bharti airtel alliances

8/6/2019 Bharti Airtel Alliances

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AMITY UNIVERSITY

UTTAR PRADESH

AMITY BUSINESS SCHOOL

SUBJECT: BPSM

COMPANY: BHARTI AIRTEL LTD.

SUBMITTED TO: SUBMITTED BY:

DR. HIMANI SHARMA HIMANSHU AGARWAL (108H38)

GROUP 6

MBA (GEN) CLASS OF 2010


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BHARTI AIRTEL

Established: July 07, 1995, as a Public Limited Company

Proportionate Revenue: Rs. 369,615 million (year ended March 31, 2009-Audited)

Shares in Issue: 1,898,239,796 as at March 31, 2009

Listings: Bombay Stock Exchange (BSE), Mumbai

National Stock Exchange (NSE), New Delhi

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. Bharti Airtel Limited

is Asias leading integrated telecom services provider with operations in India and Sri Lanka,

with an aggregate of 100 million customers. Bharti Airtel Limited has been voted as India's most

innovative company, in a survey conducted by The Wall Street Journal.

Airtel comes to you from Bharti Airtel Limited, Indias largest integrated and the first private

telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its

inception has been at the forefront of technology and has steered the course of the telecom sector

in the country with its world class products and services. The businesses at Bharti Airtel have

been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel

Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed

wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia

Services business offers broadband & telephone services in 95 cities and has recently launched

India's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services provide

end-to-end telecom solutions to corporate customers and national & international long distanceservices to carriers. All these services are provided under the Airtel brand. Airtels high-speed

optic fibre network currently spans over 101,337 Rkms covering all the major cities in the

country. The company has two international landing stations in Chennai that connects two

submarine cable systems - i2i to Singapore and SEA-ME-WE-4 to Europe.


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Bharti Airtel has a 24% market share of the Indian mobile market, with nearly 94 million

cellphone customers and over 2.7 million landline subscribers over 95 cities. Its landline

business, which combines fixed-line telephony, Internet and IPTV services, is one of the most

profitable segments, with fiscal fourth-quarter and annual profit margins of 42.1% and 42.4%. It

accounts for about 9% of Bharti's total earnings and the average revenue per user here is Rs

1,071 per month, which is three times higher than that for its mobile users.


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IS BHARTI PREPARED FOR THE BIGGEST OVERSEAS

CORPORATE DEAL EVER IN INDIA?

Bharti Airtel announced in May that it had begun tie-up talks with MTN Group of South Africa.The two companies agreed to discuss the proposal exclusively until July 31 which was initially

extended upto August 31 and now has been further delayed till September 31.

Under the terms announced in May, Bharti Airtel is to acquire 49 percent shareholding in MTN,

and MTN to acquire a 36 percent economic interest in Bharti Airtel. Together the two companies

will have US$20 billion in revenue and 200 million customers, Bharti Airtel said in May. The

negotiations are aimed at working out a formula that will help both companies keep their

identities after the alliance, according to informed sources.

This is second time that Bharti Airtel has been in alliance talks with MTN. The company, which

has Singapore Telecommunications as a key shareholder, said last year that earlier talks fell

through after disagreement on the structuring of the deal, particularly MTN's insistence that

Bharti Airtel should be a subsidiary company of MTN after the deal.

Bharti Airtel did not give a reason for the extension of the deal which initially began in 2008.

The structure and the terms of the potential transaction may be adjusted to reflect further

discussions between the parties, it said in a filing to the Bombay Stock Exchange. Under the

arrangement by the two companies, Bharti Airtel will have substantial and governance rights in

MTN, enabling it to fully consolidate the accounts of MTN. Bharti Airtel will be the primary


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vehicle for the expansion of both Bharti Airtel and MTN in Asia, while MTN will focus on

expansion in Africa and the Middle East.

The Indian service provider has benefited from the boom in the mobile services market in India.

For the quarter ended June 30, revenue was 99.4 billion Indian rupees (US$2 billion at the

exchange rate on the last day of the quarter), up by 17 percent from revenue in the same quarter

in the previous year. Profits in the quarter grew by 24 percent to 25 billion rupees.

Inspite of the inspiring figures and consent from both the sides, the deal, which was first

cancelled, now has been further delayed. Talks on the $23 billion deal between the two telecom

players, has been delayed for the second time and has been now extended to September 30, 2009

from the earlier assigned date of August 31, 2009. A stumbling block for the deal could be the

concerted effort by some shareholders of MTN to seek a more sweetened deal.

Sunil Bharti Mittal, chairman and managing director of Bharti Airtel and Phuthuma Nhleko,

group president and CEO of MTN met Salman Khurshid, minister for corporate affairs in the last

week of August, 2009 at the ministers minority affairs office in the capital.

Though it was purely a courtesy call, there are indications that the close-door meeting was a

bid to push the much-delayed deal between the two-telecom giants. Earlier Mittal and Nhelko

also met finance minister Pranab Mukherjee for the same concern.

Conclusion:

The deal is considered to the largest deal ever successfully undertaken in India ($23Billion). The

net worth of Bharti Airtel and the creditability both give an easy go the deal. Large numbers of

banks are eager to fund the deal and investors are looking forward for this merger. Not much

data and figures are reveled in the market yet. The procrastination of the deal has become the

major issue for the investors who are in a perplexed situation understanding the potential of the

deal.


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OTHER STRATEGIC ALLIANCES OF BHARTI AIRTEL

LTD.

ALCATEL-LUCENT

Bharti Airtel entered into a joint venture with Franco-American telecom gear maker Alcatel-

Lucent to manage its landline and broadband business, expanding its tested strategy of

outsourcing technology functions to focus more on marketing and sales.

Bharti is minority partner in the 26:74 joint venture, and will invest Rs 2,500 crore into the new

entity over five years till 2014. In about 40 countries, Alcatel-Lucent has carried out the

transformation of fixed line networks to make them Internet Protocol-based and also next

generation network-enabled. Bharti Airtel is expecting same kind of service from Alcatel

Lucent.

Bharti has made outsourcing a key plank of its business strategy, and has signed billion-dollar

deals with network vendors such as Ericsson, Nokia and Siemens, which manage, build and

operate its mobile network. It pioneered the network outsourcing model in 2004 by awarding

IBM a 10-year, $750-million contract, whose scope is now worth $2.5 billion. Another billion-

dollar pact exists with six BPOs, which collectively handle Bharti's customer services for a 10-

year period. However, this is the first time that the company is forming a JV to handle a core

business instead of outsourcing it to a third party.


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The reason of this Joint Venture is the complicated nature of the fixed line and broadband

business compared with mobile telephony. The average time a call centre executive spends with

a broadband customer is about 8 minutes. However, according to some industry analysts, a

possible reason for Bharti to take the JV route may be because Alcatel-Lucent has an existing

contract with Reliance Communications to manage its network based on the CDMA technology.

Bharti will not transfer any of its material assets to the JV, which will have 4,000 employees,

some of whom will be transferred from Bharti Airtel.

BOOKMYSHOW.COM

Bookmyshow (Network18 venture) partnered with Airtel and their applications are now

available on Airtel Live. Airtel customers can book tickets on the Airtel WAP site

live.airtelworld.com/AirTel Live on all GPRS enabled handsets. Airtel customers can also call

5432191 that would be directed to the Bookmyshow call center for tele-booking and home

delivery, for any cinema/Play theatre/concert venue covering any show time.


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MICROSOFT

Airtel moved beyond its two year old exclusive alliance with Blackberry, which apparently has

not been as successful as was expected at the time of launch in India despite the hype around it.

Blackberry was viewed primarily as e-mail access device and did well in India, Microsoft-based

mobiles were expected to take enterprise mobility into a new realm with offerings like MSOffice suite etc. Microsofts Windows platform offer about 18,000 applications and had 6.5 lakh

developers worldwide, a range that no other product offered.

HCL

Bharti's Airtel Broadband & Telephone Services entered into a tie up with HCL to push high-

speed Internet for home users. People buying Airtel's landline connection are now able to opt for

a PC on instalments, with some initial payment, and connect to broadband.

Airtel entered into this deal within days of a joint initiative by Intel and Reliance, under which

people buying a PC from Intel's dealers will be offered Reliance Mobile service and an LG

handset to connect with high-speed Internet wirelessly.


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AEROMOBILE TO OFFER IN-FLIGHT CELL CONNECTIVITY

Bharti Airtel partnered with UK based in-flight solutions company AeroMobile to offer on-flight

cell-phone connectivity to its customers. This will enable customers to make and receive calls on

their mobiles on select international airlines. Bharti will be the first Indian telecom company to

offer this facility to its customers. Aero currently has agreements with several global carriers

such as Emirates, Qantas, Malaysia Airlines and Turkish Airlines.

An outgoing call will cost Rs 188 per minute, while an incoming call will be charged Rs 24 per

minute. Passengers will be charged Rs 41 for an outgoing SMS while incoming SMSes will be

free. The partnership will enable Airtel post-paid customers to use their mobile phones on-board

flights, on especially equipped aircraft. This service is offered without any additional

subscription charges and only requires Airtel customers to activate their international roaming

service

IFFCO

Airtel entered into a strategic tie up with the Indian Farmers' Fertiliser Co-operative Limited

(IFFCO) and formed a new joint venture company called IFFCO Kisan Sanchar Limited (IKSL).

This joint venture company will harness the power of telecom to empower the rural farmer by

giving him access of vital market information at his fingertips. IKSL will offer products andservices, especially designed for farmers, through IFFCO societies in villages across the state.

On offer will be affordable mobile handsets bundled with Airtel mobile connections. The

farmers will also get access to a unique VAS platform that will broadcast five free voice

messages on mandi prices, farming techniques, weather forecasts, dairy farming, animal


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husbandry, among others on a daily basis. In addition, farmers will be able to call a dedicated

helpline manned by experts from various fields, to get answers to their specific queries

OUTSOURCING PACT WITH IBM

Bharti Airtel on Wednesday has strategic outsourcing agreement with IBM to further enhance its

customer service experience for its top-end platinum customers through process and technology

innovation. The six-year Q3 contract for outsourcing contact services to IBM's Managed

Business Process Services (MBPS) unit would involve augmentation of Airtel's sales, customer

service, and back office capabilities.

IBM MBPS combines IBM's deep industry and process expertise with innovative technologies

and a talented employee force to offer client's repeatable processes and assets that can improve

process productivity and deliver cost savings and reduced risk. IBM Daksh Business process

Services, a wholly-owned subsidiary of IBM Corporation, would provide a suite of services

covering both voice and back office in areas such as customer service, collections, customer

retention and the like to Airtel Platinum customers from its centres. IBM Daksh expects to have

over 700 employees in the first year focused on providing services in over 11 languages to elite

Airtel customers across the country, it said.


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ANDHRA PRADESH SSC BOARD

Airtel did a tie up with Andhra Pradesh SSC board to provide SSC results to its customers on

their mobile phones. This is the second year in succession that airtel has tied up with the board to

provide such service to its subscribers in the state. To view the result, airtel and magic customersshould send the sms keyword "exam" followed by a space and the candidate's "hall ticket

number" and send it to "444". The result displayed will include the name of the candidate, his

hall ticket number, break-up of marks of all the subjects and the total marks obtained.

INDIATIMES 8888 - EASY MUSIC CARDS

In endeavour to make mobile telephony grow beyond the realms of voice, Airtel is constantly

innovating and introducing new products which are focused on entertainment and are user

friendly. Airtel Easy Music Cards will be available in the denominations of Rs 30 & Rs 50.

While the Rs 30 Ringtone card allows a customer to download 3 monotones; the Rs 50 value

added service (VAS) Combo card offers a plethora of content to choose from across items like

monotones, truetones, polytones, wallpapers, games, video clips and more. The Rs.50 VAS

Combo card has the advantage of the balance in the VAS Wallet being carried forward, and has

validity for 30 days. Customers also have a choice to go for exclusive Kannada and Hindi tones.


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All that a customer needs to do is buy the Airtel Easy Music Card, and feed the chosen category

and the 16-digit secret code by an SMS to 8888, immediately the content will be downloaded

onto the mobile. In case of Rs.50 VAS Combo card, registering for the service can be done by

simply sending the 16 digit secret code to 8888, post which the customer can SMS his choicest

codes to 8888 to download content.

Entertainment on mobile phones has grown beyond imagination, with people looking for a

variety of content on their very own handsets. 8888, Indias largest mobile VAS player tied up

with Airtel, Indias leading operator, to supplement the entertainment channel on mobile phones.

Mobile content in regional languages is a fundamental part of our consumer strategy.

JEEVAN BLOOD BANK

Airtel made a toll-free SMS facility available to its customers to enable them to be aware of

stocks at the Jeevan Blood Bank. It strengthened its tie-up through the new facility as part of the

Airtel Cares for Everyone (ACE) project. This is a first-of-its kind initiative, wherein people can

source information on blood within minutes and access the real time stock of tested blood

components from Jeevan Blood Bank 24 hours a day.

A customer has to type and SMS it to 9600097000 (for example, Blood B+ or Blood AB+). "He

or she will get a response within a minute. It would contain information on quantity of readily

available tested blood components of the group required. It's toll-free for all Airtel customers.


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WAL-MART INDIA

In November, 2006, Wal-Mart Stores, Inc (Wal-Mart), the world's largest retailer, and Bharti

Enterprises Ltd. (Bharti), a leading business group in India, signed a Memorandum of

Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint

venture marked the entry of Wal-Mart into the Indian retailing industry.

The joint venture with equal stakes will operate in areas where the government allows foreign

investment in retail like cash-and-carry and logistics. The retail shops will be owned by Bharti

Enterprises under the Wal-Mart franchise. The idea is to give Indians the lowest price everyday.

Many analysts opined that both the parties in the venture had their own strengths and would

complement each other. Wal-Mart's logistics skill and Bharti's execution capability will create a

potent force in the Indian market.

This franchise strategy with Bharti was a deviation from Wal-Mart's usual way of entering

countries. This was because the policy restrictions on foreign direct investment (FDI) in the

Indian retail sector. As part of the agreement, Bharti was expected to pay a royalty between 2

percent and 3 percent of sales to Wal-Mart for using the latter's brand name. The Bharti-Wal-

Mart joint venture was expected to open its stores in India from August 2007.

Bharti-Wal-Mart venture would make an initial investment of US$ 100 million, which could

further increase to US$ 1.46 billion. The retail industry in India is estimated at about US$ 300

billion and is expected to grow to US$ 427 billion in 2010 and US$ 637 billion in 2015.

Moreover, only 3 percent of the Indian retail industry was in the organized sector. Foreign

retailers were keen to enter India's rapidly growing retail market. However, the government had

permitted retailers of single brand products to own a majority stake in a joint venture with a local


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partner (with prior government permission). Retailers of multi-brands were only permitted to

operate through franchises and licencees, or a cash-and-carry wholesale model.

Pantaloon Retail, the retail arm of the Future Group was expected to give stiff competition as it

had a first-mover advantage. A few Indian retailers felt that the entry of foreign retail giants like

Wal-Mart, Carrefour SA and Tesco Plc (Tesco) would result in Indian retailers learning some of

the best international practices in retailing. However, analysts noted that the success of the joint

venture would depend on how successful Wal-Mart is in building a cost efficient supply chain

and sourcing network so that the cost savings are passed on the end consumer through its

trademark "every day low price" strategy.

bharti airtel alliances

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