Airtel

Study of Bharti Airtel Ltd.

1. EXECUTIVE SUMMARY

This report on Bharti Airtel is done to find out certain objective regarding the strategic approach

adopted by Airtel to stand strongly in competitive telecom market. Airtel marketing strategy is

analyse using various models such as porters generic strategy, BCG matrix, 5-force model, SWOT

analysis, ansoff matrix of Airtel, etc.

Also a detailed study of company’s financial position is done to find out its market position.

The study includes operating profits ,net sales, revenue and expenditure of Airtel.

It also talks about the telecom industry in India, different players, role of TRAI. It also gives

information about recent strategies of Airtel such as changing of the brand Airtel logo,etc.

The report gives information on how Airtel adjusted itself to changing market conditions,what are

the various marketing strategies it takes to become 1st company by subscriber and revenue.

Lastly, some findings and suggestions are recommendate on the basis of this study.

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http://www.airtel.in/wps/wcm/connect/airtel.in/airtel.in/home/pg_home_new


2. INTRODUCTION TO INDIAN TELECOM INDUSTRY

2.1. Introduction

The Indian telecommunication industry is the world's fastest growing industry with 771 million

mobile phone subscribers as of January 2011. It is also the second largest telecommunication

network in the world in terms of number of wireless connections after China.

As the fastest growing telecommunications industry in the world, it is projected that India will

have 1.159 billion mobile subscribers by 2013.Furthermore, projections by several leading global

consultancies indicate that the total number of subscribers in India will exceed the total subscriber

count in the China by 2013. The industry is expected to reach a size of 344,921 crore (US$76.57

billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for

about 10 million people during the same period.

According to analysts, the sector would create direct employment for 2.8 million people and for 7

million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833

crore (US$30.38 billion) during the fiscal, as against 115,382 crore (US$25.61 billion) a year

beforeToday, it is the fastest growing market in the world and represents unique opportunities for

U.S. companies in the stagnant global scenario.. The wireless technologies currently in use are

Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA).

There are primarily 9 GSM and 5 CDMA operators providing mobile services in 19 telecom

circles and 4 metro cities, covering 2000 towns across the country.

Telephone Subscribers (Wireless and Landline): 806.13 million (feb. 2011)

Land Lines: 34.94 million (feb. 2011)

Cell phones: 771.18 million (feb. 2011)

Monthly Cell phone Addition: 18.85 million (feb. 2011)

Teledensity: 67.67% (feb. 2011)

Projected Teledensity: 1 billion, 84% of population by 2012.

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1.2. Evolution of the industry-Important Milestones

History of Indian Telecommunications

1851 First operational land lines were laid by the government near Calcutta,

(Seat of British power)

1881 Telephone service introduced in India

1883 Merger with the postal system

1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable Communication

Company (IRCC)

1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and

Telegraph (PTT), a monopoly run by the government's Ministry of Communications

1985 Department of Telecommunications (DOT) established, an exclusive provider of domestic and

long-distance service that would be its own regulator (separate from the postal system)

1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam

Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited

(MTNL) for service in metropolitan areas.

1997 Telecom Regulatory Authority of India created.

1999 Cellular Services are launched in India. New National Telecom Policy is adopted.

2000 DOT becomes a corporation, BSNL

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1.3. Other Major Players in the Market:

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)

Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

Foreign invested companies (Vodafone-Essar, Escotel, Idea Cellular, BPL Mobile, Spice

Communications)

A. BSNL

On October 1, 2000 the Department of Telecom Operations, Government of India became a

corporation and was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is now India’s

leading telecommunications company and the largest public sector undertaking. It has a network of

over 45 million lines covering 5000 towns with over 35 million telephone connections. The state-

controlled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance

services throughout India (except Delhi and Mumbai). BSNL will be expanding the network in

line with the Tenth Five-Year Plan (1992-97). BSNL, which became the third operator of GSM

mobile services in most circles, is now planning to overtake Bharti to become the largest GSM

operator in the country. BSNL is also the largest operator in the Internet market, with a share of 21

per cent of the entire subscriber base.

B. MTNL

MTNL was set up on 1st April 1986 by the Government of India to upgrade the quality of telecom

services, expand the telecom network, and introduce new services and to raise revenue for telecom

development needs of India’s key metros – Delhi, and Mumbai, the business capital. In the past 17

years, the company has taken rapid strides to emerge as India’s leading and one of Asia’s largest

telecom operating companies. The company has also been in the forefront of 5 technology

induction by converting 100% of its telephone exchange network into the state-of-the-art digital

mode. The Govt. of India currently holds 56.25% stake in the company. In the year 03-04, the

company's focus would be not only consolidating the gains but also to focus on new areas of

enterprise such as joint ventures for projects outside India, entering into national long distance

operation, widening the cellular and CDMA-based WLL customer base, setting up internet and

allied services on an all India basis. MTNL has over 5 million subscribers and 329,374 mobile

subscribers. While the market for fixed wireline phones is stagnating, MTNL faces intense

competition from the private players—Bharti, Hutchison and Idea Cellular, Reliance Infocomm—

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in mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 02-03, a

decline of 5.8 per cent over the previous year’s annual turnover of Rs.

63.92 billion.

C. RELIANCE INFOCOMM

Reliance is a $16 billion integrated oil exploration to refinery to power and textiles conglomerate

. It is also an integrated telecom service provider with licenses for mobile, fixed, domestic long

distance and international services. Reliance Infocomm offers a complete range of telecom

services, covering mobile and fixed line telephony including broadband, national and international

long distance services, data services and a wide range of value added services and applications.

Reliance India Mobile, the first of Infocomm's initiatives was launched on December 28, 2002.

This marked the beginning of Reliance's vision of ushering in a digital revolution in India by

becoming a major catalyst in improving quality of life and changing the face of India. Reliance

Infocomm plans to extend its efforts beyond the traditional value chain to develop and deploy

telecom solutions for India's farmers, businesses, hospitals, government and public sector

organizations. Until recently, Reliance was permitted to provide only “limited mobility” services

through its basic services license. However, it has now acquired a unified access license for 18

circles that permits it to provide the full range of mobile services. It

has rolled out its CDMA mobile network and enrolled more than 6 million subscribers in one year

to become the country’s largest mobile operator. It now wants to increase its market share and has

recently launched pre-paid services. Having captured the voice market, it intends to attack the

broadband market.

D. TATA TELESERVICES

Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over 200,000

employees and more than 2.3 million shareholders. Tata Teleservices provides basic (fixed line

services), using CDMA technology in six circles: Maharashtra (including Mumbai), New Delhi,

Andhra Pradesh, Tamil Nadu, Gujarat, and Karnataka. It has over 800,000 subscribers. It has now

migrated to unified access licenses, by paying a Rs. 5.45 billion ($120 million) fee, which enables

it to provide fully mobile services as well. The company is also expanding its footprint, and has

paid Rs. 4.17 billion ($90 million) to DoT for 11 new licenses under the IUC (interconnect usage

charges) regime. The new licenses, coupled with the six circles in which it already operates,

virtually gives the CDMA mobile operator a national footprint that is almost on par with BSNL

and Reliance Infocomm. The company hopes to start off services in these 11 new circles by

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August 2004. These circles include Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata, Orissa,

Punjab, Rajasthan, Uttar Pradesh (East) & West and West Bengal.

E. VSNL

On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a wholly Government owned

corporation - was born as successor to OCS. The company operates a network of earth stations,

switches, submarine cable systems, and value added service nodes to provide a range of basic and

value added services and has a dedicated work force of about 2000 employees. VSNL's main

gateway centers are located at Mumbai, New Delhi, Kolkata and Chennai. The international

telecommunication circuits are derived via Intelsat and Inmarsat satellites and wide band

submarine cable systems e.g. FLAG, SEA-ME-WE-2 and SEA-ME-WE-3. The company's ADRs

are listed on the New York Stock Exchange and its shares are listed on major Stock Exchanges in

India. The Indian Government owns approximately 26 per cent equity, M/s Panatone Finvest

Limited as investing vehicle of Tata Group owns 45 per cent equity and the overseas holding

(inclusive of FIIs, ADRs, Foreign Banks) is approximately 13 per cent and the rest is owned by

Indian institutions and the public. The company provides international and Internet services as

well as a host of value-added services. Its revenues have declined from Rs. 70.89 billion ($1.62

billion) in 2001-02 to Rs. 48.12 billion ($1.1 billion) in 2002-03, with voice revenues being the

mainstay.

F. VODAFONE ESSAR

Vodafone Essar, commonly referred to as Vodafone, is a cellular operator in India that covers 23

telecom circles in India. It was formerly known as Hutchison Essar. It is based in Mumbai.

Vodafone Essar is the Indian subsidiary of Vodafone Group 67% and Essar Group 33%. It is the

second largest mobile phone operator in terms of revenue behind Bharti Airtel, and third largest in

terms of customers. Vodafone had about 130.9 million customers as of February 2011.

On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka

Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja

Group, and Essar Group, which is the owner of the remaining 33%. The whole company was

valued at USD 18.8 billion. The transaction closed on May 8, 2007. Despite the official name

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being Vodafone Essar, its products are simply branded Vodafone. It offers both prepaid and

postpaid GSM cellular phone coverage throughout India with good presence in the metros.

Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM

technology. Vodafone Essar will launch 3G services in the country in the January-March quarter

of 2011 and plans to spend up to $500 million within two years on its 3G networks

G. IDEA

Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand designs to

become a national player, but in doing so is likely to become a thorn in the side of Reliance

Communications Ltd. IDEA operates in eight telecom “circles,” or regions, in Western India, and

has received additional GSM licenses to expand its network into three circles in Eastern India --

the first phase of a major expansion plan that it intends to fund through an IPO, according to parent

company Aditya Birla Group .

H. AIRCEL

The Aircel group is a joint venture between Maxis Communications Berhad of Malaysia and

Sindya Securities & Investments Private Limited, whose current shareholders are the Reddy family

of Apollo Hospitals Group of India, with Maxis Communications holding a majority stake of 74%.

Aircel commenced operations in 1999 and became the leading mobile operator in Tamil Nadu

within 18 months. In December 2003, it launched commercially in Chennai and quickly

established itself as a market leader - a position it has held since.

Aircel began its outward expansion in 2005 and met with unprecedented success in the Eastern

frontier circles. It emerged a market leader in Assam and in the North Eastern provinces within 18

months of operations. Now, the company has completed rollout in all 23 telecom circles including

Chennai, Tamil Nadu, Assam, North East, Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh,

West Bengal, Kolkata, Kerala, Andhra Pradesh, Karnataka, Delhi, UP(West), UP(East),

Maharashtra & Goa , Mumbai, Haryana , Madhya Pradesh, Punjab, Gujarat and Rajasthan.

Aircel has won many awards and recognitions. Voice and Data gave Aircel the highest rating for

overall customer satisfaction and network quality in 2006. Aircel emerged as the top mid-size

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utility company in Businessworld's 'List of Best Mid-Size Companies' in 2007. Additionally,

Tele.net recognised Aircel as the best regional operator in 2008.

With over 25 million happy customers in the country, Aircel is a full-fledged national operator.

1.4. Telecom Policy Environment

Indian telecommunications today benefits from among the most enlightened regulation in the

region, and arguably in the world. The sector, sometimes considered the “poster-boy for economic

reforms,” has been among the chief beneficiaries of the post-1991 liberalization. Unlike electricity,

for example, where reforms have been stalled, telecommunications has generally been seen as

removed from “mass concerns,” and thus less subject to electoral calculations. Market oriented

reforms have also been facilitated by lobbying from India’s booming technology sector, whose

continued success of course depends on the quality of communications infrastructure.

Despite several hiccups along the way, the Telecom Regulatory Authority of India (TRAI), the

independent regulator, has earned a reputation for transparency and competence. With the recent

resolution of a major dispute between cellular and fixed operators, Indian telecommunications,

already among the most competitive markets in the world, appears set to continue growing rapidly.

While telecom liberalization is usually associated with the post-1991 era, the seeds of reform were

actually planted in the 1980s. At that time, Rajiv Gandhi proclaimed his intention of “leading India

into the 21st century,” and carved the Department of Telecommunications (DOT) out of the

Department of Posts and Telegraph. For a time he also even considered corporatizing the DOT,

before succumbing to union pressure. In a compromise, Gandhi created two DOT-owned

corporations: Mahanagar Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and

Videsh Sanchar Nigam Limited (VSNL), to operate international telecom services. He also

introduced private capital into the manufacturing of telecommunications equipment, which had

previously been a DOT monopoly. These and other reforms were limited by the unstable coalition

politics of the late 1980s. It was not until the early 1990s, when the political situation stabilized,

and with the general momentum for economic reforms, that telecommunications liberalization

really took off. In 1994, the government released its National Telecommunications Policy (NTP-

94), which allowed private fixed operators to take part in the Indian market for the first time

(cellular operators had been allowed into the four largest metropolitan centers in 1992). Under the

government’s new policy, India was divided into 20 circles roughly corresponding to state

boundaries, each of which would contain two fixed operators (including the incumbent), and two

mobile operators.

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As ground-breaking as NTP-94 was, its implementation was unfortunately marred by regulatory

uncertainty and over-bidding. A number of operators were unable to live up to their profligate bids

and, confronted with far less lucrative networks than they had supposed, pulled out of the country.

As a result, competition in India’s telecom sector did not really become a reality until 1999. At that

time the government’s New Telecommunications Policy (NTP-99) switched from a fixed fee

license to a revenue sharing regime of approximately 15%. This figure has subsequently been

lowered (to 10%-12%), and is expected to be reduced even further over the coming years. Still,

India continues to derive substantial revenue from license fees ($800 million in 2001-2002),

leading some critics to suggest that the government has abrogated its responsibilities as a regulator

to those as a seller. Another, perhaps even more significant, problem with India’s initial attempts

to introduce competition was the lack of regulatory clarity. Private operators complained that the

licensor – the DOT – was also the incumbent operator. The many stringent conditions attached to

licenses were thus seen by many as the DOT’s attempt to limit competition. It was in response to

such concerns that the government in 1997 set up the Telecom Regulatory Authority of India

(TRAI), the nation’s first independent telecom regulator.

Over the years, TRAI has earned a growing reputation for independence, transparency and an

increasing level of competence. Early on, however, the regulator was beleaguered on all fronts. It

had to contend with political interference, the incumbent’s many challenges to its authority, and

accusations of ineptitude by private players. Throughout the late 1990s, TRAI’s authority was

steadily whittled away in a number of cases, when the courts repeatedly held that regulatory power

play with the central government. It was not until 2000, with the passing of the TRAI Amendment

Act, that the regulatory body really came into its own. Coming just a year after NTP-99, the act

marks something of a watershed moment in the history of India telecom liberalization. It set the

stage for several key events that have enabled the vigorous competition witnessed today. Some of

these events include:

The corporatization of the DOT and the creation of a new state-owned telecom company, Bharat

Sanchar Nigam Ltd (BSNL), in 2000;

The opening up of India’s internal long-distance market in 2000, and the subsequent drop in long-

distance rates as part of TRAI’s tariff rebalancing exercise;

The termination of VSNL’s monopoly over international traffic in 2002, and the partial

privatization of the company that same year, with the Tata group assuming a 25% stake and

management control;

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The gradual easing of the original duopoly licensing policy, allowing a greater number of

operators in each circle;

The legalization, in 2002, of IP telephony (a move that many believe was held up due to lobbying

by VSNL, which feared the consequences on its international monopoly);

The introduction in 2003 of a Calling Party Pays (CPP) system for cell phones, despite

considerable opposition (including litigation) by fixed operators; And, more generally, the

commencement of more stringent interconnection regulation by TRAI, which has moved from an

interoperator “negotiations-based” approach (often used by the stronger operator to negotiate ad

infinitum) to a more rules-based approach. All of these events have created an impressive forward-

momentum in Indian telecommunications, resulting in a vigorously competitive and fast-growing

sector.

India has also suffered from its fair share of regulatory hiccups. Many operators (mobile players in

particular) still complain about the difficulties of gaining access to the incumbent’s (BSNL)

network, and the government’s insistence on capping FDI in the telecom sector to 49% (a move

made in the name of national security) limits capital availability and thus network rollout. In

addition, ISPs, who were allowed into the market under a liberal licensing regime in 1998,

continue to haemorrhage money, and have been pleading with the government for various forms of

relief, including the provision of unmetered phone numbers

for Internet access. Despite initially impressive results, the growth of Internet in the country has

recently stalled, with only 8 million users. Broadband penetration, too, remains tiny.

But perhaps the biggest – and, until recently, most intractable – regulatory problem has been the

drawn-out battle over “limited mobility” telephony. This imbroglio began in 1999, when MTNL

sought permission from TRAI to provide CDMA-based WLL services with “limited mobility.”

GSM cellular operators were soon up in arms, arguing that “limited mobility” was simply a

backdoor entry into their business. Moreover, fixed operators had paid lower license and spectrum

fees than cellular one’s; were not required to pay access charges for cell-to-fixed calls (unlike their

cellular counterparts); and, amidst accusations of cross-subsidization, were charging considerably

lower rates than the cellular operators. The resulting conflict dragged on in the courts and in the

political arena for years. Fixed operators including new entrants Reliance and Tata Teleservices

claimed that they were being prevented from providing a cheap service that would drive

penetration and be of benefit to the “common man”; cellular players bitterly opposed what they

perceived as unequal regulatory treatment for two kinds of operators who were in fact offering the

same service. The real victim, of course, was the Indian telecommunications market, which

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suffered from investor perceptions of regulatory confusion and operator in-fighting. In late 2002,

for example, thousands of mobile users in New Delhi were for a time cut off from the fixed-line

network when MTNL shut down interconnection for cellular companies. (MTNL later attributed

the incident to a “technical snag.”) It was not until late 2003 that the issue was finally resolved,

under considerable government pressure, when cellular operators agreed to withdraw their many

cases against the fixed-line operators. Fixed operators would in effect be allowed to enter the

mobile business; in return, the government granted cellular players several concessions, including

lower revenue-share arrangements estimated to total over $210 million. Perhaps most notably, the

government announced its intention to adopt a “unified access licensing” regime, which would in

the future provide a single, technology-neutral license for fixed and cellular operators. The hope is

that this new license category will prevent a repeat of the recent controversy, and allow new

technologies to enter the Indian market without requiring a wholesale rewrite of licensing laws.

1.5. MAJOR MARKET TRENDS

The telecoms trends in India will have a great impact on everything from the humble PC, internet,

broadband (both wireless and fixed), cable, handset features, talking SMS, IPTV, soft switches,

and managed services to the local manufacturing and supply chain. This report discusses key

trends in the Indian telecom industry, their drivers and the major impacts of such trends affecting

mobile operators, infrastructure and handset vendors.

A. Higher acceptance for wireless services

Indian customers are embracing mobile technology in a big way (an average of four million

subscribers added every month for the past six months itself). They prefer wireless services

compared to wire-line services, which is evident from the fact that while the wireless subscriber

base has increased at 75 percent CAGR from 2001 to 2006, the wire-line subscriber base growth

rate is negligible during the same period. In fact, many customers are returning their wire-line

phones to their service providers as mobile provides a more attractive and competitive solution.

The main drivers for this trend are quick service delivery for mobile connections, affordable

pricing plans in the form of pre-paid cards and increased purchasing power among the 18 to 40

years age group as well as sizeable middle class – a prime market for this service. Some of the

positive impacts of this trend are as follows. According to a study, 18 percent of mobile users are

willing to change their handsets every year to newer models with more features, which is good

news for the handset vendors. The other impact is that while the operators have only limited

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options to generate additional revenues through value-added services from wire-line services, the

mobile operators have numerous options to generate non-voice revenues from their customers.

Some examples of value-added services are ring tones download, coloured ring back tones, talking

SMS, mobisodes (a brief video programme episode designed for mobile phone viewing) etc.

Moreover, there exists great opportunity for content developers to develop applications suitable for

mobile users like mobile gaming, location based services etc. On the negative side, there is an

increased threat of virus – spread through mobile data connections and Bluetooth technology – in

mobile phones, making them unusable at times.

B. MERGERS

Demand for new spectrum as the industry grows and the fact the spectrum allocation in done on

the basis of number of subscribers will force companies to merge so as to claim large number of

subscribers to gain more spectrum as a precursor to the launch of larger and expanded services.

However it must also be noted that this may very well never happen on account of low telecom

penetration.

C. NEW CIRCLES

As mentioned earlier there is a significant number of tier-2 and tier 3 cities that can accommodate

more players we expect aggressive response by the companies to such opportunities as and when

they are created.

1.6. Constraints:

Slow pace of the reform process .

It would be difficult to make in-roads into the semi-rural and rural areas because of the lack of

infrastructure. The service providers have to incur a huge initial fixed cost to make inroads into

this market. Achieving break-even under these circumstances may prove to be difficult.

The sector requires players with huge financial resources due to the above mentioned constraint.

Upfront entry fees and bank guarantees represent a sizeable share of initial investments. While the

criteria are important, it tends to support the existing big and older players. Financing these

requirements require a little more liberal approach from the policy side.

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2. INTRODUCTION OF Bharti Airtel Ltd.

3.1. Vision & promise

By 2010 Airtel will be the most admired brand in India:

Loved by more customers

Targeted by top talent

Benchmarked by more businesses

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

3.2. 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.”

3.3. Core Values

Empowering People - to do their best

Being Flexible - to adapt to the changing environment and evolving customer needs

Making it Happen - by striving to change the status quo, innovate and energize new ideas with a

strong passion and entrepreneurial spirit

Openness and transparency - with an innate desire to do well

Creating Positive Impact – with a desire to create a meaningful difference in society.

3.4. Goals

To undertake transformational projects that have a positive impact on the society and contribute

to the nation building process.

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To Diversify into new businesses in agriculture, financial services and retail business with world-

class partners

To lay the foundation for building a “conglomerate” of future

3.5. Company overview

Incorporated on July 7, 1995, Bharti Airtel Ltd is a division of Bharti Enterprises. The businesses

of Bharti Airtel are structured into two main strategic groups -Mobility and Infotel. The Mobility

business provides GSM mobile services in all 23 telecommunications circles in India, while the

Infotel business group provides telephone services and Internet access over DSL in 15 circles. The

company complements its mobile, broadband, and telephone services with national and

international long-distance services. The company also has a submarine cable landing station at

Chennai, which connects the submarine cable connecting Chennai and Singapore. Bharti Tele-

Ventures provides end-to-end data and enterprise services to corporate customers by leveraging its

nationwide fibre- optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs,

ISP and international bandwidth access through the gateways and landing station. All of Bharti

Tele-Ventures' services are provided under the Airtel brand.

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti Group has a

diverse business portfolio and has created global brands in the telecommunication sector. Bharti

has recently forayed into retail business as Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for

the cash & carry business. It has successfully launched an international venture with EL

Rothschild Group to export fresh agree products exclusively to markets in Europe and USA and

has launched Bharti AXA Life Insurance Company Ltd under a joint venture with AXA, world

leader in financial protection and wealth management.

Airtel comes to you from Bharti Airtel Limited, India’s 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 (SBU’s) - 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

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business offers broadband & telephone services in 95 cities and has recently launched India's best

Direct-to-Home (DTH) service, Airtel digital TV.

3.6. Organization Structure

3.7. Business Divisions

Mobile Services (2G + 3G)

Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is the largest

mobile service provider in the country, based on the number of customers.

Airtel Telemedia Services

The group offers high speed broadband internet with a best in class network. With Landline

services in 94 cities we help you stay in touch with your friends & family and the world. Get world

class entertainment with India’s best direct to home (DTH) service digital TV in more than 150

cities

Enterprise Services

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Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier

customers. This division comprises of the Carrier and Corporate business unit. Enterprise Services

is regarded as the trusted communications partner.

3.8. Services Offered By Airtel

The Company is a part of Bharti Enterprises, and is India's leading provider of telecommunications

services. The businesses at Bharti Airtel have been structured into three individual strategic

business units (SBU’s) - mobile services, broadband & telephone services (B&T) & enterprise

services. The mobile services group provides GSM mobile services across India in 23 telecom

circles, while the B&T business group provides broadband & telephone services over 96 cities.

The Enterprise services group has two sub-units - carriers (long distance services) and services to

corporate.

Al these services are provided under the Airtel brand. Its include

Voice Services

Mobile Services (2G + 3G)

Satellite Services

Managed Data & Internet Services

Managed e-Business Services

Voice Services:

Bharti Airtel became the first private fixed-line service provider in India. It is now promoted under

the Airtel brand. Recently, the Government opened the fixed-line industry to unlimited

competition. Airtel has subsequently started providing fixed- line services in the four circles of

Delhi, Haryana, Madhya Pradesh, Karnataka, Tamil Nadu & UP (West).

Airtel Enterprise Services believes that these circles have high telecommunications potential,

especially for carrying Voice & Data traffic. These circles were strategically selected so as to

provide synergies with Airtel’s long distance network and Airtel’s extensive mobile network.

Airtel Enterprise Services, India's premium telecommunication service, brings to you a whole new

experience in telephony. From integrated telephone services for Enterprises and small business

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enterprises to user-friendly plans for Broadband Internet Services (DSL), we bring innovative,

cost-effective, comprehensive and multi-product solutions to cater to all your telecom and data

needs.

Voice - Product Portfolio:

Airtel Enterprise Services telephone services go beyond basic telephony to offer our users a whole

host of Value Added Services as well as premium add-ons. Each telephone connection from Airtel

Enterprise Services is backed by a superior fibre-optic backbone for enhanced reliability and

quality telephony. Few of the Value Added Services offered are Calling Line Identification, Three

Party Conferencing, Dynamic Lock, Hunting Numbers, and Parallel Ringing etc. Airtel Enterprise

Services Voice Services provide Free Dial-up Internet access that is bundled along with your

Telephone connection from Airtel. It’s fast, reliable and gives you unlimited Internet access.

Mobile Services:

Airtel’s mobile footprint extends across the country in 21 telecom circles. Its service standards

compare with the very best in the world. In fact, that’s how Bharti has managed to win the trust of

millions of customers and makes it one of the top 5 operators in the world, in terms of service and

subscriber base. The company has several Firsts to its credit:

The First to launch full roaming service on pre-paid in the country.

The First to launch 32K SIM cards.

The First in Asia to deploy the multi band feature in a wireless network for efficient usage of

spectrum.

The First to deploy Voice Quality Enhancers to improve voice quality and acoustics.

The First telecom company in the world to receive the ISO 9001:2000 certification from British

Standards Institute

Satellite Services :

Airtel Enterprise Services provides you connectivity where ever you take your business Our

Satellite Services bring you the benefits of access in remote locations. Airtel Enterprise Services is

a leading provider of broadband IP satellite services and DAMA/PAMA services in India. Our

solutions support audio, video and voice applications on demand.

17



Satellite Services include :

PAMA/DAMA

BIT - Internet

VPN

Satellite based IPLCs for redundancy reasons

Managed Data & Internet Services:

Airtel Enterprise Services brings you a comprehensive suite of data technologies. So we are able to

support all types of networks and ensure our customers can migrate their network to the future

seamlessly.

Our Managed Data & Internet services make our customers future proof. Managed Data & Internet

Services include:

MPLS

ATM

FR

Internet

IPLC

Leased Lines

Customised Solutions

International Managed Services

Metro Ethernet

Managed e-Business Services :

Airtel Enterprise Services offers an internationally benchmarked, carrier class hosting, storage and

business continuity services. A range of services that help to keep your business running the way

you want- 24x7. Thanks to our world-class high tech Data Centres. Managed e-Business Services

include:

Co-lo: Dedicated and Shared

BCRS Services

Web hosting

18



3.9. Corporate Responsibility at Bharti Airtel

At Bharti, CSR is a way of life. Each department and employee strives to be sensitive to the

stakeholders and environment within their work context. Bharti encourages employees to take

decisions and design business-linked processes that are sensitive to communities and environment.

Corporate Social Responsibility (CSR) in Bharti encompasses much more than only social

outreach programs. It is an integral part of the way Bharti conducts its business.

The essence of Bharti’s commitment to Corporate Social Responsibility is embedded in the

‘Corporate Values’, which stem from its deepest held beliefs.

These Values are:

To be responsive to the needs of our customers

To trust and respect our employees

To continuously improve our services – innovatively and expeditiously

To be transparent and sensitive in our dealings with all stakeholders

They encourage their employees to take decisions and design business processes, keeping in mind

the following:

Ethics, fairness and being correct

Meeting and going beyond compliances and legal requirements

Showing respect and sensitivity towards stakeholders and communities, and

Nurturing the environment

They practice their CSR beliefs and commitments through a three-pronged approach:

Engaging with stakeholders

Ensuring stakeholder sensitive policies and practices

Undertaking programs for our employees, community and environment

19



Bharti Airtel sensitizes its employees towards CSR issues at various forums. We feel that it is

important that each employee should understand the importance of environmental, social and

economical aspects while taking business decisions. At Bharti, each employee is sensitized

towards CSR issues and thus operations at the ground level are influenced. Such sensitization

exercises have resulted in many socially and environmentally sensitive decisions on the ground.

3.10. Some Headlines

Financial Year 2008-09:

Airtel offers 1 cent/min call rates from US to India, April 8, 2009

Airtel pioneers 16 Mbps Broadband in India, April 6, 2009

Bharti Airtel and Australia Japan Cable collaborate to create a new connectivity solution to

Australia from Singapore and the US, March 31, 2009

Bharti Airtel to Observe Silent period from March 31, 2009, March 23, 2009

Airtel digital TV brings Home the Magic with Kareena Kapoor, March 25, 2009

Bharti Airtel announces apex level organisation changes, March 12, 2009

Bharti Airtel withdraws ‘95’ dialling on its fixed line service, March 9, 2009

A R Rahman to soon knock on Airtel digital TV customers’ door, February 27, 2009

Bharti Airtel launches world’s first Windows-based Online Desktop on Airtel broadband–

powered by Microsoft and Nivio, February 15, 2009

Airtel and mChek announce milestone of One Million users; introduce a broad range of new

mCommerce services, January 20, 2009


Bharti Airtel Announces Strategic Organisation Changes For Future Growth

Bharti enters into exclusive discussions with Zain for the acquisition of Zain Africa BV

14, February 2010, Zain Ghana issued a resolution to accept a $10.7 billion buyout offer from

Bharti Airtel Limited (Bharti) to enter into exclusive discussions until 25 March 2010, regarding

the sale of its African unit, Zain Africa BV.

Bharti Airtel ties up financing for proposed acquisition of Zain Africa BV

Bharti Airtel and global telcos boost Trans-Pacific connectivity with the launch of the Unity cable

system

Bharti Airtel extends partnership with Ericsson

Bharti set to acquire Zain Africa BV

Bharti Airtel, HTC and Qualcomm Launch the HTC Smart in India20



Airtel introduces fastest ever speed for broadband users in India

Bharti Airtel to Observe Silent period from March 31, 2010


Q2 FY11 Revenues at Rs. 15,215 crore, up by 47% Y-o-Y

Bharti Airtel submitted its bid for 3G spectrum auction which starts from April 9, 2010.

Bharti Airtel has partnered with US-based software maker VMware Inc. It has done this in order to

focus on the cloud-based managed computer services market.

On May 18, 2010, Airtel won 3G spectrum in 13 circles: Delhi, Mumbai, Andhra Pradesh,

Karnataka, Tamil Nadu, Uttar Pradesh (West), Rajasthan, West Bengal, Himachal Pradesh, Bihar,

Assam, North East, Jammu & Kashmir for Rs. 12,295 crores.

Bharti Airtel wins broadband spectrum in four circles: Maharashtra, Karnataka, Punjab and

Kolkata for Rs. 3314.36 crores.

8, June 2010, Bharti Airtel completed a deal to Zain Telecom's businesses in 15 African countries

for $10.7 billion.

August 11, 2010, Bharti Airtel announced that it would acquire 100% stake in Telecom Seychelles

for US$62 million taking its global presence to 19 countries.

20 September 2010, Bharti Airtel said that it has given contracts to Ericsson India, Nokia Siemens

Networks (NSN) and Huawei Technologies to set up infrastructure for providing 3G services in

the country.

Airtel unveils new youthful and dynamic global identity.

18 November, 2010, Bharti Airtel announced a re-branding campaign wherein, they would be

referred as airtel, with a new logo.

20 December 2010, Airtel launched its new identity for Bangladesh subscribers.

On 23 December 2010, Airtel opened its first underground terrestrial fibre optic cable built in

alliance with China Telecom.

On 23 February 2011, Bharti Airtel launched the Europe-India gateway cable system, along with

16 other global telecom firms. A 15,000 kilometre long cable, between Mumbai and London.

On 27 February 2011, Bharti Airtel launched its speech recognition based service, 'One Number,

One Voice'

Bharti Airtel to observe silent period from March 31, 201121



3.11 Growth Strategies By Airtel:

Bharti Airtel is structured as four strategic business units - Mobile, Telemedia, Enterprise and

Digital TV. The mobile business offers services in India, Sri Lanka and Bangladesh. The

Telemedia business provides broadband, IPTV and telephone services in 94 Indian cities.

The Enterprise business provides end-to-end telecom solutions to corporate customers and national

and international long distance services to carriers. The Digital TV business provides DTH

services across India. All these services are provided under the Airtel brand. Airtel’s national high-

speed optic fiber network currently spans over 118,337 Rkms across India.

Bharti Airtel and global telcos boost Trans-Pacific connectivity with the launch of the

Unity cable system:

In a move that is set to boost Trans-Pacific connectivity, Bharti Airtel, one of Asia’s leading

integrated telecom services providers and global telcos announced the launch of the Unity cable

system. The Unity consortium together with its suppliers NEC Corporation and TE SubCom

(formerly Tyco Telecommunications), have successfully completed comprehensive end-to-end

testing, making the cable system ready for service.

This cable link synergises with Bharti Airtel’s existing multiple high speed connectivity options

from India to Singapore on i2i and from Chikura, near Tokyo to the US west Coast. Bharti Airtel’s

investments in Unity, is part of its plans to expand it global network through its ownership of the

i2i submarine cable system and consortium ownership in other global undersea cable systems like

SEA-ME-WE 4, EIG, I-ME-WE and AAG.

The Unity cable system provides direct connectivity between Chikura, located on the coast near

Tokyo, and West Coast network Points-of-Presence in Los Angeles, Palo Alto and San Jose. At

Chikura, Unity is seamlessly connected to other cable systems, further enhancing connectivity into

Asia. Through the deployment of state-of-the-art submarine cable technology, the five fiber pair

22



Unity cable system is designed to deliver up to 4.8 Terabits per second (Tbps) of bandwidth across

the Pacific, with each fiber pair having a capacity of up to 960 Gigabits per second (Gbps).

The name Unity was chosen to signify a new type of consortium, born out of potentially

competing systems, to emerge as a system within a system, offering ownership and management

of individual fiber pairs.

Bharti Airtel extends partnership with Ericsson:

Bharti Airtel and Ericsson further strengthened their strategic partnership with a USD 1.3 billion

network expansion contract. Airtel users will enjoy an enhanced voice quality and faster data

access. The agreement will enable Airtel to put in place a converged network and expanded

coverage in rural India. Ericsson will expand and upgrade Airtel’s network in 15 of India’s 22

telecom circles.

As part of this contract, Ericsson will supply its industry-leading portfolio of energy efficient

2G/2.5G radio base stations, circuit and packet core, microwave transmission and Intelligent

Network. In addition, Ericsson will ensure that Bharti Airtel’s core and transport network is 3G-

ready in order to reduce time to market and enable the fast rollout of 3G services at a later date.

The expansion covers introduction of some of the latest technologies within the wireless world

which will bring better quality voice to end users, support more users in using one base station,

enhanced data rates using Evolved EDGE technology and other new services.

Ericsson is the largest telecom network supplier supplying, for example, mobile, wire line, DTH,

device management and variety of services such as prepaid to Airtel.

Bharti Airtel, HTC and Qualcomm Launch the HTC Smart in India:

HTC Corporation, a global smartphone designer and Bharti Airtel, one of Asia’s leading integrated

telecom service providers, announced an exclusive partnership to launch the HTC Smart in India

in collaboration with Qualcomm Incorporated. The HTC Smart marks HTC’s strategic focus on

India, the fastest growing telecom market in the world. HTC Smart, an easy-to-use and affordable

23



smartphone, aims to create a new category of smartphones by bringing the globally acclaimed

HTC Smart to the masses.

HTC has always focused on setting the stage for new mobile experiences and the HTC Smart is

clear differentor from touch phone and the result of customer feedback from all over the world for

an easier-to-use, affordable smartphone.

The HTC Smart incorporates the latest cutting-edge features and is powered by Qualcomm’s Brew

Mobile Platform™ operating system. The stylish device sports a 2.8-inch TFT-LCD touch-

sensitive screen with QVGA resolution and is equipped with a 3.5 mm stereo audio jack. The HTC

Smart also includes a 3.0 megapixel color camera with fixed focus and flashlight.

As the undisputed leader in the Indian telecom industry, Airtel is constantly delighting its

customers and offering innovations to enrich their experience. With the HTC Smart, Airtel

customers will be the first in the world to experience a revolutionary Smartphone that is not only

affordable but is also 3G-ready.

Airtel introduces fastest ever speed for broadband users in India:

Bharti Airtel has pioneered 50 Mbps broadband – the fastest wireline broadband for its consumer

segment on VDSL2 in the country. Initially, the service would be available in select few locations

in Delhi and Gurgaon. As the leading private broadband service provider in the country, Bharti

Airtel has been the pioneer in introducing high speed broadband in India with the launch of its 16

Mbps plans last year.

Airtel, with this step, brings in a world class experience for its broadband customers with

introduction of 50 Mbps speed - the fastest, wired broadband service on next generation VDSL2

technology. This ultra-fast broadband connection will allow customers, the convenience to

download songs in seconds and full length feature films in less than three minutes.

Powered by Airtel’s Carrier Ethernet Network, the service will be initially available in select few

premium locations in Delhi and Gurgaon, with phased roll-out in cities of Mumbai, Chennai and

24



Bangalore. Customers can avail the following plans for ultra high-speed broadband. It has priced

this service in a very strategic way:

50 MBPS @ Rs. 8999 per month, experience 50 Mbps broadband speed with free data

transfer upto 200 GB and additional free value added services (VAS) like Parallel Ringing,

Website Builder (Basic), PC Secure (Anti-Virus software), Online Storage, Unlimited Gaming on

Games on Demand.

30 MBPS - @ Rs. 7999 per month, experience 30 Mbps broadband speed with free data

transfer upto 200GB and additional free VAS like Parallel Ringing, Website Builder (Basic), PC

Secure (Anti-Virus software), Online Storage, Unlimited Gaming on Games on Demand.

VDSL2 (Very High Speed Digital Subscriber Line) is the newest and most advanced standard of

DSL broadband wire line communications. It is designed to support the wide deployment of Triple

Play services such as voice, video, data, IPTV, high definition television (HDTV) and interactive

gaming. VDSL2 also enables customers to stream HD Content anywhere from the internet world

as well.

Bharti set to acquire Zain Africa BV:

Bharti Airtel Limited (“Bharti”), Asia’s leading telecommunications service provider, has entered

into a legally binding definitive agreement with Zain Group to acquire Zain Africa BV based on an

enterprise valuation of USD 10.7 billion.

Under the agreement, Bharti will acquire Zain’s African mobile services operations in 15 countries

with a total customer base of over 42 million. Zain is the market leader in ten of these countries

and ranks second in four countries. With this acquisition, Bharti Airtel will be the world’s fifth

largest wireless company with operations across 18 countries. Bharti group’s global telecom

footprint will expand to 21 countries along with the operations in Seychelles, Jersey, and

Guernsey.

This agreement is a landmark for global telecom industry and game changer for Bharti. More

importantly, this transaction is a pioneering step towards South cooperation and strengthening of

ties between India and Africa. With this acquisition, Bharti Airtel will be transformed into a truly

global telecom company with operations across 18 countries fulfilling our vision of building a

world-class multinational. The strength of the brand and the historical Indian connect with Africa

25



coupled with our unique business model will allow it to unlock the potential of these emerging

markets.

After Airtel acquired Celtel in 2005, they have grown substantially to become one of Africa’s

leading mobile operators. Bharti Airtel has a fantastic track record in running successful operations

in the emerging markets.

Zain Africa BV has mobile operations in the following 15 countries - Burkina Faso, Chad, Congo

Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger,

Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia. The total population of these 15 countries

stands at over 450 million with telecom penetration of approximately 32%.

With this acquisition Bharti’s total customer base will increase to around 179 million in 18

countries. Bharti launched mobile services in India in 1995, Sri Lanka in 2009 and acquired Warid

in Bangladesh in January 2010.

Standard Chartered Bank is the Lead Advisor to Bharti on this transaction. Barclays Capital is the

Joint Lead Advisor and SBI Group is the Lead Onshore Advisor. Global Investment House KSCC

is the Regional Advisor to Bharti on this transaction.

Looking at the kind of investments made by Bharti and its route for Strategic inorganic growth,

Airtel is expecting a very bright future ahead with becoming leading telecom player worldwide.

Insights about Bharti-Zain deal:

The board of Kuwait’s Zain Telecom has accepted a $10.7-billion (Rs 49,700 crore) offer from

Bharti Airtel for the bulk of its African assets, breathing new life into the Indian company’s

cherished ambition of transforming itself into an emerging-market multinational. Bharti would

acquire 100% of Zain’s African operations. Sudan and Morocco would be out of the deal.

The deal would be an all-cash deal where Bharti would pay $700 mn to Zain by year end. Telecom

Minister A Raja said that the Bharti-Zain deal was good for the Indian industry.

People familiar with the matter and Kuwait’s state news agency KUNA said Zain’s board had

unanimously approved Bharti’s offer for all of Zain’s African assets except those in Sudan and

Morocco.

26



“Bharti Airtel’s bid to buy Zain Africa assets in the Black Continent… proved successful… The

bid involves up to $10.7 billion of investments. If the deal fructifies, the acquisition will give

Bharti a firm foothold in a relatively untapped market and pit it in direct competition with MTN,

with which it has tried and failed to merge twice. The operations spread across 15 African

countries that Bharti is seeking to buy are grouped under an entity called Zain International.

Africa has nearly 450 million mobile phone users and a teledensity under 50%, still offering large

room for growth for a company that is battling a fierce tariff war in India’s overcrowded mobile

phone market. If it buys Zain’s African operations, Bharti will be catapulted past China Unicom,

Sweden’s TeliaSonera, and Germany’s T-Mobile to become the world’s seventh-largest mobile

phone company by subscribers.

The banker said India’s largest phone firm is under-leveraged and has “enough borrowing

capacity” and “financing flexibility”.At the end of December, Bharti’s net debt was just 0.1 times

its equity and it had cash reserves of about Rs 7,600 crore.

Another banker with knowledge of the deal said Bharti is likely to maintain flexibility on payment

depending on how the talks progress—it could be financed entirely by cash or be a part-cash and

part-share deal. Bharti may even consider raising $500 million-$1 billion from the equity market

and around $7.5 billion in debt.

Last year, when Bharti was in talks with MTN, it was looking to raise around $5 billion in debt.

For the overseas component of the loan of $3-3.5 billion, it would have had to pay around 315

basis points above the benchmark London inter-bank offered rate plus fees of 50 bps. The pricing

is likely to come down by over 50 bps now

StanChart is currently Bharti’s sole banker while Zain is being represented by UBS in London. A

third banker said the deal could be in two steps—the first involving the buyout of the African

operations as well as a small stake in Zain itself. Subsequently, Bharti would become a majority

holder of Zain and the total value of the deal would be around $10 billion.

Many analysts see the Bharti stock coming under pressure in the immediate future due to a strain

on cash flow as well as Zain’s low operating margins. The valuation may appear slightly stretched

27



right now, but Airtel needs a foothold in Africa. With Zain, MTN and Vodacom the only large

players with African operations, Airtel’s choice is limited.

There will be some strain on the balance sheet, but Airtel will become a global player with this

acquisition. India is attractive in the long term, but not in the short term and Airtel needs to

diversify at a time when not too many assets are up for sale. Bharti can replicate it in Africa, where

market conditions are similar.

Competitive landscape in Africa will only get tougher with the disappearance of the pent-up

demand for rudimentary telecom services as operators have plucked most of the low-hanging fruit

in their markets.

OBJECTIVE

The Indian communications scenario has transformed into a multiplayer, multi product market

with varied market size and segments. Within the basic phone service the value chain has split into

domestic/local calls, long distance players, and international long distance players. Apart from

having to cope with the change in structure and culture (government to corporate), Airtel has had

to gear itself to meet competition in various segments – basic services, long distance(LD),

International Long Distance (ILD), and Internet Service Provision (ISP).It has forayed into mobile

service provision as well. Objective of study are:

Primary Objective

To find out what marketing strategies the Airtel is implementing to defend and increase the market

share.

Secondary objective

To find who are the competitors of the Airtel and the market shares of the competitors and what

strategies Airtel is implementing to beat its competitors.

To find out how Airtel react to the technology changes in the communications sector,

METHODOLOGY

PRIMARY DATA SOURCES

Primary data is collected by Observation method and Experiment.

28



SECONDARY SOURCE

Internet

Newspaper

Magazines

Others

4. ANALYSIS

3.11. SWOT ANALYSIS

Following is the SWOT Analysis for AIRTEL

29



STRENGTH

VERY FOCUSED ON TELECOM

Bharti Airtel is largely focused on the telecom, around 93% of the total revenue comes from

telecom (Total telecom revenue Rs 3,326).

LEADERSHIP IN FAST GROWING CELLULAR SEGMENT

Airtel is holding leadership position in cellular market. Bharti Airtel is one of India's leading

private sector providers of telecommunications services based on an aggregate of 27,239,757

customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071 broadband

& telephone customers.

PAN INDIA FOOTPRINT

Airtel offers the most expansive roaming network. Letting you roam anywhere in India with its

Pan-India presence, and trot across the globe with International Roaming spread in over 240

networks. The mobile services group provides GSM mobile services across India in 23 telecom

circles, while the B&T business group provides broadband & telephone services in 92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING

INTERNATIONAL SUBMARINE CABLES.

Airtel, the monopoly breaker shattered the Telecom monopoly in the International Long Distance

space with the launch of International Submarine cable Network i2i jointly with Singapore

Telecommunications Ltd. in the year 2002. This has brought a huge value to the IPLC customers,

delivering them an option besides the incumbent carrier, to connect to the outside world.

WEAKNESS

PRICE COMPETITION FROM BSNL AND MTNL.

Airtel is tough competition from the operators like BSNL and MTNL as these two operators are

offering services at a low rate.

30



UNTAPPED RURAL MARKET.

Although Airtel have strong Presence throughout the country but still they are far away from the

Indian rural part and generally this part is covered by BSNL so indirectly Airtel is losing revenue

from the rural sector.

OPPORTUNITIES

THE FAST EXTENDING IPLC MARKET

An IPLC (international private leased circuit) is a point-to-point private line used by an

organization to communicate between offices that are geographically dispersed throughout the

world. An IPLC can be used for Internet access, business data exchange, video conferencing, and

any other form of telecommunication. Airtel Enterprise Services and SingTel jointly provide

IPLCs on the Network i2i. The Landing Station in Singapore is managed by SingTel and by Airtel

in Chennai (India). Each Landing Station has Power Feeding Equipment, Submarine Line

Terminating Equipment and SDH system to power the cable, add wavelengths and convert the

STM-64 output to STM-1 data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGE

The costs of introducing cellular services for Airtel are marginal in nature, as it needs only to

augment its cellular switch/equipment capacity and increase the number of base stations. The

number of cities, towns and villages it has covered already works to its advantage as putting more

base stations for cellular coverage in these areas comes with negligible marginal cost. Besides such

cost advantages, it has also other cost advantages for the latest cellular technology. As a late

entrant into the cellular market, it has dual advantage of latest technology with modern features,

unlike other private cellular operators who started their service more than 4-5 years back and low

capital cost due to advantages of large scale buying of cellular switch/equipment.

HUGE MARKET

The cellular telephony market is presently expanding at a phenomenal / whopping __ rate every

year and there is still vast scope for Airtel to enter /expand in this market. Besides there is a vast

rural segment where the cellular services have not made much headway and many customers are

looking towards Airtel for providing the service to them. With its wide and extensive presence

31



even in the remotest areas, Airtel poised to gain a big market share in this segment when it

expands cellular services into the rural areas.

THREATS

COMPETITION FROM OTHER CELLULAR

It is time for BSNL to improve/expand its cellular services. Fierce and cut-throat competition is

already in place with the markets ever abuzz with several tariff reductions and announcement of

attractive packages, trying to grab most of the ‘mind share’ of the ‘king’ - ‘the consumer’, whose

benefits are increasing with passing of everyday. If BSNL is not innovative and agile, its cellular

service will be a flop. It needs to be proactive with attractive packaging, pricing and marketing

policies lest its presence in the market be treated with disdain by the private cellular companies.

The launch of WLL services by Reliance Infocomm has aggravated the situation.

MARKET MATURITY IN BASIC TELEPHONY SEGMENT

Although Airtel entered in the basic telephony market it’s a biggest there for the company as the

basic telephony market has reached

32



3.12. BCG MATRIX

The BCG matrix (aka B.C.G. analysis, BCG-matrix, Boston Box, Boston Matrix, Boston

Consulting Group analysis) is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1970 to help corporations with analyzing their business units or product lines.

This helps the company allocate resources and is used as an analytical tool in brand marketing,

product management, strategic management, and portfolio analysis.

To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis

of their relative market shares and growth rates.

Cash cows are units with high market share in a slow-growing industry. These units typically

generate cash in excess of the amount of cash needed to maintain the business. They are regarded

as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many

as possible. They are to be "milked" continuously with as little investment as possible, since such

investment would be wasted in an industry with low growth.

Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing

industry. These units typically "break even", generating barely enough cash to maintain the

business's market share. Though owning a break-even unit provides the social benefit of providing

33

http://en.wikipedia.org/wiki/Market_share

http://en.wikipedia.org/wiki/Scatter_graph

http://en.wikipedia.org/wiki/Portfolio_(finance)

http://en.wikipedia.org/wiki/Strategic_management

http://en.wikipedia.org/wiki/Product_management

http://en.wikipedia.org/wiki/Brand

http://en.wikipedia.org/wiki/Product_line

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Corporation

http://en.wikipedia.org/wiki/Boston_Consulting_Group






jobs and possible synergies that assist other business units, from an accounting point of view such

a unit is worthless, not generating cash for the company. They depress a profitable company's

return on assets ratio, used by many investors to judge how well a company is being managed.

Dogs, it is thought, should be sold off.

Question marks (also known as problem child) are growing rapidly and thus consume large

amounts of cash, but because they have low market shares they do not generate much cash. The

result is large net cash consumption. A question mark has the potential to gain market share and

become a star, and eventually a cash cow when the market growth slows. If the question mark does

not succeed in becoming the market leader, then after perhaps years of cash consumption it will

degenerate into a dog when the market growth declines. Question marks must be analyzed

carefully in order to determine whether they are worth the investment required to grow market

share.

Stars are units with a high market share in a fast-growing industry. The hope is that stars become

the next cash cows. Sustaining the business unit's market leadership may require extra cash, but

this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars

become cash cows if they have been able to maintain their category leadership, or they move from

brief stardom to dogdom.

34

http://en.wikipedia.org/wiki/Return_on_assets



BCG Matrix of Bharti Airtel Ltd:

BCG Matrix is used to find out the relative growth prospects of the product line. Within the Airtel

product line leased, private, circuit are among star. Airtel is going to have a submarine cable

between Singapore and Chennai with the collaboration of singtel. This will help Airtel to maintain

its position in IPLC market. Right in India only VSNL have such cables.

35



3.13. ANSOFF MATRIX

It is also known as Product-Market Growth Matrix.

The Ansoff Product-Market Growth Matrix is a marketing tool created by Igor Ansoff and first

published in his article "Strategies for Diversification" in the Harvard Business Review (1957).

The matrix allows marketers to consider ways to grow the business via existing and/or new

products, in existing and/or new markets – there are four possible product/market combinations.

This matrix helps companies decide what course of action should be taken given current

performance. The matrix consists of four strategies:

Market penetration (existing markets, existing products): Market penetration occurs when a

company enters/penetrates a market with current products. The best way to achieve this is by

gaining competitors' customers (part of their market share). Other ways include attracting non-

users of your product or convincing current clients to use more of your product/service, with

advertising or other promotions. Market penetration is the least risky way for a company to grow.

Product development (existing markets, new products): A firm with a market for its current

products might embark on a strategy of developing other products catering to the same market

(although these new products need not be new to the market; the point is that the product is new to

36

http://en.wikipedia.org/wiki/Igor_Ansoff



the company). For example, McDonald's is always within the fast-food industry, but frequently

markets new burgers. Frequently, when a firm creates new products, it can gain new customers for

these products. Hence, new product development can be a crucial business development strategy

for firms to stay competitive.

Market development (new markets, existing products): An established product in the marketplace

can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for

the firm. For example, Lucozade was first marketed for sick children and then rebranded to target

athletes. This is a good example of developing a new market for an existing product. Again, the

market need not be new in itself, the point is that the market is new to the company.

Diversification (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines,

Virgin Telecommunications are examples of new products created by the Virgin Group of UK, to

leverage the Virgin brand. This resulted in the company entering new markets where it had no

presence before.

Ansoff Matrix for Bharti Airtel Ltd.

37

http://en.wikipedia.org/wiki/Virgin_(company)

http://en.wikipedia.org/wiki/Lucozade

http://en.wikipedia.org/wiki/McDonald's



To portray alternative corporate growth strategies, Igor Ansof conceptualized a matrix that focused

on the firm’s present and potential products and markets / customers. He called the four product-

market strategic alternatives

The company should follow all four strategies depending on the demand and product as indicated

in the matrix. The company perhaps needs to focus more on the comparatively neglected area of

diversification.

MARKET PENETRATION: Airtel entered in broadband and fixed phone line market.

PRODUCT DEVELOPMENT: IPLC products

MARKET DEVELOPMENT: Airtel is now looking for overseas market.

Company has already made his presence in Nigeria and Seycheles.

DIVERSIFICATION: Airtel has now outsourcing sum of its services like customer services with

IBM

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3.14. INDUSTRY STRUCTURE PORTER’S MODEL

a) PORTERS GENERIC STRATEGY

Michael Porter has described a category scheme consisting of three general types of strategies

that are commonly used by businesses to achieve and maintain competitive advantage. These three

generic strategies are defined along two dimensions: strategic scope and strategic strength.

Strategic scope is a demand-side dimension (Porter was originally an engineer, then an economist

before he specialized in strategy) and looks at the size and composition of the market you intend to

target. Strategic strength is a supply-side dimension and looks at the strength or core competency

of the firm. In particular he identified two competencies that he felt were most important: product

differentiation and product cost (efficiency).

39



Porter’s Generic Strategy for Bharti Airtel Ltd.

b) PORTERS FIVE FORCES MODEL

40



The industry structure has become relatively unfavourable compared to earlier monopolistic times

the earlier pattern used to be that the national telecom company used to own every segment of the

value chain till the international gateway. With liberalization there was competition in virtually

every segment. There are companies that provide local connectivity, those that function as long

distance carriers, and those that provide only gateway links. Some integrated players operate in all

segments. The intensity of competitive pressures across the chain is reflected in the downward

spiral being witnessed in tariffs and prices to customer. The value chain for cellular mobile service

and Internet Service Providers (other than cable based net connections) is similar in as much as the

calls reach the destination through similar local loop, long distance and international gateway.

1. Threat from Competition

Wireless Market – Top 4 garnering 75% market share

The subscriber growth for Airtel is only 37% as compared to Reliance & Vodafone whose growth

is nearly 60%. After the launch of Reliance GSM in all India basis the subscriber base has

increased tremendously. In Mumbai region Airtel could not become No. 1 because of its technical

problems in coverage.

41



2. Customer Bargaining Power

a. Lack of differentiation among Service Providers

b. Cut throat Competition

c. Low Switching Costs

d. Number Portability will have –Ve Impact

e. Businesses & Consumers

3. Suppliers Bargaining Power

4. Threat of Substitutes

a. Landline

b. CDMA

c. Video Conferencing

d. VOIP - Skype, Gtalk, Yahoo Messenger

e. e-Mail & Social Networking Websites

5. Threat of New Entrants

a. Huge License Fees to be paid upfront & High gestation period

b. Entry of MVNOs & WiMAX operators

c. Spectrum Availability & Regulatory Issues

d. Infrastructure Setup Cost - High

e. Rapidly changing technology

42



3.15. ENVIRONMENTAL ANALYSIS

It is a systematic examination of al 3 levels of the environment with at least three purposes:

Detecting important economic, social, cultural, environmental, health, technological, and political

trends, situations, and events Identifying the potential opportunities and threats for the institution

implied by these trends, situations, and events? Gaining an accurate understanding of your

organization’s strengths and limitations STEEP refers to changes in the social, technological,

economic, environmental, and political sectors that affect organizations directly and indirectly. A

STEEP analysis of the macro environment indicates that economic (a phone call being a cheaper

way to stay in touch than outstation travel for example) and social factors (working outside the

home town) have forced the pace of utilization of technology (Public Cal Offices, mobile phones,

networked companies). Increasing customer awareness has raised expectations and vocal demands

are being articulated for consumer rights; such political factors have in turn impacted the

competitive environment by way of entry of private players, independent regulation, and a policy

framework tilted towards a ‘level playing field’ for new entrants. A near environment analysis

indicates that the competitors are becoming active resource rivals (political and financial) apart

from applying pressures as customer rivals. The customer has, needless to say, benefited from

increased choice from within the communications services basket itself

CORE COMPETENCE

Airtel core competencies are sales & promotions and as of now Airtel is leading brand in mobile

services in India. Airtel have three big personality Viz. Sachin Tendulkar , Shahrukh Khan and

music maestro A. R. Rahman for endorsing there product and services currently Airtel is

outsourcing there no competence function and try to fully concentrate on his core competency that

is sales promotion.

43



5. AIRTEL – STRATEGY

MANTRA: Focus on Core Competencies and Outsource the rest!

A. Strategy

• Airtel partnered with leading players in telecommunication players across the globe.

• It has managed to work with the best of domain specialists globally and emerge as a world

class entity.

• Partnerships include operational contracts with marquee vendors and strategic investors

ranging from private equity investors to global telecom giants.

44



B. 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.

C. 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 world’s largest is still not matured. Opportunities

abound in the hinterland which must be exploited.

45



6. FINDINGS

Strategic allianceThe company has a strategic alliance with SingTel. The investment made by

SingTel is one of the largest investments made in the world outside Singapore in the company. The

company also has a strategic alliance with Vodafone. The investment made by Vodafone in Bharti

is one of the largest single foreign investments made in the Indian telecom sector. The company’s

mobile network equipment partners include Ericsson and Nokia. In the case of the broadband and

telephone services and enterprise services (carriers), equipment suppliers include Siemens, Nortel,

Corning, among others. The Company also has an information technology alliance with IBM for

its group-wide information technology requirements and with Nortel for cal centre technology

requirements. Outsourcing The cal centre operations for the mobile services have been outsourced

to IBM Daksh, Hinduja TMT, and Teletech & Mphasis. Overseas Market. Airtel is looking for

overseas market and already started operation in Nigeria and Seycheles.CompetitionAirtel is

facing strong competition from Reliance, TATA Indicom, MTNL and BSNL in spite of the fact

they are far away from Airtel technologically but these two have an inside rich in rural and urban

area and have low tariff rates.Brand AmbassadorAirtel have strong brand ambassador, Sachin

Tendulcar, Shahrukh Khan, Kareena Kapoor, Saif Ali Khan and A . R. rehman to promote their

product and services. Faces that Airtel choose to represent itself are the icon of Indian youth. So in

some way Indian customer link them selves to these brand ambassador and thus to the Bharti

Airtel as a brand they trust.Leader in Telecom marketAirtel is holding a position of Market

Leader by having 20 percent of the total market share.First Movers AdvantageAirtel is popular

for introducing new schemes & facilities; some are as follows, Electronic recharge, Hello tunes,

Airtel Live!, Portfolio manager, Song catcher, Easy music, Black berry handsets, M-

cheques.Growth Factors

46



SUGGESTION

S

After the complete analysis of entire STUDY researcher put forward a set of recommendations

which are as follows:

PRICINGDepending on the market conditions / competition from cellular or wl-mobile service

providers and also to suit local conditions, there should be flexible pricing mechanism (either at

central or local level).IMPROVEMENT IN TECHNOLOGYAirtel should immediately shift

to third generation switches by replacing its c-dot switches. This will improve the quality of

service to desired level and provide simultaneous integration with the nationwide network. The

special distribution of the transmission towers should be increased to avoid “no signal

pockets”ESTABLISHMENT OF DISTRIBUTION CHANNELSAirtel should establish

widespread and conspicuous distribution to match that of the competitors. The distribution

network shall make the product visible and available at convenient locations.UNTAPPED

RURAL MARKETLarge part of Indian rural market is still untapped therefore Airtel is

required to bring that area under mobility.B-1 . BIBLIOGRAPHYIPLC International

Private Leased CircuitBSNL Bhart Sanchar Nigam LtdMTNL Mahanagar Telephone Nigam

47



LtdTRAI Telephone Regulatory Authority of IndiaREFERENCE Bharti Airtel, Annual Report -

2010

• Investors presentation, Bharti Airtel Limited, November 2008

• Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November

2010

• Analyst Report – Bharti Airtel, Asit C. Mehta Invesment Intermediates Ltd.

• Telecommunication Sector Report – March 2008, CRISIL

• Capitaline Database http://capitaline.com

• Indian Telecommunication Sector - August 2007, IBEF Report

• www.airtel.in

• airtel-broadband.com

• www.trai.gov.in

• www.hindustantimes.com

• http://www.moneycontrol.com/financials/bhartiairtel/ratios/BA08

• http://www.moneycontrol.com/annual-report/bhartiairtel/directors-report/BA08

• http://www.telecomindiaonline.com/india-telecom-growth-and-subscribers-2011.html

• http://coai.in/statistics.php

• http://www.oppapers.com/essays/History-Of-Telecom-Industry/280456

• http://www.indialawoffices.com/pdf/telecommunication.pdf

48

http://www.oppapers.com/essays/History-Of-Telecom-Industry/280456

http://coai.in/statistics.php

http://www.telecomindiaonline.com/india-telecom-growth-and-subscribers-2011.html

http://www.moneycontrol.com/annual-report/bhartiairtel/directors-report/BA08

http://www.moneycontrol.com/financials/bhartiairtel/ratios/BA08

http://www.hindustantimes.com/

http://www.airtel.in/

http://capitaline.com/



B-2 ANNEXURES

Financials at glance(Rs b) FY07 FY08 FY09

FY10Sales 184.202 276.965 373.521

418.295Sales growth (%) 57.9% 50.4% 34.0%

24.1%Operating profit 74.407 109.314 135.769

174.728Operating profit 40.4% 39.5% 36.35%

41.75%margin (%)Net profit 40.620 57.763 78.590

91.631Net profit margin (%) 22.1% 20.9% 21.04%

21.89%Key Ratios:

Key Ratios - Airtel Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Debt Equity Ratio 0.65 0.47 0.33 0.28 0.14

Long Term Debt Equity Ratio 0.61 0.43 0.30 0.26 0.12

Subscriber Growth

Group Company wise % market share - Jan'2011

Sr.

No

.

Name of Company Total Subscriber Figures(in

Millions)

% Market Share

1 Bharti 159065234 19.732

2 Reliance Com 130098433 16.139

3 Vodafone 127364342 15.800

4 BSNL 114296179 14.178

5 Tata 87334405 10.834

6 Idea 84289641 10.456

7 Aircel 51831796 6.430

8 Uninor 20305550 2.519

9 Sistema 9094752 1.128

10 Videocon 6011233 0.746

49



11 MTNL 8895202 1.103

12 Loop 3062120 0.380

13 Stel 2514777 0.312

14 HFCL 1470647 0.182

15 Etisalat 452574 0.056

16 Sistema 39403 0.005

Total Subscriber 806126288 100

Income & Expenditure (in Cr.)

Operating Profit (in Cr.)

50



Net Sales (in Cr.)

51



Revenue Market Share (in %)

52

http://convergence.in/blog/wp-content/uploads/2010/05/wireless-operators-revenue.png


Airtel

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