Bharti Airtel Ltd and Indian Telecom Sector

Ashish M. DeshmukhHenal Mehta

Pravin SharmaSaurabh JainSohom Dhol

EMERGING MARKET CHAMPION

Feb 13,2008 Bharti Airtel Limited (BAL), a leading telecom company in India crossed 60 million customer mark.

Tenth largest telecom company in the world in terms of subscriber base.

Wireless segment constitutes 96% of BAL’s total customer base. Market share – 31.8% and its valuation stood at US $ 40 Billion

(Feb 2008) BAL’s growth matched the growth in Indian Telecom Sector,

which was fastest in the world. Emerged as undisputed leader in Indian mobile market. Faced new challenges to its leadership position with the entry of

strong international telecom companies.

MOBILE TELEPHONY IN INDIA Started when government decided to allow private sector participation. In initial days, mobiles were out of reach of most Indians. Subscriber number increased with a fall in tariff. Legal conflict between fixed service operators and cellular operators. Introduction of Universal service telecom license. small players and foreign players exited from the sector. Mobile subscriber- 86% of telecom subscribers in India. GSM operators – 74% of mobile phone users and rest CDMA. ARPU per month for GSM operators- Rs. 275 while for CDMA

operators – Rs. 173 Changes in market may be witnessed due to introduction of new

technologies, etc.

Bharti Airtel Ltd• Bicycle parts Business (1976-1980).• Bharti Telecom Ltd (1985).• Conglomerate with Siemens AG (1985).• Bharti Tele Venture

– Bharti Cellular Ltd (1995)– Touchtel (2001)– IndiaOne– Mantra

• Discontinuation of Multi Branding strategy(2004). Telecom services under ‘Airtel’.

• BTV renamed to BAL(2006).

THE CZAR OF INDIAN TELCOM• Building a Strong Brand

• Various Brand Ambassador(SRK, Sachin, A R Rahman)• Largest advertiser in IndiaT

ouch Tomorrow(1999)

Express Yourself (2003)

Business Model Innovation Lean organization Outsourcing Network Deployment- Nokia and

Ericsson IT services – IBM Customer Contact Centers – Nortel Different Payment Model from revenue per share to

cost per all. Free incoming calls to its mobile phone user.

ACCOLADES

• Best CMT company for 5 years (2001-05) in terms of Shareholder Performance Index.

• ‘MIS Asia IT Excellence Award for best Change in Management’

• ‘2005 Indian Mobile Operator of the Year’.• ‘Competitive Service Provider of the Year’.(2006)• CEO of the Year – Sunil Mittal(2006).

BAL COMPETITIORSVODAFONE ->

RELIANCE COMMUNICATION(ADAG)->

TATA INDICOM->

BSNL->

NEW CHALLENGES FOR BAL

• Vodafone’s entry in Indian telecom market posed 1st real

threat to BAL’s supremacy.

• Vodafone planned to invest $ 2 billion to establish and

introduce new 3G technologies.

• Vodafone’s application of allocation of spectrum to expand

from 16 to 23 telecom circles.

• Vodafone entry increased competition and better services to

customer.

RELIANCE AND TATA

• GoI’s approval to companies to provide both GSM & CDMA.

• Entry of new players like Reliance and Tata in GSM.

• New player expected to break oligopoly on market.

• Due to competition slashing down of tariff rates which were already lowest in

world.

• BAL did not have plans to start CDMA.

• GoI plan to allow more players to enter to reduce rates.

• BSNL, Reliance, Tata are players in both GSM & CDMA.

• Steady fall in BAL’s ARPU.

COUNTERING THE THREATS

• NETWORK EXPANSION.

• TARGETTING ALL SEGMENTS.

• WOOING THE RURAL AREAS.

COUNTERING THE THREATS

• NEW ADVERTISING STRATEGY.

- ‘Kuch Bandhan atoot hote hain …’

- ‘Barriers break when people talk’

• NEW TECHNOLOGY.

TAPPING UNTAPPED MARKET

International presence in Seychelles through its subsidiary Telecom Seychelles Limited. Europe (Channel Islands) through its subsidiaries Jersey

Airtel Limited (JAL) and Guernsey Airtel Limited (GAL). In 2006, Airtel became the first Indian telecom operator to

launch 3G services in Seychelles In May 2007, JAL and GAL entered into a partnership with

Vodafone to launch mobile services in Channel Islands under the Vodafone-Airtel brand.

Airtel started in operations in Srilanka in 2008

A $23 BIILION DEAL India’s largest telco Bharti Airtel on Monday is set to acquire a

49% stake in Africa’s largest telco MTN to create a entity stretching from the Cape of Good Hope across the African continent, West Asia and the Indian Subcontinent with revenues of about $20 billion and over 200 million subscribers. The combined entity will be amongst the top five operators globally.

The South African telco will get a 36% economic interest in Bharti Airtel in return for offloading the minority stake. The deal size is estimated to be worth over $23 billion. (taken from Economic Times)

CONCLUSION

Airtel faced some challenges to its leadership position in the Indian telecom market.

Industry experts said that the key to future growth lay in making the Airtel brand attractive to both the tech-savvy urban population and the rural masses where the bulk of the future growth is expected.

Finding alternate revenue streams in view of the rapidly falling ARPUs is one more significant challenge that lay before Airtel in terms of future growth.