Bharti Airtel – Largest player with presence in 23 Circles
Go-ahead to the CDMA technology INDIA Private players were allowed in Value Added Services National Telecom Policy (NTP) was formulated 1992 1994 1997 Independent regulator, TRAI, was established NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime 1999 2000 2002 BSNL was established by DoT ILD services was opened to competition Internet telephony initiated Reduction of licence fees 2003 Calling Party Pays (CPP) was implemented Unified Access Licensing (UASL) regime was introduced Reference Interconnect order was issued 2004 Intra-circle merger guidelines were established Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010 2005 FDI limit was increased from 49 to 74 percent Attempted to boost Rural telephony 2006 Number portability was proposed (pending) Decision on 3G services (awaited) 2007 Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry. ILD – International Long Distance Evolution GROUP 7
In 1992, Bharti entered the cellular market by launching services in Delhi.
Soon extended to other places.
Cellular showrooms in 1995.
Value added services in 1997.
VALUE ADDED SERVICES
CALL LINE IDENTIFICATION
32K SIM CARD
RINGTONES AND LOGOS
TRAFFIC AND WEATHER UPDATE
AIRTEL-LEADERSHIP CAMPAIGN(LATE 90s) GROUP 7
Bharti became the market leader.
Call rates Rupees 16/minute.
Global market saturation.
Essar searching for untapped potential.
REDUCTION IN TARIFF RATES
Competition in the sector intensified
Telecom players extended their horizons
GROUP 7 Source: TRAI Report
Adding emotion to leadership.
In 2000, Bharti launched its “TOUCH TOMORROW” campaign.
To strengthen its relationship with customers.
TOUCH TOMORROW GROUP 7
28 % Urban Population
Rising Income level
50% of the Indian population is below the age of 25, according to the CIA FACTBOOK.
The average age of an Indian is 33.
Changing Demographics Source: Mckinsey Report
LIVE EVERY MOMENT
Give Airtel a younger look.
To attract the youth.
The logo symbolized friendliness, energy and innovation.
Porter’s Generic Strategy GROUP 7
Porter’s 5 Forces GROUP 7
1. Threat from Competition Wireless Market – Top 4 garnering 75% market share GROUP 7 HIGH
Competitor Analysis GROUP 7 Best OP Margins & Net Profit Margins among Peers Source: CMIE November 2008 OP Margin Net Margin Company Sep-07 Sep-08 Sep-072 Sep-083 Bharti 43.00% 38.00% 26.40% 19.30% Rcom 37.90% 31.60% 23.90% 13.20% IDEA 32.80% 26.60% 14.10% 6.50% MTNL 23.70% 22.90% 7.00% 6.80%
AMOU & ARPU Stats Minutes of Usage per Month – Mobile Services ARPU* in India – Mobile Services Despite a low teledensity of approximately 19 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity to telecom companies. The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability. GROUP 7
2. Customer Bargaining Power
Lack of differentiation among Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have –Ve Impact
Businesses & Consumers
GROUP 7 HIGH
3. Suppliers Bargaining Power GROUP 7 LOW
4. Threat of Substitutes
VOIP - Skype, Gtalk, Yahoo Messenger
e-Mail & Social Networking Websites
GROUP 7 BROADBAND SERVICES DIMINISHING MARKET HIGH
5. Threat of New Entrants
Huge License Fees to be paid upfront & High gestation period
Entry of MVNOs & WiMAX operators
Spectrum Availability & Regulatory Issues
Infrastructure Setup Cost - High
Rapidly changing technology
GROUP 7 LOW
Largest Telecom Player in India - ~80Mn, 22.6%
Strategic Alliance with other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel
Pan India Presence
Outsourcing of Core Systems
Lack of emerging market investment opportunity
Source: CMIE Report NOV 08 GROUP 7
Bharti Infratel – Cutting Down cost in Rural area
Match Box Strategy – Scale of Penetration
Current Tele-Density – 30.6 is still low among developing countries
Low Broadband Penetration, Rural Telephoney
India centric – Major revenues from India
Falling ARPU & AMOU
Intense Competition & Shortage of Bandwidth
BCG Matrix for Bharti Airtel LOW HIGH HIGH LOW GROUP 7 Mobile Services DTH & IPTV Broad Band
Future Growth Avenues GROUP 7
A New look GROUP 7
Road Map – Growth Path GROUP 7 VPN & VoIP WiMAX 3G 2G/2.5G