Market Sizing and Future Growth Potential of Telecom in ABS Segment

Prepared By: Jatin Trikha Manish Garg Supreet Singh

About Bharti Airtel Bharti Airtel Ltd formerly known as (Bharti Tele-Ventures Ltd),

incorporated in 7th July,1995 is part of Bharti Enterprises and is India’s Leading provider of Telecom Services. Bharti Airtel has been structured into 3 individual SBU’s.

Telemedia Services Enterprise Services

Mobile Services

About the Project The project included Market Research of the

corporate/SME(Small and Medium Enterprises) segment in a small part of the Delhi/NCR zone. Data collected was obtained through telephonic interview as well as direct interviews.

The project was undertaken to find out concentration of different service providers of landline and broadband (DSL- Digital Service Line), and different influencing factors while selecting a particular service provider.

The target of the project is focused on the high revenue customers who are currently using landline and broadband service from service providers other than Airtel..

OBJECTIVE OF THE STUDY

The project “Market sizing and future growth potential of telecom in the ABS segment” is carried out with following objective:

To find out concentration of different service providers in corporate sector in Delhi/NCR region.

To find out different factors which influence customers in selecting any service provider.

  To know different parameters by using which better services can be

provided to corporate clients.

To determine customer’s satisfaction level and reasons of dissatisfaction.

   To calculate ARPU(Average Revenue Per User) factor.

Important Metrics1. Average Revenue Per User(ARPU) is computed by dividing

company’s total revenues during certain period by its average customers in the same period. A higher ARPU is better for the company.

2. Churn is calculated by dividing the total number of disconnections during the certain period by the average customers in the same period. A lower churn is better for the company.

3. MoU(Minutes of Usage) is the duration for which a customer uses the network. Higher MoU is better for the company.

4. Subscriber Base refers to the number of individuals that use or subscribe to company’s services.A larger subscriber base is better for the company.

CompetitorsThe main competitors of the company are: MTNL/BSNL Reliance Communication Tata Indicom

S.No. Wired-Line Service Provider

Total Subscribers Share in %

1 Bharti Airtel Limited 2,756,254 7.28

2 Reliance Communications

1,115,693 2.95

3 Tata Teleservices 929,564 2.45

4 Mahanagar Telephone Nigam Ltd.

3,575,909 9.45

5 Bharat Sanchar Nigam Ltd.

29,149,831 77.09

6 HFCL Infotel 162,044 0.46

7 STL 122,573 0.32

Current Market Share

Research MethodologyResearch Plan Used

Data Sources Primary Data and Secondary Data

Research Design Descriptive study

Research Approach Questionnaire

Sampling Unit Corporate Offices of Delhi/NCR

Sample Size 230

Data Collection Direct and Telephonic interview

Analysis1. Analysis of Satisfaction of Customers:

Airtel Other Total

Satisfied with Service

138 222 360

Not Satisfied with Service

33 78 111

Total 171 300 471

Null Hypotheses:The number of Airtel customers who are satisfied with the service are more in number as compared to other operators.

Alternate Hypotheses:The number of Airtel Customers who are satisfied with the service are less in number as compared to other operators.

Observed Expected O – E (O - E)2 (O - E)2/E

138 130.7 7.3 53.29 0.41

222 229.3 -7.3 53.29 0.23

33 40.3 -7.3 53.29 1.32

78 70.7 7.3 53.29 0.75

∑(O-E)2/E = 2.71

Observed Value is 2.71, which is the Chi-square value

Degree of freedom (υ) = (r-1) (c-1) = (2-1) (2-1) = 1

The tabulated value on.01 confidence interval is as follows:

Tabulated value, .01, 1= 3.84

  The observed value of 2.71 is less than Critical table value of 3.84, so the decision is to accept null hypothesis. Hence I accept null hypothesis and this shows that the number of Airtel customers who are satisfied with the service are more in number as compared to other operators.

 

2. Analysis of difference in use of Landline and Internet connection:

Airtel MTNL Others Total

Use of Voice lines

99 180 38 317

Use of Internet 72 62 20 154

Total 171 242 58 471

Null Hypothesis: There is no difference in use of Voice line and Internet for the same service provider.

Alternative Hypothesis: There is difference in use of Voice line and Internet for the same service provider.

Chi-Square:Observed Expected O – E (O - E)2 (O - E)2/E

99 115.08 -16.08 258.56 2.24

180 162.87 17.13 293.43 1.80

38 39.03 -1.03 1.06 0.02

72 55.91 16.09 258.88 4.63

62 79.12 -17.12 293.03 3.70

20 18.96 1.04 1.08 0.05

∑(O-E)2/E = 12.44

Observed Value is 12.44, which is the Chi-square value.

Degree of freedom (υ) = (r-1) (c-1) = (2-1) (3-1) = 2

The tabulated value on.05 confidence interval is as follows:

Tabulated value, .05, 2= 5.99

The observed value of 12.44 is greater than Critical table value of 5.99, so the decision is to reject null hypothesis. Hence I accept Alternate hypothesis and there is difference in use of Voice line and Internet for the same service provider.

Total Number of DEL

Revenue from DEL

Internet Penetration

Accounts with same Service Provider for Voice and Data

Revenue Market Share(RMS) of Landline:

RMS = {(Total revenue of Airtel Landlines) / (Total Revenue of all Service

Providers)} * 100

RMS = (3122600/7974300) * 100

RMS = 39.15%

Customer Market Share(CMS) of Landline:

CMS = {(Total Airtel Landlines) / (Total Landlines of all Service

Providers)} * 100

CMS = (1985/5259) * 100

CMS = 38%

Average Revenue Per User(ARPU):

a. 100% Airtel Owned Account= 90370/35

= Rs. 2582

b. Partial penetrated Account= 24640/64

= Rs. 385

Limitations The limitation of the research work is that there might be a

chance that only those persons might be selected who prefer Airtel services over another operators.

Another major limitation of the project is that the sample size is small, so our result can have some tolerance level.

Thirdly, it is difficult to calculate market share of the company

only on the basis of revenue.

Observations The market research help me in finding the Customer

market share and Revenue market share.

The way Airtel is expanding its customer base is really good for the future of the company.

If the company will carry on their business the way they

are dealing with there are more chances that they will be the market leader very soon.

Factors helping their way out: The Brand “AIRTEL” is itself a reason for their success.

Their policy of retaining existing customers instead of just acquiring new customers.

The services company is providing to the customers are better than its competitors.

The network and services that the company is providing in mobility is also helping in inducing the customer.

 

Factors could prove to be obstacles in their way:

In landline and broadband services Airtel is having a limited network coverage and it is still to reach every part of the country unlike BSNL and MTNL.

Company’s competitors are coming up with very lucrative plans, so the company needs to cut down on its prices.

 

Suggestions The USP (Unique Selling Proposition) of Airtel is its service so it

should be made maintained in order to increase the market share.

The company can also work on acquiring the customers of its competitors more aggressively than what they are doing at present.

Among high end users there is maximum usage of local and STD calls. Hence more flexible plans separately for local and for STD calls can be workout to gain extra market share.

The company at the later stage can go for the whole market instead of just a particular class of customers.

 

 

Conclusions According to my data analysis of 230 accounts Airtel’s Customer Market

Share is 38% and its Revenue Market Share is 39.15%.

According to secondary data (Source TRAI) Airtel had a market share of 7.28%, while MTNL is just a little ahead with a market share of 9.45% and Bharti Airtel will definitely overtake MTNL in coming years if it continue to provide same level of service.

TTSL despite having presence in Bihar, HP, Orrisa other than states

where Airtel operates, have less than 3% of market share.

Reliance is also far behind in fixed line with a market share of just

2.95%.

The reason is the 360 degree aggressive marketing and branding of

Airtel and bringing broadband and telephone services under one umbrella.

Thanks!!!