AIRTEL 4G

Marketing Plan

Group Members
Aditi Agarwal Amit Mutha Anil Gawade Apurva Suvarna Arpita Kalubarme Ashwin Nair Chintan Gala Mikhil Sabadra Nikhil Kele Rajdeep Malhotra Sujitkumar Birendranath Tasneem Nawab Vishal Yadav

Objectives:

20% of 3G users shift to 4G (5.18 million 3G Subscribers) Every year, we attract 10% new users (2G / Vodafone / Reliance, etc.) ARPU will also increase by 10% YoY
Growth Potential: Compounded growth of 12% in Total Revenue YoY

Flow of Presentation
Timeline Sector Overview

Competitor Analysis
PEST Analysis Porter's Five Forces Analysis Primary and Secondary Research Integrated Marketing Communications

Cost - Benefit Analysis

Timeline of Important Telecom Regulations in India

Private Players Allowed in VAS 1992 1994 NTP was formulated CPP Implemented ILD services were opened to competition 2002 Reduction of License fees Internet Telephony Initiated UASL was Introduced

TRAI was established 1997

BSNL was established by DOT

2000 1999

2003

NTP-99 Migration from High cost to low cost revenue sharing

CDMA Technology

Timeline of Important Telecom Regulations in India

Number Portability was proposed 500 million connections

Intra-circle Merger Guideline

Boost Rural Telephony

MNP Implemented
2009 2011 2012 Service Tax 10% -> 12%

2004

2005

2006
2008

Broadband policy formulated

FDI limit increased from 49 %to 74%

3G policy announced, spectrum Allotment awaited

Present: Indian Telecom Industry

Second largest wireless network in the world 926.55 million Telephone connection after China India will achieve 1 billion telephone connections Wireless telephones are increasing

Recent Updates
India will allow wireless broadband airwave holders to provide voice services Samsung prepping a $100 contract free 4G LTE smartphone for India

Indian consumers would not be able to enjoy 4G data services on their Apple products

Wireless services driving growth : Major players

Net addition in past year

Competitor Analysis
Reliance Jio Infocomm Only owner of pan-India BWA spectrum To set up over 1 lakh telecom towers on its own Offer voice services Plans to roll out in 69 cities by 2014 It can change the pecking order in the world's third biggest telecom market as most players are reeling under huge debts amid falling margins Tikona Digital Won the BWA spectrum in the five circles Planning to launch its 4G services sometime later this year or in early 2014 Aircel Has BWA spectrum in eight circles and 3G spectrum in 13 circles Roll out 4G services in the current year Will invest Rs 7500 crores

Videocon Bagged liberalised spectrum for seven circles Launch 4G long-term evolution (LTE) services in the Gujarat circle Tied up with Nokia Siemens Using 4G technology based on FDD-LTE, The Company could have an advantage over the competition

PEST ANALYSIS
Political
2G Spectrum Case 2G Auctions second round 3G Auction 4G in India Stability of Government

Economic
Economic Growth and GDP trends Business Cycle Stage Infrastructure Cost

Social
Demographics changes Lifestyle changes Income Distribution Level of Education Ease of availability of services

Technology
Technology Infrastructure High capital investment Sharing of towers Different generation

Porters Five Forces Analysis

Barriers to Entry: High
1. High capital investment 2. Well established players 3. Evolving Technology Degree of rivalry: High

Threat of substitutes: Moderate

1. Large no. of competitors 2. Internet telephony

Power of Suppliers: Low

1.High competition 2.Low scope of forward integration

Power of Buyers: High

1. Low Switching Costs 2. MNP 3. Low Brand Loyalty

Primary Market Research

Top Competitors:
Vodafone Dolphin/MTNL Idea Reliance Aircel Tata Docomo

Primary Market Research

Secondary Market Research

Smartphones Customer Demand 31% of smartphone users and 37% of non-users would upgrade to a 4G smartphone package Existing smartphone users would agree to pay a premium of EUR 8-10 for a 4G plan In all markets price is the single most important criteria Only in Sweden coverage is also of high concern Mobile Broadband 37% of current mobile broadband users and 41% of non-users are willing to opt for a 4G dongle/card Also in mobile broadband current users would pay a premium of EUR 8-10 Price is the leading buying criteria but QoS parameter such as speed and coverage are more important than for Smartphones

Willingness to pay

Key buying criteria

Advantages of 4G over 3G
Higher user speeds Faster connection times Less roundtrip latency
4G enables users to download more content than 3G in the same amount of time This makes data-intensive, on-the-go downloads such as music or high-definition video streaming a reality

4G requires 95 percent less time to connect than evolved highspeed packet access (HSPA+), assuring an always-on service experience

LTE offers a 50 percent reduction in round-trip latency compared to HSPA+, making real-time applications such as VoIP, video calls, and online gaming possible

OPERATIONS

4G License in India

Service Provider Airtel Aircel Qualcomm Tikona

Price (in Cr Rs) 3314 3438 4912 1057

Augere

124

Future of 4G in India
Current licenses(as of May 2010) are for 2300 MHz frequency band New spectrum allocation in mid 2014

No of 4G users is estimated to be 1 million by 2015 with new operators coming New technologies like TD-LTE are evolving
Voice over 4G services

4G Service Launch
City Kolkata Date 10th April, 2012 Partner ZTE

Bangalore
Pune

7th May, 2012

18th Oct, 2012

Huawei
Nokia Siemens

Kolkata Launch: 4G dongles 7999 Rs and wi-fi 7750 Rs Rental 999 Rs and 1999 Rs Plan Data usage (6-30 GB) with cash back offer Speed reduced to 128 kbps after limit

Current Product Portfolio

Tariff plans
Name of the Bill Plan Rental (in Rs) Free usage (in GB) Charges after free usage Speed post free usage Cash back offer Cash back period

break free
999 6

break free max 1399 9

break free ultra 1999 18

break free ultimate 2999 30

break free supreme 4799 50

Nil
128 Kbps

Nil
128 Kbps

Nil
128 Kbps

Nil
128 Kbps

Nil
128 Kbps

167
6 months

466
6 months

312
12 months

417
12 months

417
12 months

1 month 2 month discount of Rs discount of Rs discount of Rs Description of rental over 6 rental over 6 3749 over 12 4999 over 12 4999 over 12 cash back months months months months months

Current Product Portfolio

Wireless Dongle
4G Multi Mode Dongle Rs. 4999 LTE network only with USIM

Customer Premises Equipment

Rs. 4999 Built-in DHCP Server and NAT Security serve

Huawei Ascend P1 LTE

Expected launch date before November 2013 Expected Price:Rs.27000 Expected rollout in Delhi and Mumbai

USIM (Universal Subscriber Identification Module)

New sim for new connection USIM is a 128 KB SIM card Price at Rs 49

Fine prints regarding Airtels 4G plans

In order to enjoy 4G LTE services, you will need a 4G enabled USIM card You will require a 4G enabled device & airtel 4G network to enjoy airtel 4G services All packs will work on both on USB Modem and 4G enabled indoor wi- fi device You cannot recharge a data pack with another data pack till previous balance is above 500MB

On recharge with new data pack (when balance less than 500MB)/change in existing pack, earlier data balance available in your account will be forfeited

Upcoming 4G Launches
LOCATIONS PARTNER NO OF BASE STATIONS TOTAL FIXED COST OF B STATIONS TC /MONTH/ BS = CAPEX + OPEX (appx) CHANDIGARH ZTE 1000 135 Cr. 1L MUMBAI Huawei 3000 405 Cr. 1L DELHI Huawei 3000 405 Cr. 1L

Airtel 4G Specifications
Speed 100 Mbit/s for high mobility communication Hi Speed Wireless Broadband Service 1 Gbit/s for low mobility communication Voice Calling

Future Launches
Other Cities

Haryana Kerala

Services

Upcoming 4G Launches
Objective To become 1st to launch 4G in licensed circle To recover high cost of licenses Technology LTE is preferred over WiMax TD-LTE is preferred over FDLTE Voice Technology Nokia Siemens Network CSFB in LTE

4G LTE DEVICES
Device Features

4G LTE USB Modems

4G LTE Indoor Wireless Gateways Smartphones

Dongle
CPE

Connect to a laptop or compatible tablet PC via USB, for highspeed 4G LTE connectivity.
Connect to multiple laptops with high-speed 4G LTE connectivity. Perfect when there are multiple users, for instance, in a family or an enterprise.

LTE enabled

Fast performance and LTE speeds

Challenges
Device and data tariffs remain high Unavailability of relevant content Less demand to drive wireless broadband services penetration Inability to upgrade / exchange 3G device with 4G(LTE adaptable) device New or separate SIM or number for airtel 4G LTE

Segmentation
Done on the basis of Regulatory norms- i.e. Telecom circles based on states & regions

Market-wise, Airtel ventures in for the elite class, Corporates & young professionals requiring quality mobile telecom facilities

Provide all over India, across all urban & rural segments

Targeting
Elite class , Corporates, YUPS(Young Upward Profesionals) Youth Achievers & aspiring individuals, quality seekers

Target Women & Senior Citizens with postpaid plans

Airtel should start targeting across various geographical social classes of India Being the first mover for quite some time India with new services like Hello Tunes, Airtel Live, electronic recharge, Blackberry handsets etc, Airtels target market has been of those who are ahead of the curve, the educated, well-aware class of people

Positioning

Core values of the brand, leadership, performance and dynamism

Position itself in the premium category aimed at elite class of society Created Airtel as an aspiration and lifestyle brand The tagline "power to keep in touch' The brand should resonate leadership, everywhere, be it network, innovations, offerings or services Sponsor events like Golf which particularly entices the privileged class

Tagline 'touch tomorrow' to cater to other aspirational segments of the population

Some Big Ticket Ideas

Corporate plans- Tie ups with corporates to set up 4G wifi/dongles
Lighter strategy- making airtel recharge cards available wherever lighters can be found Focus where 3G is underpenetrated and provide direct mobilization of the non data users to 4G

CUG- Closed User Groups

Airtel Platinum Service for 4G users

Give 4G enabled hardware free with 4G services to build the necessary infrastructure eg. Dongles, 4G enabed handsets

Some Big Ticket Ideas

A single pipe that meets all the requirements
A portable dongle, set top box at home that will allow video streaming TV, broadband data and VOIP calls Will be able to do away with multiple players for various functions such as direct to home, broadband and wifi Enable all this on a single device and a single bil

Offer video on demand and IPTV to subscribers

4Ps- Pricing
4G- price and content is vital

Selective about the audience, the objectives will be to first skim the market and go mass slowly
Double the premium of 3G Dongles priced at 4999 a piece, Base plan monthly rental of 999 Avg Indian households monthly spend on cable TV, movies, voice and data is 900 at the lower end of scale Payment services to create captive payment gateways so users can pay for apps on a monthly basis rather than per usage basis Free voice calls with a certain GB of data and some free minutes of video streaming

Integrated Marketing Communications

4G Services TG Current Scenario : Airtel 4G High
Costs, Reliance to launch 5500 Rs 4G handsets in collaboration with Samsung by end of year 2013

B2B

B2C

Objective : Lock customers before

Reliance launch

Mobile TG Dongles / Broadbands TG

B2B
Tie ups with corporates
Set up Airtel World Shops which can double up as Work from Home Kiosks

Event Tie ups for trials

Sponsoring of business events like ET business leader, CNBC awards, Delhi Marathon

HoReCa Tie ups

Waiting lounges at airports and 3AC and above railway lounges,5 Star Hotels, Tie up with Tab cabs

B2C Mobile Target Groups

Super-Connected : (S)he uses the mobile in the morning to check his mails and update his social networking sites, while traveling to college or work to stay connected or to play games (Mobile Apps), to search trivia online, get news updates, scores, etc Might have budgetary constraints look for deals Utilitarian Executive : (S)he is a committed professional; is not attached to the mobile personally, uses the mobile to check for mails when outside office, uses the mobile to check for relevant news updates usually set up through a RSS feed, uses utilitarian applications like torchlight, alarm, alerts regularly Is not worried about the cost not deal seeking Constant Mover : (S)he uses the mobile to check for routes while traveling, uses the mobile to find decent hotels to stay in, uses the mobile to check for train / Flight schedules, uses the mobile to stay connected and check mails sporadically Costs are a moderate consideration

SuperConnect ed

Executiv e

ConstantMo ver

Mobile TG Provide superior bundled services

Super-Connected
Theatre schedules and restaurant locators to plan their evening nexGTV monthly services for watching sitcoms while travelling

Utilitarian Executive Alive App of TOI Augmented Content Personal Digital Assistant Sync Flight Schedules

Constant Mover Use RSS feed and sports score / Financial sites to keep up to date with the latest happenings Google Maps are also used by Super Connected to find routes within a city

B2C-Dongles/Broadband TG
Offers 4G Pack share Watch your favourite movies on Bigflix without buffer Separate Airtel 4G zones at malls for gaming- playstations Airtel 4G zones at airports for Wi-Fi 4G experience Live streaming of cricket, football at clubs Tie-up with F1 team
Developing co-branded merchandise Offering mobile apps and F1 updates to subscribers Organising driver meet and greet sessions for consumer promotions Connect with F1 fans and youth across the Indian subcontinent

Cost Benefit Analysis

CAPITAL EXPENDITURE
Already incurred for Telecom circles of Kolkata, Maharashtra, Punjab and Karnataka Additional Capital Expenditure (operational expansion) Rs. 3,314.36 crores

Rs. 1,000.00 crores

Total Capital Expenditure

__________________ Rs. 4,214.36 crores

Cost Benefit Analysis

Objective in terms of No. Of Users 20% of the users of Airtel 3G will convert to 4G 5% new users who will straight up use Airtel 4G
(Currently, Airtel has 51.8 lakh 3G subscribers)

10.36 lakh 2.59 lakh

Our Marketing Strategy will help us see a 10% YoY growth in Users Projections for User data over the next 5 years is as follows:
(in lakhs) Year Total No. Of Users Incremental No. Of Users 2014 2015 2016 2017 2018

12.95
12.95

14.25
1.30

15.67
1.42

17.24
1.57

18.96
1.72

Cost Benefit Analysis

AVERAGE REVENUE PER USER (ARPU):
The ARPU for Airtel 3Gs Data Service is Rs. 47 4G is priced at double the premium of 3G. Thus, ARPU for 4G Data = Rs.94
Revenues from Voice Services tend to be higher than those from Data Services. But lower margins offset that increase. Thus, taken as equal to data. Our Marketing Strategy will help us see a 10% YoY growth in Values Projections for ARPU data over the next 5 years is as follows:
(in Rs.)

Year DATA VOICE Total Revenue / User

2014 94.00 94.00 188.00

2015 103.40 103.40 206.80

2016 113.74 113.74 227.48

2017 125.11 125.11 250.23

2018 137.63 137.63 275.25

Cost Benefit Analysis

ONE TIME REVENUES:

The Average Pricing of the three major categories of Products offered along with the Product Mix is as follows:
Routers USIMs Dongles Total Average One Time Revenue / new user Avg Price (Rs.) % of Users 5,000 10 1,000 40 2,000 50 100 Value Mix 50,000 40,000 1,00,000 1,90,000 1,900

Cost Benefit Analysis

REVENUE SUMMARY (Projections):
(Rs. In crores)

Year

2014

2015

2016

2017

2018

One Time Data and Voice Total Revenue

246.05 24.35 270.40

24.61 29.46 54.06

27.07 35.64 62.71

29.77 43.13 72.90

32.75 52.19 84.94

The trend shows a 12% YoY growth in Revenues from Year 2 onwards Using the Perpetuity formula, the Present Value of the cash flows from 4G business amounts to Rs. 5,676.76 Subtracting the initial outflow of Rs. 4,214.36, gives us a surplus of Rs. 1,462.40 crores making this a Profitable venture.