 players capturing 61% - Favours Infrastructure Competition

Trends to Watch out for Airtel- Developed Economies

Consolidation in Sector: European operators achieved acquisitions through overseas instead of Regional consolidation Convergence in Sector: Mobile & Services platforms merging Go out with Locally responsive International Strategy

International Front Contd.. Developing Econ.

Differentiating Factors
- Growing middle class income - Small premium segment - Increasing rate of Urbanization - Young population compared to most developed nations

Key Trends to Watch out for Airtel- Developing Economies

- Make Broadband assessible to everyone - Look out for Government subsidized deployments- Korean Govt. offsets 50bn US$ to subsidy fibre; Govt. tax incentives

International Front Contd.. Developing Econ.

Recent Developments of Airtel
- Announcement of online desktop for broadband- started in 95 countries - Australian Japan Cable and Airtel partnership- offer services in future - Overseas Recharge Service- Recharge available online in 150 money ex. - Looking out for merger with MTN; Started Operations in Sri Lanka

Proposed Airtel Strategy

- Should go for Polycentric Approach- while costly may serve - Should look out Merger and Acquisitions - Look out for 3 things while short listing developing countries- political stability, regulatory aspect and easy licensing - Go to Disruptive Innovation/ Innovating strategies eg. TataDoCoMo

Strategic Decisions: Marketing Front

Changing Strategy Timeline

Marketing Mix
Product Airtel Pre-paid Airtel Post-paid Blackberry Wireless Handheld Value Added Services (VAS) Price Customer based pricing strategies. Flexible pricing mechanism Controlled by TRAI. Place It has wide and extensive presence even in the remotest areas Airtel Customer Care Touch Points Distributors like : Paan shops, grocery stores, chemists, outlet etc Promotion Large scale print and video advertising. Big celebrities like SRK and Sachin are roped in to endorse the product. In 2002 Airtel got its Signature tune from A.R. Rehman, this signature tune is perhaps the most downloaded tune in India. Provides innovations such as Bollywood movie premiers, music services such as ring back tones & many more.

SWOT Analysis
Strengths
Market share. Pan India Footprint. The only operator in India other than VSNL having international submarine cables. Customer care. Promotions.

Weaknesses
Price Competition from BSNL and MTNL Losing lead on technical expertise.

Opportunities
The fast extending IPLC market. Latest technology and low-cost advantage. Growth of mobile phone users. Untapped Rural Market.

Threats
Market Maturity in basic telephony segment.

Marketing Front- Future Perspective

Segmentation Long Term Outlook Product Innovation Quality Strategy Heavy Advertising & Media Pioneer Effective Sales Promotion Competitive Toughness Customer care New tariff plans. More value added services. Increase in visibility and coverage The AirTel - AirTel advantage New innovative packages More of the e-factor

Further Suggestions
Tele-density Utilisation India (1.29), US (60.73) CAGR of 23.44% is required to reach network that of US Partnership in developing economies Technology Leadership Constantly evolving Value Added Services