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Strategy management airtel telecom
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Strategy management airtel telecom


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  • Interesting presentation, and discussion points on brand image. Check-out my recent post which highlights how telecoms brands such as Vodafone and Three are telling a compelling digital brand narrative: - Also features our most recent white paper which looks at 10 successful telecoms brand strategies -
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  • 2. Company Background • Established in 1995 by Sunil Bharti Mittal, currently the Chairman and MD of Airtel • Telecom giant Bharti Airtel is the flagship company of Bharti Enterprise • Bharti Airtel Limited, (commonly known as Airtel), is India’s largest integrated and the first private telecom services provider with services in all the telecom circles • Bharti Airtel is structured into three strategic business units - Mobile services, Telemedia services, Enterprise services and Digital TV services* • The mobile business provides mobile & fixed wireless services using GSM technology * This study is based on the Airtel Mobile Services only
  • 3. Target Market(s) Airtel has two major customer segments (demographically) in the mobile telephony services: • Students and young professionals who use the prepaid services (use convenient recharge/load) • Premium and upper middle class customers, who value time and have the paying capacity. They are mostly post-paid users (billed on a monthly basis) Airtel has mobile services in all the telecom circles in India (geographically). The concentration is mostly in urban and sub-urban areas where mobile users are more)
  • 4. Competition • Airtel is the market leader in GSM mobile services • Other key players along with the percentage market share has been shown in the table and pie chart* below Telecom Company No of Subscribers Bharti Airtel 171,846,824 Vodafone 144,144,031 IDEA 98,441,714 BSNL BSNL 15% 90,622,219 Aircel 59,191,661 Others Aircel 10% Others 8% IDEA 16% Bharti Airtel 28% Vodafone 23% 47,512,178 * GSM market share as of Aug 2011 (based on number of subscribers) Source:
  • 5. PEST Analysis/Factors POLITICAL FACTORS • Regulatory bodies – DoT & TRAI • Mobile number portability introduced in January 2011 • Lack of Transparency in Spectrum & License Allocation SOCIAL FACTORS •Customers notion regarding brand and status symbol • Cost factor is major concern to customers • Likes and dislikes of a teenager and adult not the same ECONOMIC FACTORS • Fastest Growing Sector – CAGR 22% (2002-07) • Tariff rates declining since the year 2000 • Declining ARPU but increasing subscriber base TECHNOLOGICAL FACTORS • e-commerce portal •R&D driven industry • Introduction of newer products/ services/ plans • 3G, 4G and high speed broadband in the market
  • 6. Porter’s 5 Forces Analysis Bargaining power of Buyers Bargaining power of Suppliers HIGH HIGH Threat of New Entrants HIGH Industry Rivalry Threat of Substitutes HIGH HIGH As per the Porter’s 5 forces study, the Indian Telecom Industry is Highly Unattractive
  • 7. Strategic Maps Price High Medium Low Low Medium High Call Quality • Airtel is good in quality but has relatively higher prices (hence lower score) • BSNL has least price (being government division), but lacks the call quality • Vodafone and Aircel are priced at similar level but differ in call quality
  • 8. Strategic Maps Price High Medium Low Low Medium Network Coverage • Airtel has substantial network coverage, but at a higher price • BSNL has highest network coverage and least price • Aircel has lowest network coverage and medium level price High
  • 9. Strategic Maps Product Offerings High Medium Low Low Medium High Brand Image • Airtel is considered the best brand with high no of products/services/plans offered • BSNL lacks the brand image and is very low on the no of services/plans offered • Idea and Aircel lie in the medium range, lower than Vodafone and Airtel
  • 10. Strategic Maps Customer Services High Medium Low Low Medium High Reach / No of Outlets • Airtel and Vodafone provide the best customer services, with large no of outlets • Idea has got higher reach than Aircel with similar customer service • BSNL is low on both customer service and reach
  • 11. Key Success Factors The key success factors for the industry are as below: • Price (Threshold) • Customer Services • Brand Image • Network Coverage • Call Quality • Reach/No of outlets • Product Offerings* * This includes value added features like international roaming, international calling, CUG services, BlackBerry and iPhone connection and services etc
  • 12. Competitive Matrix Key Success Factors Weightage Airtel Vodafone IDEA BSNL Aircel Network Coverage 25% 8 7 7 9 4 Call Quality 25% 8 9 6 6 6 Product Offerings 15% 9 8 7 3 6 Brand Image 15% 9 8 6 4 6 Reach / No. of Outlets 10% 9 8 6 2 4 Customer Service 5% 9 8 5 3 5 Price 5% 6 7 6 9 7 Score 100% 8.35 7.95 6.35 5.85 5.3 28.09% 23.56% 16.09% 14.81% 9.68% Market Share • Network coverage and call quality are the most important factors in the telecom market • The products/plans offered, along with the brand image also play an important role for customers decision making process • Price is a threshold as similar prices are charged by all private players (BSNL is Govt. owned)
  • 13. Triangle Model Vision / Mission Key Success Factors Core Competencies •Price • Customer Services • Brand Image • Network Coverage • Call Quality • Reach/No of outlets •Product Offerings • Sales & Promotions • Brand Image • Market Share • Resource availability • Product quality Value Proposition Quality, Value, Consistency and Reliability – Anywhere, Anytime
  • 14. Ladder Model Sustainable Comp. Advantage 1. 2. 3. Brand Image Products & VAS R&D capability Distinctive Comp. 1. 2. Network Coverage Product Offering Strategic Comp. 1. 2. Competencies 1. 2. Threshold Comp. 1. Resources 1. 2. 3. Peripheral Comp. Market Share Distribution Brand 1. Incompetency 1. Innovative pricing 1. 2. Market Leader Product Innovation Network Infrastructure Distribution Customer Service Comp. Advantage Basic voice and data services Market Share Distribution system
  • 15. Vision, Mission, Values VISION MISSION VALUES By 2015 Airtel will be the most loved brand, enriching the lives of millions “ 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” • Empowering People • Being Flexible • Making it Happen • Openness and transparency • Creating Positive Impact
  • 16. Long Term Objectives STRATEGIC Continue market leadership and increase the market share 1. Technical Enhancement: Equip technically to stand against competitors (extension of 3G to all 22 circles in India & introduction of 4G in the top 10 cities) 2. Bottom of the pyramid: Provide connectivity to in the low income group in rural area targeting a teledensity of more than 50% is currently 33.8% only 3. Increase Usage: By value added services like mcommerce (mobile wallet), Airtel can increase it’s ARPU by 20% from the current level of Rs 194 per month FINANCIAL Grow at higher than industry rate and create value for shareholders 1. Increase Market Share: Continue to grow at a higher rate (42.1% in 201011) than the industry growth rate (7%) to maintain market leadership 2. Dividends for Shareholders: Pay progressive dividends to the share holders (4,428 million INR in 2010-11) 3. Cash Reserves: Maintain cash reserves to invest in R&D and network development (cash and cash equivalent in 2010-11 was 9,575 million INR). PPE increased more than 9 folds in 2010-2011
  • 17. New Key Success Factors Key Success Factors Weightage Airtel Vodafone IDEA BSNL Aircel R&D Performance 30% 9 8 7 5 6 Rural Market Focus 25% 8 6 5 9 5 Partnership 20% 9 8 6 3 4 Network Coverage 10% 9 7 7 9 4 Call Quality 10% 9 9 8 6 7 Product Offerings 5% 9 9 8 3 8 100% 8.3 7.2 6.35 6.05 5.45 35.00% 25.00% 15.00% 10.00% 8.00% Score Market Share * • R&D is required to provide higher bandwidth data services to high income group • Rural market still remains quite unexplored, which has huge potential customer base • Partnership with mobile phone manufacturers can help in starting the concept of contract based service plans (especially for lower income group) * This is the expected market share based on the new key success factors
  • 18. New Triangle Model Vision / Mission Key Success Factors Core Competencies • R&D Performance • Rural Market Focus •Partnership • Network Coverage •Call Quality • Product Offerings • Technological Capabilities • m-Commerce • Brand Image • Market Share •Product quality Value Proposition Connecting people across the country with latest technology and high quality service in all states, cities, towns and villages
  • 19. Strategic Options STRENGTHS SWOT Analysis OPPORTUNITIES O1 – 3G expansion O2 – 4G introduction O3 – Low rural penetration O4 – m Commerce THREATS T1 – Increased competition T2 – Regulatory Issues T3 – Vulnerability to recession T4 – Mobile number portability WEAKNESSES S1 – Current Market Share S2 – Brand Image S3 – R&D Capabilities S4 – Distribution Network S5 – Network Coverage W1 – Infrastructure issues W2 – Higher price 1-Pan India 3G service(S1,S3,O1) 2-Introduce 4G in all tier 1 cities (S1, S2, S3, O2) 3-Rural sector with tele-density of only 33.8% (S1, S4, O3) 4-Value added services like mobile wallet and international SIM etc(S2,S3,O4) 1 – Improve the infrastructure in order to support technical enhancements (W1, O1, O2) 2 – Innovate to reduce price for rural expansion (W2, O3) 1 – Improve time to market to handle growing competition (S3, S5, T1) 2 – Increase network coverage to support MNP (S5, T4) 1 – Reduce price to match the competitors (T1, W1) 2 – Maintain cordial relation with the government (T2) 3 – Improve infrastructure in order to retain customers not to move out by MNP (W1, T4)
  • 20. Options Filter Strategic Options Long Term Objectives Value Proposition Organizational Capability Mission / Values 30% 30% 30% 10% 3G Expansion 8 9 9 9 8.7 4G Introduction 9 5 4 6 6.0 8 7 7 7 7.3 7 9 8 9 8.1 Rural Penetration Value Added Services Total Score
  • 21. Recommendations SHORT TERM 1. 3G Expansion: The 3G services are currently being offered in the tier 1 cities. They should be extended to other cities/towns as well 2. Value Added Services: With the current teledensity of almost 75%, VAS like the mcommerce and international SIM provide a way ahead for mobile industry LONG TERM 1. Rural Penetration: The telecom rural penetration at 33.8% at end of March 31, 2011 offers huge growth potential in terms of both customers and usage 2. 4G Introduction: The upper segment customers are looking forward for high speed data availability on the move
  • 22. Market Leadership Sustainable Growth Continuous Growth Telecom House Framework Value Proposition Core Competencies Vision / Mission / Values Company’s Strengths & Capabilities Industry Success Factors Competitive Advantage
  • 23. References • Bharti Airtel Annual Report 2010 – 2011 • • Airtel/Investor+Relations/Company+Profile/PG_Company_Profile?countrytabs=1 • • •
  • 24. THANK YOU!!