B h a rtiA irte lLtd a n d In d ia n

Te le co m S e cto r
Alyn Varghese
Azharuddin Mansiya
Mrinal Kaul
Sandeep Kumar A
Subrato Das
 Platform1882-Platform 2009
• T & T Relation
 - Year 1850
 - Year 1882


• Posts and Telegraph

 - Year 1888
 - Year 1984


• 1949 & 1950

 - Own your Phone Scheme
 Inaugurated and
 operationalized.
•

•
 Important Milestones


• Rajiv Gandhi + = Laid Foundation of Telecom

R e vo lu tio n in th e ye a r
1987.

 D O T w a s sp lit in to V S N L a n d M T N L in ye a r 1 9 8 6 .

 In ye a r 2 0 0 0 D O T b e co m e s B S N L .

 In th e ye a r 1 9 9 7 T R A I w a s fo rm e d u n d e r th e
M in istry o f
Te le co m m u n ica tio n a n d IT w ith o b je ctive to b e a n
e ffe ctive
re g u la to ry fra m e w o rk a n d to e n su re fa ir
co m p e titio n a n d
p ro te ctio n o f co n su m e r in te re sts.  A lso to e n su re
re so lu tio n o f
d isp u te s b e tw e e n G o ve rn m e n t ( in its ro le a s
 NTP94

 The focus of the Telecom Policy shall be
telecommunication for all and
telecommunication within the reach of all.


 Another objective will be to achieve universal

service(basic telephone) covering all villages
as early as possible.


 The quality of telecom services should be of

world standard.


 It is necessary to ensure that India emerges as a

major manufacturing base and major exporter
 Revised NTP94
•
• Telephone should be available on demand by 1997.
•
• All villages should be covered by 1997.
•
• Urban area- PCO for every 500 persons by 1997.
•
• All VAS available internationally should be available in India
preferably by 1996.
•
•
 NTP99


• Availability of affordable and effective communications for

the
 citizens.


• Create a modern and efficient telecommunications

infrastructure taking into account the convergence of IT,
media, telecom and consumer electronics and thereby
propel India into becoming an IT superpower.


• Convert PCO’s, wherever justified, into Public Teleinfo

centres having multimedia capability like ISDN services,
remote database access, government and community
information systems etc.


• Achieve efficiency and transparency in spectrum

management .

 Specific Targets of NTP99

 Encourage development of telecom in rural areas by 2002.


 Provide Internet access to all district head quarters by the
year 2000.



A d d e n d u m to N T P 9 9
•
• Unified Licence for Telecommunication Services permitting
Licensee to provide all telecommunication/ telegraph
services covering various geographical areas using any
technology;
•

• Licence for Unified Access (Basic and Cellular) Services

permitting Licensee to provide Basic and /or Cellular
Services using any
 GSM and CDMA


• In year 1995 GSM entered India. Historic call made by

MobileNet-joint venture between Telstra (Australia) & B.K.
Modigroup.
• In year 1996 Tatatele services launched first ever CDMA
based cell operations.
•
• Call rates were hovering around Rs 17/min and basic
handset was priced at Rs 40000.
• But who is the father of Basic telephone ? And who is the
father of Cell phone ?
•


•
 Mr. Martin Cooper
As of 2009 …
The Moment Of Truth ….
1995
 Factsheet- Airtel
• Telecom giant Bharti Airtel is the flagship company of Bharti
Enterprises.
• Headed by Sunil Bharti Mittal
• India’s largest integrated and the first private telecom
services provider
• Bharti is now the world's third-largest, single-country mobile
operator and sixth-largest integrated telecom operator.
• Has a customer base of 110 million people in India.
• Has a footprint in all 23 circles.
• Market share of 23.5 overall (as of Sep ‘09) and 26.82% (as
of June ‘09) in the rural market.
• Bharti has 30 % market share in terms of revenue.
• It is worth about $25 billion and is growing fast.
• Airtel's operation in Sri Lanka, known as Airtel Lanka,
commenced operations on the 12th of January 2009.
•

 Organisational
Structure

Source: www.airtel.co.in
 Evolution of Airtel in
India
• Bicycle parts Business (1976-1980).
• Bharti Telecom Ltd (1985).
• Conglomerate with Siemens AG (1985).
• Bharti Tele Venture
– Airtel was founded in 1995 as Bharti Tele-
ventures(1995)
– Touchtel (2001)
• Discontinuation of Multi Branding
strategy(2004). Telecom services
under ‘Airtel’.
• BTV renamed to BAL(2006).

 Marketing the brand

‘Airtel’
Ø Second Largest Advertiser in India after HUL in
2008.
 Business Model
 The secret of Airtels’ success is its effective business model.


 Airtel focuses solely on

Ø Customer acquisition & servicing (retention)
Ø Business development/expansion
Ø

All other functions are outsourced


Ø Network Management – NokiaSiemens ,Ericsson and Huawei

Ø Backend Applications and IT systems- IBM
Ø Call Centres- IBM Daksh, Mphasis, Firstsource, Teleperformance, Aegis and HTMT
Ø Value added services- On Mobile, Comviva, Yahoo, Google and Cellebrum
Ø Blackberry enterprise & internet services- Reliance India Mobile


Source: Airtel quarterly report for the 2nd quarter and half year ended 30th September 2009
 Airtel & Oligopoly
• Number of operators
• Measures of concentration
– Concentration ratio: indicator of the
relative size of firms in relation to
the industry as a whole
– Herfindahl Hirschman index
–

Market Share
Herfindahl-Hirschman
Calculation
Operator Market share in M^2
Airtel percentage
24 . 3 (M) 590 . 49
Reliance 18 . 9 357 . 21
Vodafone 18 . 8 353 . 44
MTNL 12 . 7 161 . 29
Idea 11 . 2 125 . 44
TTSL 9.7 94 . 09
Others 4.4 19 . 36

1806

Herfindahl - Hirschman Index

Airtel and Oligopoly
 Major Operators in India
• Bharat Sanchar Nigam Limited
• BPL Mobile Communications Limited
• Mahanagar Telephone Nigam Limited
• Bharti Airtel
• Vodafone Essar
• Reliance Communications
• Tata Teleservices
• Spice Telecom
• Idea Cellular
• Sasken Network Engineering Limited
•
 First Mover
Advantage
 Airtel was the first to introduce the following value added services
 - Electronic recharge
 - Hello Tunes
 - Airtel Live
 - Song Catcher
 - Easy Music
 - Blackberry Handsets
 - MChek



People know about AIRTEL
cellular service through
AIRTEL users in people’s
phone book
Celebrity liked by people
very much in AIRTEL
Balance Sheet
Operational Performance
Comparative Study

Data as on Sept 09
Airtel Reliance Idea
ARPU 250 161 209
AMOU 450 340 375
RPM 0.56 0.47 0.56

ARPU Average Revenue Per user

AMOU Average minutes of Usage
RPM Rate per minute
 RPU
• A ratio used to express the
profitability of a company on a per-
user basis. RPUs are calculated by
taking overall revenue and dividing
by total number of users
Airtel 250
• Idea
Reliance 161
209
•
 Way Ahead
• Airtel faced some challenges to its
leadership position in the Indian
telecom market.
• Industry experts said that the key to
future growth lay in making the
Airtel brand attractive to both the
tech-savvy urban population and
the rural masses where the bulk of
the future growth is expected.
• Finding alternate revenue streams in
view of the rapidly falling……
 SWOT
S tre n g th s W e a kn e ss
Largest Telecom Player in India -
 Outsourcing of Core Systems


~110Mn, 23.5% Lack of emerging market investment



Strategic Alliance with other

 opportunity
stakeholders in Bharti Airtel
include Sony-Ericsson, Nokia - and
Sing Tel
Pan India Presence


Strong Financials Threats

Opportunities


Tie ups for customer application Intense Competition &

Shortage of Bandwidth
Presence in emerging market
Falling ARPU & AMOU
Current Tele-Density – 30.6 is
still low among developing
countries
Brand
Low Rural Telephoney
Match Box Strategy – Scale of
Penetration 30
 Bharti-MTN Deal
• When and how did it begin?
Ø Proposed merger to acquire 49% stake on
25th May 2009.
Ø Potential to become 3rd biggest merger of
2009 globally
Ø Acquisition aimed at reaching out over 200
million subscribers.
•
• Structure of the deal
Ø MTN, 36% stake in Bharti
Ø Bharti, 49% stake in MTN
 Bharti-MTN Deal
Why did it fail?


• Locally domiciled
• Dual listing structure


Opportunity cost of the deal to Airtel?



• Fast growing and under-penetrated

countries of Africa.
• Huge scale and operating Metrics.
• access to innovative technology
•
 What Next ????
 Bharti-ZAIN ?
• Valuable ASSET to buy.
• Wide Coverage.
• Unique one network Strategy.
• Bharti-ZAIN or MTN-ZAIN?

 WORLDWIDE
INTEROPERABILITY FOR
MICROWAVE ACCESS.
• “Wireless at maximum”
• WiMAX can provide broadband
wireless access (BWA) up to 30
miles (50 km). 
• It is estimated that India will have 19
million WiMAX subscribers by 2012
(TRAI).
• Bharti acquired licenses in the
3.3GHz range to utilise the
opportunities.
 VoIP
• Has Collaborated with Cisco.
• Invested heavily in setting Up
Infrastructure.
• The Market world wide is expected to
be at $6 bn by 2012.
• The market in India is expected to be
at 1.2bn.
Rural Telephone
 Rural Market
• Airtel is also the leading player in
rural sector with 26.82 % share.
• The market is fast growing.
• As the government targets to
increase rural teledensity from the
current 2 percent to 25 percent by
2012, rural telephony will require
major investments.
•
 Rural Market Share

Airtel 26 . 82 Reliance 12 . 99
Vodafone 19 . 72 Aircel 7 . 01
Idea 15 . 72 Others 3 . 38
BSNL 15 . 36
 VAS
• Provide more Value Added Services , e.g
• Twitter on Airtel
• Ringtones
• Wallpapers
• Web Applications
• Phone Banking (M-Commerce)
• Hello Tunes
• SMS
• Airtel Live
• Co-Branding Activities
• Business Solutions



 Aggressive Marketing
• More Proactive with Plans
• Continue on going Ad – Campaigns
• Consistent Brand Message
• Improve its Customer Care Services
and make it marketable.
•
•
•
 TAPPING UNTAPPED
MARKET
• Seychelles through its subsidiary Telecom
Seychelles Limited.
• Europe (Channel Islands) through its subsidiaries
Jersey Airtel Limited (JAL) and Guernsey Airtel
Limited (GAL).
• In 2006, Airtel became the first Indian telecom
operator to launch 3G services in Seychelles
• In May 2007, JAL and GAL entered into a
partnership with Vodafone to launch mobile
services in Channel Islands under the Vodafone-
Airtel brand.
• Airtel started in operations in Srilanka in 2008
