2003 – VaS explosion 0.75 % of revenue removed as ADC, only termination fees halved to 50 paise/min NTP 1999- Convert PCO’s, wherever justified, into Public Teleinfo centres having multimedia capability like ISDN services, remote database access, government and community information systems etc.
The CDMA subscriber base has reached 74.36m in the quarter ending June 2008 as against 68.37m at the end of the previous quarter. The growth in this quarter is 8.76% as against 11.37% for the previous quarter. Reliance remains the largest CDMA mobile operator followed by Tata Teleservices and BSNL with subscriber base of 42.71m, 26.33m and 4.59m respectively. Wimax – This is a disruptive technology facing Indian telecos VoIP – This will put pressure on the Telecos since ISP can offer virtually free internet based mobile phones – Also License fees is 2 Cr against 1650 Cr for telecom operators 4 G – people are already talking about it
They undertake various research activities and monitor the quality of service provided in the Indian telecom industry. They also provide various recommendations to improve the status of telecom operations in India.
MNP – Mobile Number Portability
Growing per capita disposable income increase from Rs.12000 to Rs. 33000 Falling handset prices
Best service provider, good call center serice esp. in local languages, good service even in the remote areas, emphasis on “barriers break when people speak”, new initiatives like google search on airtellive, downloads etc 2. Long term HR strategy, Gallup Great Workplace Award, Both internal development as well as external hiring, development programs with iims etc, Young leader development program for top 18 MBA prog 3. retail, insurance, realty
Bharti comtel - Bharti Comtel Limited, a wholly owned subsidy of Bharti Airtel Limited, [providing front end HR services,] has been recheristened as "BHARTI AIRTEL SERVICES LIMITED”. Bharti Airtel Services will provide recruitment, payroll & performance management support to all Airtel verticals. Satcom Broadband- Ccom to Satcom providing broadband solutions to SMEs Bharti boradband- Comsat ( max india ltd) after merging woth bharti airtel ltd, VSAT and broadband overseas
Pg 8 76 5 of consolidated revenues Census town 1. A minimum population of 5,000 2. At least 75% of male working population engaged in non-agricultural pursuits 3. A density of population of at least 400 persons per sq. km.
Pg 8 Reduction in ADC
High debt to equity means the co has been aggressive in financing its growth ROCE =PBIT/Total Assets RONW= PAT/Net worth
campaign celebrates a person’s inherent need to communicate spontaneously and grab that moment to live it completely.
Airtel recharge available wherever match boxes can be found
"Friendz" pre-paid connection would attract those between 15-19 years of age that had several interesting features. Similarly, the "Ladies Special" plan was to allow more and more women to use mobile phones that had become a necessity today, said Mr. Bindal, adding that the new scheme would give them special discounts. The plan also offers women the option to club the monthly bills with that of their spouses. 60 years of age, Airtel has new post-paid plan, Seniors, where subscribers get discount on one STD number and one local Airtel number. Besides, subscribers of this plan would get special discounts for health check-ups and would have a facility to club bills with that of their children
Cellular Services address the communication needs and staying connected. Hence a necessity There is no substitute that can replace it completely.
What they are doing in retail for last 4 years. What to put in Cash Cow. Bharti Infratel The Company has entered into a joint venture agreement with Vodafone Essar Limited (Vodafone) and Idea Cellular Limited (Idea) to form an independent tower company (“Indus Towers Limited” or “Indus Tower”) to provide passive infrastructure services in 16 circles of India. The Company and Vodafone will hold approximately 42% each in Indus Tower and the balance 16% will be held by Idea. Pursuant to the aforesaid agreement, Bharti Infratel Limited has subscribed 50,000 equity shares of Rs. 10 each in Indus Towers Limited on December 17, 2007 for an aggregate value of Rs. 500 thousand. For this purpose, Bharti Infratel Ventures Limited has been incorporated as a wholly owned subsidiary of Bharti Infratel Ltd. The telecom passive infrastructure will be transferred to Bharti Infratel Ventures for ultimate merger in Indus Towers Limited. The Company’s 61,984,721 mobile customers accounted for a 23.8% of wireless (GSM + CDMA) market share as on March 31, 2008. The revenues from the mobile services for the financial year were Rs. 218,697 mn., a growth of 55% over the revenues in the previous financial year. The mobile services business contributed 80% to the consolidated revenues. Telemedia Services During the year, the Broadband and Telephone Services business was renamed as Telemedia Services in line with the Company’s growing focus on new media solutions and foray into IPTV and DTH businesses. The Company provides broadband (DSL) and telephone services (fixed line) in 15 circles spanning over 94 cities across India. As on March 31, 2008, the Company had 2,283,328 customers (a growth of 22%), of which 34.8% (~795,000) were subscribing to broadband / internet services. The Company’s strategy for Telemedia business is to focus on the cities with high revenue potential, excepting for DTH which will be an all India offering. The product offering in this segment includes supply and installation of fixed-line telephones providing local, national and international long distance voice connectivity and broadband Internet access through DSL. The business also provides value added services such as intelligent network Passive Infrastructure Services The undertaking relating to the entire assets and liabilities of telecom passive infrastructure was transferred from Bharti Airtel Limited to Bharti Infratel Limited pursuant to a scheme of arrangement sanctioned by the Honble High Court of Delhi. Bharti Infratel provides passive infrastructure services on a non-discriminatory basis to all telecom operators in India. Bharti Infratel deploys, owns and manages passive infrastructure on an all India basis. The Company has approximately 52,000 towers as on March 31, 2008, of which approx 30,000 towers will be transferred to Indus Towers Ltd (a Joint Venture between Bharti Infratel, Vodafone and Idea Cellular) for 16 circles.
Telemedia – Airtel Industry % BroadBand - 0.2 4.5 4 Fixed Line 1.2 40 3 Broadband ..HP and Airtel had a deal … As on March 31, 2008, the Company had 2,283,328 customers (a growth of 22%), of which 34.8% (~795,000) were subscribing to broadband / internet services. Broadband subscribers - 4.38 million at the end of June 2008 as compared to 3.87 million at the end of March 2008 (growth rate @ 13.18%) Out of total 4.38 million broadband subscribers, 3.72 million are DSL based; 0.42 million Cable Modem; 0.11 million Ethernet LAN; 0.045 million Fiber; 0.057 million Radio, Leased Line 0.018 million and 0.005 million use other technologies. The key financial results of the Long Distance Services division for the year ended March 31,2008 are presented below. About 25% growth .. Enterprise Services – Corporates--- 49% growth ….
1. Index• Introduction to Indian Telecom Industry• Introduction to Bharti Airtel• Financial Analysis• Marketing Analysis• Porters 5 forces analysis• BCG, GE Matrix• Future
3. Evolution of Telecom In India ILD services was BSNL was Number portability Independent opened to Intra-circle merger established by was proposed Private players regulator, TRAI, competition guidelines were DoT Calling Party Pays were allowed in was established (CPP) was established Attempted to (pending) Value Added Go-ahead to implemented boost Rural Services the CDMA telephony technology 1994 1999 2002 2005 2007 2003 2004INDIA 1992 2000 Internet Unified Access 2006 1997 telephony Licensing (UASL) initiated regime was Broadband introduced policy 2004 was National Telecom Decision on 3G NTP-99 led to Reduction of formulated— Policy (NTP) was FDI limit was services (awaited) migration from high- licence fees Reference targeting 20 formulated increased from 49 cost fixed license fee Interconnect million to 74 percent to low-cost revenue order was subscribers by sharing regime issued 2010 Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry. ILD – International Long Distance
4. Changing DemographicsDemand for VAS & Broadbandservices Among Youth28 % Urban PopulationRapid UrbanizationRising Income level Source: Mckinsey Report
5. TechnologiesCDMA – Already there are big players in this segment Reliance , Tata3G – Value added services potential still to be tapped fully2G/3G – GSM Currently commands 70% of mobile subscribers in India
6. Telecom Ecosystem Indian Telecom Industry Framework Indian Telecom Industry Framework Indian Government Bodies Independent BodiesWireless Planning Handles spectrum allocation Telecom Regulatoryand Coordination Authority of India (TRAI) Independent regulatory body(WPC) and management DoT – Licensee and Telecom DisputesDepartment ofTelecommunications frequency management Settlement and Appellate for telecom Tribunal (TDSAT) Telecom disputes settlement bodyTelecom Exclusive policy making body Association of Commission of DoT Unified Telecom Service Handles ad hoc issues of Providers(AUSPI)Group on Telecomand IT (GoT-IT) the telecom industry
7. Regulatory framework 74% FDI Investment Lack of Transparency in Spectrum & License Allocation 3G Policy & MNP still Pending GROUP 7 8
8. Industry• Subscriber base- 330m• Wireless penetration- 14.7%• CAGR (wireless)- 68%• Second Largest Telecom Market – Lowest tariff charges in the world – Wireless Subscribers – 315.3 Mn – Wireline Subscribers – 38.4 Mn – Teledensity – 30.6 – Share in Asia Pacific mobile phone market- 6.4 – Mobile subscriber base growth rate- 82.2%, 42% of the population below 20• 9 GSM and 5 CDMA players in 19 circles and 4 metro cities connecting 2000 towns• Bharti Airtel largest player with presence in all 23 circles
9. Vision 2010• By 2010 Airtel will be the most admired brand in India: – Loved by more customers – Targeted by top talent – Benchmarked by more businesses
10. Vision 2020• To build Indias finest business conglomerate by 2020• Supporting education of underprivileged children through Bharti Foundation• Strategic Intent: – To create a conglomerate of the future by bringing about “Big Transformations through Brave Actions.”
11. 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”
12. Organization Structure
13. Company History• 1995 – mobile service brand in Delhi and HP and BT acquires a stake• 1996-97 – Formed Bharti BT VSAT Ltd• 1999-2000 Acquires JT Mobiles in Karnataka, AP and Punjab• 2001-02 – Launches IndiaOne , 8 new licenses in the East, becomes largest operator, launches Airtel tune• 2003-04 – Association with Ericsson, IBM, RIM• 2006-07 – Forays into Sri Lanka and US, tie up with Google and Microsoft
15. Airtel- SBUsMobile• Service across 23 circles• 4676 census towns and 207327 non-census towns and villages covering 59% of population• Market share- 22.9%• 85mn subscribers from 25m in Jul 2006
16. Airtel- SBUs contd.Broadband & Telephone Services (B&TS)• Service across 94 cities across 16 circles• 1.75 m voice and 0.59 m broadband customers
17. Airtel- SBUs contd.Enterprise Network-Carriers• 49000 kms of fiber• Submarine cable landing station at Chennai• Association with SEA-ME-WE-4 with 15 more operators
18. Contd.-Corporates• Deep domain knowledge exploitation for Banking, BFES, IT/ITES, Media, Education, Retail• Integrated services for key corporate accounts
20. Share Capital• Rs 8,340.15 million raised through the IPO• 2002 Went Public• Shares in issue – 1,898,101,604 as at September 30, 2008• Market Capitilization – Approx. Rs. 1,371 billion• P/E – 19.98• EPS – 36.16
21. Some Key highlights…Balance Sheet Amount in Rs. CrTotal Share Capital 1897.91Net Worth 20241.49Total Debt 6570.34Net Block 19030.65Investments 10952.85 IncomeNet Current Assets -5922.94 (Sep 08) (Mar 08) StatementTotal Assets 26811.84 Quarterly Annual Net Sales 8274.37 25703.51 Other 28.43 235.86 Income PBDIT 3151.06 10736.89 Net Profit 1604.78 6244.20
22. Key Ratios Key Ratios - Airtel Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Debt-Equity Ratio 0.38 0.54 0.83 0.6 0.07Long Term Debt-Equity Ratio 0.35 0.5 0.76 0.5 0.03 ROCE (%) 34.88 34.07 22.55 23.96 0.16 RONW (%) 39.53 43.04 31.82 23.88 -0.27 Key Ratios - Industry 2007 2006 2005 2004 2003 Debt-Equity Ratio 0.35 0.21 0.27 0.34 0.36 Long Term Debt-Equity Ratio 0.3 0.19 0.24 0.29 0.33 ROCE (%) 9.72 10.28 8.25 8.43 3.07 RONW (%) 10.11 10.62 10.87 6.76 0.18
24. Subscriber Growth Group Company wise % market share - Nov2008Sr, No. Name of Company Total Sub Figures % Market Share 1 Bharti Airtel 8,29,20,593 33.25% 2 Vodafone Essar 5,87,64,164 23.57% 3 BSNL 4,04,87,511 16.24% 4 IDEA 3,28,09,720 13.16% 5 Aircel 1,53,75,258 6.17% 6 Reliance Telecom 95,82,695 3.84% 7 Spice 37,05,894 1.49% 8 MTNL 38,21,277 1.53% 9 BPL 18,82,324 0.75% All India 24,93,49,436 100.00%
25. Customer Growth across the years Airtel Subscriber Year Overall Subscriber Base Base Market ShareMar-04 2,61,54,405 42,16,317 16.12087Mar-05 4,10,25,940 1,04,78,585 25.54136Mar-06 6,91,93,321 1,95,79,208 28.29638Mar-07 12,14,31,166 3,71,41,210 30.58623Mar-08 18,44,13,702 6,19,84,721 33.61178
26. Income and Expenditure(Rs. Cr)
27. Operating Profit (Rs. Cr.)
28. Stock Movement
29. Share Price Competitors DifferentialsCompany Name Last Price % Chg 52 wk 52 wk Market Cap High Low (Rs. cr) Bharti Airtel 722.30 -2.69 1,063.00 484.00 137,107.31Reliance Comm 249.20 4.18 844.00 148.60 51,435.55 Idea Cellular 53.50 0.09 148.90 34.05 16,585.51 Tata Comm 495.15 0.53 783.00 320.00 14,111.78 MTNL 74.85 -2.54 219.45 51.75 4,715.55TataTeleservice 20.15 2.03 65.00 12.50 3,822.84 Spice Comm 36.00 10.43 77.30 23.25 2,483.73Tulip Telecom 501.20 15.66 1,225.00 385.00 1,453.48 HFCL Infotel 7.45 6.28 59.70 5.55 391.51
30. Net Sales(Rs. Cr)
31. Net Profit(Rs. Cr)
32. For the current year
34. Core Values of AirTel• Performance• Dynamism• Leadership
35. TARGETING• Elite• Up market professionals• Entrepreneur with business plans• Low income mass category• Youth• Women and senior citizens by post paid connection
36. POSITIONING• “Power to keep in touch”• “Touch tomorrow”• “Live every moment”• “Express yourself”
37. TIME LINE
38. “Power to keep in touch”• Positioned in premium category aimed at elite class of society• Convey power of instant communication• Perception of aspirational and lifestyle brand• Airtel decided that the brand should always connote leadership–be it in network, innovations, offerings, services• Sponsored games like Golf
39. TIME LINE
40. “Touch tomorrow”• New campaign launched to facilitate entry into new markets• Started to capture mass market• A new logo for Airtel- Red , black and white colors with ‘Airtel’ enwrapped in an eclipse.• Logo indicated core value of the brand: leadership, performance and dynamism
41. TIME LINE
42. “Live every moment”• Launched to capture the imagination of the customer• Projects a persons desire to spontaneously communicate through words, emotions, sights, sounds, thoughts and actions over boundaries, distances and geographies
43. TIME LINE
44. “Express Yourself”• In 2003, Airtel repositioned its brand with “Express yourself” campaign• Changed its logo to give more energetic and younger look• Highlight capability of Airtel’s performance and network coverage• Launched in regional language
45. THE FIRST MOVER ADVANTAGE• Electronic recharge• Hello tunes• Airtel Live!• Portfolio manager• Song catcher• Easy music• Black berry handsets• M-cheques
46. First Mover Advantage
47. RURAL STRATEGIES• Airtel follows “Match-box strategy”• The firm expands regularly in Bihar, piggybacking on 300 distributors and more than 50,000 retail outlets selling Airtel prepaid cards• Covers over 4,00,000 villages and hopes to expand to other 1,00,000 by 2009
48. IMC TOOLS• Advertisements• Sales promotion• Publicity and events
49. AIRTEL ADVERTISEMENT• Airtel basically uses two appeal to connect to the users – Emotional – Humorous• Total advertising budget of Airtel is Rs. 150 crore
50. The Ad diagnosticsscore helps tounderstand how farthe Ad has been ableto break the clutter
51. INTERNET ADVERTISINGMassive advertising through• Google AdSense• BidVertisers• Sponsor online games at Zapak.com
53. Youtopia• Special tariff plan for youth- Youtopia• Reduced tariffs, access to cell phones• 14-19 years of age• Expand customer base (limited to the older age groups till now)• Deviation from earlier positioning for older people symbolizing dignity and power• Re 0.25 for 30 seconds- night!, special bidding portal, music download facilities, SMS at affordable prices
54. PUBLICITY AND EVENTSSponsored events• Delhi half marathon• Delhi golf tournamentSponsored TV shows• Big Boss• KBC• Indian Idol
55. OUTCOME OF THE CAMPAIGN Addition of 2.7 Million customers in a month
59. 1. Threat from CompetitionWireless Market – Top 4 garnering 75% market share HIGH
60. Competitor AnalysisBest OP Margins &Net Profit Margins among Peers Source: CMIE November 2008
61. AMOU & ARPU Stats Minutes of Usage per Month – Mobile Services USA 838 Despite a low teledensity of India 461 approximately 19 percent, India has China 303 the second highest minutes of usage per month. This offers huge Russia 88 growth opportunity to telecom companies. ARPU* in India – Mobile Services 10 The declining ARPU impliesARPU (USD per month) 8 that India Inc. is tapping a 6 large market at the bottom of 4 the pyramid by reducing 2 tariffs; thereby, enhancing 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 affordability. GSM CDMA
62. 2. Customer Bargaining Power• Lack of differentiation among Service Providers HIGH• Cut throat Competition• Low Switching Costs• Attractive Schemes for new connection• Availability of all operators everywhere• Difficulty to differentiate Brand• Number Portability will have –Ve Impact• Businesses & Consumers
65. 4. Threat of Substitutes• Landline DIMINISHING MARKET HIGH• CDMA• World Phone• Video Conferencing BROADBAND SERVICES• VOIP - Skype, Gtalk, Yahoo Messenger• e-Mail & Social Networking Websites
66. 5. Threat of New EntrantsLow Because• Huge License Fees to be paid upfront & High gestation period• Entry of MVNOs & WiMAX operators• Spectrum Availability & Regulatory Issues Previously Low, Now High• Infrastructure Setup Cost - High• Rapidly changing technology
67. 5. Threat of New EntrantsHigh Because• Entry through 3G• New Entrants are ready to enter with Huge Capital Considering the attractiveness of the market• Increase Of FDI to 76% bringing competiton from Foreign players• New Entrants from Non telecom companies with the ease of Outsourcing Previously Low, Now High
68. HIGH BCG Matrix for Bharti Airtel Mobile Services DTH & IPTV Broad BandLOW HIGH LOW
69. GE Matrix Classification Business Strength Strong Medium Weak 5.00 HighMarket Attractiveness 3.67 Medium 2.33 Low 5.00 3.67 2.33 1.00
70. Factors Underlying MarketAttractiveness
71. Factors Underlying Market/Biz Strength
72. Airtel’s GE Matrix High Low Business Strengths High Attractive 5.00 Airtel EnterpriseMarket Attractiveness Mobile 3.67 Moderate TeleMedia Attractive 2.33 Unattractive Low 5.00 3.67 2.33 1.00
74. SWOTStrengths Weakness• Largest Telecom Player in India - • Outsourcing of Core ~80Mn, 22.6%• Market Leader Systems• Strong Leadership – Sunil Bharti • Network Coverage (earlier) Mittal• Recognized Globally• Pan India Presence• Strong Financials• Focus on Core Activities – Outsource the rest• Strong Brand Image – Marketing Team• Strong New Business Development team
75. SWOTOpportunities Threats• Bharti Infratel – Cutting • India centric – Major Down cost in Rural area revenues from India• Match Box Strategy – Scale • Falling ARPU & AMOU of Penetration • Intense Competition &• Current Tele-Density – 30.6 is still low among Shortage of Bandwidth developing countries • New Players coming in India• Low Broadband • Uncertain Economic Penetration, Rural conditions Telephoney
76. AIRTEL STRATEGY
77. Airtel – StrategyMANTRA : Focus on Core Competencies and Outsource the rest!
78. Strategy• Partner with leading players in telecommunication across the globe.• Managed to work with the best of domain specialists globally and emerge as a world class entity.• Operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.
79. Outsourcing deals in 2004• Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles.• IBM was given the mandate to handle the back office requirements of Airtel’s presence in India
80. 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.
81. Performance till date• Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened.• It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone.• Has coped well with regulatory changes.• Continues to attract and delight customers.
82. FUTURE STRATEGIES
83. 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 worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.