2. Index
• Introduction to Indian Telecom Industry
• Introduction to Bharti Airtel
• Financial Analysis
• Marketing Analysis
• Porters 5 forces analysis
• BCG, GE Matrix
• Future
4. 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 2004
INDIA
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
5. Changing Demographics
Demand for VAS & Broadband
services Among Youth
28 % Urban Population
Rapid Urbanization
Rising Income level
Source: Mckinsey Report
6. Technologies
CDMA – Already there are big
players in this segment
Reliance , Tata
3G – Value added services
potential still to be tapped
fully
2G/3G – GSM Currently
commands 70% of mobile
subscribers in India
7. Telecom Ecosystem
Indian Telecom Industry Framework
Indian Telecom Industry Framework
Indian Government Bodies Independent Bodies
Wireless Planning
Handles spectrum allocation Telecom Regulatory
and Coordination Authority of India (TRAI) Independent regulatory body
(WPC)
and management
DoT – Licensee and Telecom Disputes
Department of
Telecommunications frequency management Settlement and Appellate
for telecom Tribunal (TDSAT) Telecom disputes
settlement body
Telecom Exclusive policy making body Association of
Commission
of DoT Unified Telecom
Service
Handles ad hoc issues of
Providers(AUSPI)
Group on Telecom
and IT (GoT-IT) the telecom industry
8. Regulatory framework
74% FDI Investment
Lack of Transparency in
Spectrum & License
Allocation
3G Policy & MNP still
Pending
GROUP 7 8
9. 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
10. 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
11. Vision 2020
• To build India's 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.”
12. 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”
14. 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
16. Airtel- SBUs
Mobile
• 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
17. 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
18. 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
19. Contd.
-Corporates
• Deep domain knowledge exploitation for Banking, BFES,
IT/ITES, Media, Education, Retail
• Integrated services for key corporate accounts
21. 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
22. Some Key highlights…
Balance Sheet Amount in Rs. Cr
Total Share Capital 1897.91
Net Worth 20241.49
Total Debt 6570.34
Net Block 19030.65
Investments 10952.85
Income
Net Current Assets -5922.94 (Sep '08) (Mar '08)
Statement
Total 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
23. 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 0.07
Long 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
36. TARGETING
• Elite
• Up market professionals
• Entrepreneur with business plans
• Low income mass category
• Youth
• Women and senior citizens by post paid
connection
37. POSITIONING
• “Power to keep in touch”
• “Touch tomorrow”
• “Live every moment”
• “Express yourself”
39. “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
41. “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
43. “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
45. “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
46.
47. THE FIRST MOVER ADVANTAGE
• Electronic recharge
• Hello tunes
• Airtel Live!
• Portfolio manager
• Song catcher
• Easy music
• Black berry handsets
• M-cheques
49. 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
51. AIRTEL ADVERTISEMENT
• Airtel basically uses two appeal to connect to
the users
– Emotional
– Humorous
• Total advertising budget of Airtel is Rs. 150
crore
55. 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
56. PUBLICITY AND EVENTS
Sponsored events
• Delhi half marathon
• Delhi golf tournament
Sponsored TV shows
• Big Boss
• KBC
• Indian Idol
57. OUTCOME OF THE CAMPAIGN
Addition of 2.7
Million
customers in
a month
63. 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 implies
ARPU (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
64. 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
67. 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
68. 5. Threat of New Entrants
Low 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
69. 5. Threat of New Entrants
High 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
70. HIGH BCG Matrix for Bharti Airtel
Mobile Services
DTH & IPTV
Broad Band
LOW
HIGH LOW
71. GE Matrix Classification
Business Strength
Strong Medium Weak
5.00
High
Market Attractiveness
3.67
Medium
2.33
Low
5.00 3.67 2.33 1.00
76. SWOT
Strengths 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
77. SWOT
Opportunities 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
80. 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.
81. 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
82. 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.
83. 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.
85. 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.
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
Pg 9
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 ….