A STUDY OF THE ORGANIZATION STRUCTURE IN THE TELECOMMUNICATION

SECTOR
“THE CASE OF BHARTI AIRTEL”

Submitted to:
Dr. Mridul Dutta
Assistant Professor
Department of Business Administration
Tezpur University

Submitted by:
Tania Choudhury-
BAM19006
Merupranta Saikia-
BAM19008
Srishti Das-BAM19019
Bichitra Das-BAM19036
Sheilla Maluwa-BAM19052
0
Ruth Thauzeni-BAM19054
 DECLARATION

This report is completed under the guidance of Dr. Mridul Dutta, Assistant Professor, Department
of Business Administration, Tezpur University, Tezpur during the session 2019-20 as Test III of
MBA First Semester.

Name of Course Instructor

Dr. Mridul Dutta
Signature of Course Instructor

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Contents
ABSTRACT ................................................................................................................................ 3

INTRODUCTION ...................................................................................................................... 4

Objectives of the study: ........................................................................................................... 4

Significance of the study: ......................................................................................................... 4
LITERATURE REVIEW............................................................................................................ 6

FINDINGS ................................................................................................................................. 8

AUDITING: ..............................................................................................................................10

ORGANIZATIONAL STRUCTURE IN A NUTSHELL: ............................................................10

CONCLUSION AND FUTURE PROJECTIONS: .......................................................................15

REFERENCES ..........................................................................................................................16

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 ABSTRACT

Bharti Airtel is one of the largest companies in the telecommunications industry in India listed on
NIFTY in 2002. This study is conducted to analyze the change of the organization structure in
Bharti Airtel. To pursue this aim, the study used literature studies and contributions from the social
and organization theory to give a theoretical foundation of this study. We assessed the meaning of
organization structure, types of organization structures, an analysis of the new and old
organization structure, the challenges before and after the change in the structure, the importance
of the change and find out how the change affected the organization’s growth in the
telecommunications sector in India.

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 INTRODUCTION
‘A brief history of Bharti Airtel and its Organization’s Structure’

Founded by Sunil Mittal in 1995, BhartiAirtel is one of India’s top telecommunication company
with operations in 19 countries across Asia and Africa. The company offers mobile voice & data
services, fixed line, high speed broadband, Direct-To-Home, turnkey telecom solutions for
enterprises and national & international long-distance services to carriers. BusinessWeek has
ranked Airtel as one of the six best performing technology driven companies in the world. Bharti
Airtel had over 300000000 customers across its operations

For years Bharti Airtel was India’s topmost telecommunication network operator until August
2012, (“Jyotisinghm, December, 2012”).

An effective and efficient control of an organization is strictly connected with its organization
structure, when a company expands or outsources its operations it is important that a new structure
is applied with the new system.

With this in mind, on July 7, 2011, Bharti Airtel announced a new organization structure for its
operations in India and South Asia. The new structure, which became effective from August 1,
2011, was aimed at driving greater business and functional synergies, providing a common
interface to customers, and creating a de-layered and more agile organization. The new structure
was to provide more meaningful, empowered roles and enhance employee engagement.

Objectives of the study:

i) To find out the effects of the newly adopted Hybrid Design on the organization.
ii) To find out why the change was implemented

Significance of the study:

The study of the Hybrid organization structure in Bharti airtel will be necessary to help
understand why restructuring of an organization structure happens. It will also help us know
how these changes may affect the organization and how the members of the organization

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react to such. Knowing the impacts of restructuring will help students and other organization
to be able to project and make assumptions if such changes will be necessary for any
organization.

Limitation of the study:

During the course of this study, we had limited data that we had access to and as such we
faced certain problems that proved to be a hindrance in the process of preparing this report.

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 LITERATURE REVIEW

As per Henry Mintzberg’s book ‘The structuring of Organizations’, an organization’s structure

emerges from the interplay of the organization’s strategy, the environmental forces it experiences,
and the organizational structure itself.

Monavarian, Asgari & ashna (2007) has defined the organization structure as the framework of
dependent sections on systems, jobs, operating systems, groups and people working together
towards achieving one specific goal).

Business Dictionary has defined Organization structure as the typically hierarchical arrangement
of lines of authority, communications, rights and duties of an organization. Organizational
structure determines how the roles, power and responsibilities are allocated, operated and
coordinated and how information travels between different layers of management.

Bharti Airtel being one of the top telecommunications companies in India, has adopted certain
organizational structures for its company. Founded by Sunil Mittal in 1995, for years Airtel a
product of Bharti Airtel was India’s topmost telecommunication network operator until recently.
With presence in over 19 countries, it operates on a mass scale in South East Asia and Africa, with
over 260 million users in India itself. Airtel has a pool of product offerings that include 2G, 3G
and 4G services, high speed broadband, DTH services etc.

Bharti Airtel had adopted a hybrid structure in 2013.

The World Bank has defined a hybrid organizational structure as the structure whereby an
organization has more than one organizational structure within, and ensures flexibility and easy
distribution of roles among the employees.

Hybrid organizational structures are those structures that are designed by business models on the
basis of alleviation of a certain environmental and social issues. Hybrid organizational structures

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help the organization to get high revenue and income. It also attracts capital in ways that may be
consistent with profit models or non-profit models

Types of Organization Structures

1. Line and Staff Organization:

Allen has stated line and staff organization as:

“Line functions are those which have direct responsibility for accomplishing the objectives of the
enterprises and staff refers to those elements of the organization that help the line to work most
effectively in accomplishing the primary objectives of the enterprises.”

2. Functional Organization:
According to Terry, “Functional organization refers to the organization which is divided into a
number of functions such as finance, production, sales, personnel, office and research and
development and each of functions are performed by an expert”. Line authority, staff authority and
functional authority as a third type of authority are in this type of organization.

3. Project Organization:
This organizational structure is temporarily formed for specific projects for a specific period of
time, for the project of achieving the goal of developing new product, the specialists from different
functional departments such as production, engineering, quality control, marketing research etc.,
will be drawn to work together. These specialists go back to their respective duties as soon as the
project is completed.

4. Matrix Organization:
According to Stanley Davis and Paul Lawrence matrix organization is “any organization that
employs a multiple command system that includes not only the multiple command structure, but
also related support mechanism and an associated organizational culture and behavior pattern.”

The reason for this type of structures is that the structure of an organization can make a whole lot
of difference to the way it performs. That is why many companies attain success through strict
controls and systems, but others that try to copy such structures may suffer deplorable results. It’s

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also why a company has to continuously evolve its structure over time as it grows, and as its
strategy changes overtime.

FINDINGS
● For 17 years Airtel was the undisputed leader of the telecom industry in the country until
recently when it lingered to the third spot behind Vodafone-Idea and Jio on three vital
operating metrics — revenue market share (RMS), adjusted gross revenue (AGR) and
customers. This goes to show that this new Hybrid Structure was successful in keeping
intact the top position for a considerably long period of time barring the recent slump since
the Smartphone revolution in the country.

● The new Organizational Design saw two CEOs heading operations for two regions viz.
India & South Asia and the other for all International Operations. This has reduced the
workload because now two CEOs oversee operations on the basis of Geographical division
instead of the earlier design where one CEO used to oversee all operations. This structure
is one of the peripheral reasons as to why Airtel has seen such massive growth in the
International Market over the years, especially in Africa where the company operates
across 14 countries, has recently crossed the 100 million mark in terms of the customer
base.

● Some major mergers in recent times such as The Airtel-Telenor merger in 2018, Tata Tele
Services-Airtel merger has paved the way for expansion of the company.

● With different units working together with B2B units and B2C units in parallel through
computer and internet based integration, Airtel over the years has come out with a range of
products like Wynk Music, Airtel TV, Airtel Bank. It has also partnered with Amazon to
provide cashbacks in purchase of a number of handsets, as well as with Netflix to provide
free membership to its customers for a limited period of time. This has invariably helped
Airtel sustain with the changing times.

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● The Profits after Tax of Airtel has been taking a major plunge ever since 2016. In March
2015 the PAT was Rs. 13200.50 cr, in March 2016 it dipped to Rs. 8420.60 cr, again in
March 2017 it was Rs. 7345.20 cr. Similarly, in March 2018 it went down to Rs. 683.30 cr
and in March 2019, it reported a loss of Rs. 4633.90 cr. With an Organizational Design that
is decentralized to an extent and created to withstand dynamic environments through
divisional, geographic, horizontal and functional features, it should have been able to
withstand the shock of the Smartphone revolution amidst cut throat competition from
contemporaries like Jio and Vodafone.

● It failed to identify the threat that Jio possessed even in this blooming stage. Jio dealt
exclusively in 4G networks while Airtel was still laying the foundation stone to enter into
the 4G market. While Jio catered to the needs of the Indian customers by providing data at
the cheapest rates possible, Airtel failed to do so, since it was still operating in 3 spectrums
the 2G, 3G and 4G; this led to heavy costs being incurred and hen ce slowly but steadily it
started losing out on its footing at the top spot in the telecommunication sector. The Hybrid
structure that boasted of responsiveness to market dynamics failed to read and analyse the
market.

● With region wise distribution of authority, it becomes very easy to become vulnerable to
region wise disparity of objectives i.e. since the Operations Directors of the different
regions have substantial authority they may at times take up decisions that may not
correlate or coincide with policies of other regions thereby creating turbulences in the
ultimate fulfillment of the company’s objectives.

● It has failed to penetrate the postpaid market properly. With only a tiny fragment of its
customer base as postpaid customers, Airtel operates a prepaid majority operato. The
primary reason is costly postpaid plans. With the postpaid plans of JIO starting at Rs 199,
Airtel sees its postpaid plans being 1.5x to 2x costlier than JIO with plans priced from Rs
499 to Rs 1599; with a selective offer of Rs 399. This has seen the Organizational Structure
fail to be customer oriented.

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AUDITING:

Bharti Airtel, as per the Companies Act, 2013 has appointed Delloitte Haskins &Sells LPP as the
company’s Statutory auditors until 2022.
Amongst the Board of Directors, Ms. Kimsuka Narsimhan (Independent Director), Mr. Manish
Kejriwal (Independent Director), Ms. Tan Yong Choo (Non-Executive Director), are in the Audit
Committee with Mr. V.K. Viswanathan(Independent Director) as the Chairman.
Also, the board has appointed Head Internal Assurance as the Internal Auditor of the company and
Ernst & Young LLP and ANB & Co., Chartered Accountants, Mumbai as the Internal Assurance
Partners.

ORGANIZATIONAL STRUCTURE IN A NUTSHELL:

In earlier 2013, the company saw departures of key senior executives in the company and a new
restructured management at the helm. Many of Airtel’s businesses were divided into product
regimes with chief executives for each product reporting to region specific chief executives in
India and Africa. In terms of financial management, the company is handled by one person for
both regions reporting to the Board.

The broader idea in the restricting was to have individual CEOs and CFOs for each region, India
and Africa, reporting to a global CEO and the board. This work seems to be in progress, as no such
approach has been noted since announcements in 2013, until March 2019 when Bharti Airtel roped
in Telenor's Malaysian unit former CFO Nakul Sehgal as Corporate Chief Financial Officer, to
look after fund raising of the company and potential Airtel Africa initial public offering, following
relief in listing regulations and considerations into spinning out operations, where the Singapore
concern has played vital role.

Being a company promoted and managed by a family with majority control, decision making is
plagued by delays and concerns of related party transactions. The board of directors of the
company does not have an optimum mix of executive and non-executive directors, which consists

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of two executive and nine non-executive directors. Mr. Sunil Bharti Mittal, Chairman and Mr.
Gopal Vittal, MD & CEO (India and South Asia) are two executive directors on the board is half
of the total strength of the board.

Further, the Managing Director – a board member – is also the Chief Executive Officer and is part
of key board committee like Risk Management. Risk management is vital and risk tolerance needs
to be defined without managerial influence and strictly enforced.

As its decision making is not swift, it faced the heat in bottom line while competing with Reliance
Jio. The decision to churn the lower end of the non-revenue generating customer segment took
multiple quarters depleting resources.

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OLD STRUCTURE
Chairman & Managing Director-
Sunil Bharati Mittal

CEO & Joint Managing

Director-
Manoj Kohli

Deputy CEO- Director Technology & Director Supply Chain-

Sanjay Kapoor Customer Service- S. Ashokan
Dr. Jai Menon

Director Legal & Director Human

Regularity- Resource- Krish Shankar
President-
Jyoti Pawar
Enterprise
services-
Director Internal CFO-
David
Assurance- Srikanth Bala Chander
Nishball
Shamini Ramalingam
Director President Joint
DTH Mobile President-
Services- Services- Delhi Media Director Alliances & Director Marketing-
Ajay Puri Atul Bindal Services- CSR- Shireesh Joshi
K.Srinivas Tina Unekan

Director Technology &

Network-
Joachin Horn

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 NEW HYBRID STRUCTURE

Chairman & Managing Director-

Sunil Bharati Mittal

Director Global Brand CFO (India/South Director- Innovation CEO (India & South CEO (International) &
(India/South Asia & Asia & Africa)- & IT- Asia)- JMD-
Africa)- B. Srikanth Dr. J Menon Sanjay Kapoor Manoj Kohli
Bharat Bambawale

President B2C- President B2B- Executive Director HR- Executive Director

K Srinivasan Drew Kelton Krish Shankar Supply Chain-
S. Ashokan

Operations Director West Operations Director North, Director Network-Services CFO-

& National Distribution- East & Bangladesh- Group- Nilanjan Roy
Raghunath Mandeva Ajay Puri Jagbir Singh

Operations Director South Director Legal & Director IT-

and Sri Lanka- Regulatory- Amrita Gangotra
Vineet Taneja Jyoti Pawar

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The Organizational structure that existed previously, focused on the concentration of the hierarchy
of operations (excluding services) within the company as a whole. The structure depicts the
corresponding operations/region of different in-charges and hence it didn’t hold anyone
responsible for its services. Hence, the company decided to restructure its organizational chart and
it came into implementation in 2013. The new structure has two distinct Customer Business Unit
with its main focus on B2B and B2C.

Comparison of the old and new structure of Bharti Airtel

Comparing the organizational structure of Bharti Airtel, it can be seen that the new organizational
structure has adopted a more decentralized structure. Previously, there was only one CEO and Joint
Managing director reporting directly to Sunil Mittal, the Chairman and Managing Director.
However, the new Organizational Structure sees two separate CEOs one of them handling
operations for India and South Asia and the later handling International operations.
Previously under the CEO, there was a deputy CEO and under him were all the Directors and
Presidents handling the different products like DTH services, mobile services and Telemedia
services. The other Directors handling Legal & Regulatory Services, The CFO, the Director of
Marketing, Director of Technology and Networks etc reported to the only the then CEO and JMD.

The new Hybrid Structure sees Divisional, Geographical, Horizontal and Functional
characteristics. Here the Presidents related to B2C, B2B affairs report to the CEO of India and
South Asia. The Region wise division sees operation Director of West and National Distribution,
West and Bangladesh, South and Sri Lanka reporting to the CEO. Furthermore, there are also
directors of Innovation and IT, CFO, Global Brand Director of all the aforementioned regions that
also report to the CEO. Also there are Executive Directors of Supply Chain, Human Resources
that report to the CEO. The basic idea of this new Hybrid Design is to enhance business efficiency,
create greater flexibility and also to enhance empowerment to employees thereby decentralizing
the Organizational structure to an extent.

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CONCLUSION AND FUTURE PROJECTIONS:

1. In the new structure, the company opts for two CEOs; one for India and South Asian region
and the other for Africa and International. However, only one CFO and a Director Global
Director who look after the operations of company across the globe which shows
economical use of resources.

2. The company may face a ratings downgrade, as interest cover ratio is sharply declining
over last few quarters.
3. Operationally, the company hasn’t been able to generate good returns. The key ratios like
Return on Capital Employed, operating profit margins have been declining over last 3
years.
4. Management efficiency measured in terms of investments turnover ratio has been on the
rise, while there have been frequent congestions, requiring further capital expenditure.
5. The company has a negative working capital, meaning a major shock risk triggering a HR
crisis or a payment crisis might be a setback for the company.
6. In case of future expansion overseas other than the specified regions, the company will
have to restructure to enable the management to effectively and efficiently control the
operations.
7. The CEOs with the same authority might in the future face conflicts which can negatively
impact the company.

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REFERENCES

• Books
1. Ahmady. Gholam Ali; Mehrup. Maryam; Nikoravesh. Agdas, 3rd International
conference on New challenges in management and organization: Organization and
Leadership, 2 May 2016, Dubai, UAE
2. Writing. Alexis, Advantages of Hybrid Organizational structures
3. Haigh Nardia; Walker John; Bacq, Sophie and Kichul, Jill, Hybrid organizations:
Origins, strategies, impacts and implications

• Journals
1. Integrated Report and Annual Financial Statements Bharti Airtel Limited.
Retrieved from https://assets.airtel.in/static-assets/cms/Bharti-Airtel-Limited-
Integrated-Report-Annual-Financial-Statements-2018-19.pdf
2. DeCanio, Stephen & Dibble, Catherine & Amir-Atefi, Keyyan, (2000). The
importance of Organizational Structure for the Adoption of Innovations.
Management science.

• Websites
1. https://s3-ap-southeast-
1.amazonaws.com/bsy/iportal/images/Bharti_Airtel_Abridged_Annual_Report_2
010-11_118B598DE1E7EDE82827C72923F60D8B.pdf (last accessed on 5.11.19
at 18:50pm)
2. https://s3-ap-southeast-1.amazonaws.com/bsy/iportal/images/Bharti-Airtel-
Abridged-Annual-Report-2012-
new_2_23E0651D412B5174B7166047F56B42FC.pdf (last accessed on 5.11.19 at
18:52pm)

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3. https://s3-ap-southeast-1.amazonaws.com/bsy/iportal/images/Abirdged-Annual-
Report_E3C90857521FD7CD9150D393EBE432CD.pdf (last accessed on 5.11.19
at 18:50pm)
4. http://www.businessdictionary.com/definition/organizational-structure.html (last
accessed on 5.11.19 at 18:54pm)
5. https://www.ukessays.com/essays/management/the-importance-of-organizational-
structure-management-essay.php (last accessed on 5.11.19 at 18:55pm)

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