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
MNP – Mobile Number Portability
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
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 ….
. Mahesh Kumar BBAU LKO ROLL NO-4411
Bharti Airtel• Largest Private Integrated Telecom Company in India• 3rd Largest Wireless Operator in the World• Largest & Fastest Growing Wireless Operator in India• Largest Telecom Company listed on Indian Stock Exchange GROUP 7 2
Financial Snapshot - 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 http://www.capitaline.com 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 http://www.capitaline.com GROUP 7 5
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
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.”
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”
Core Values• Empowering People - to do their best• Being Flexible - to adapt to the changing environment and evolving customer needs• Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit• Openness and transparency - with an innate desire to do good• Creating Positive Impact – with a desire to create a meaningful difference in society.
Objectives/Goals• To undertake transformational projects that have a positive impact on the society and contribute to the nation building process.• To Diversify into new businesses in agriculture, financial services and retail business with world-class partners• To lay the foundation for building a “conglomerate” of future
Indian Telecom Sector• Fastest Growing Sector – CAGR 22% (2002-07)• Second Largest Telecom Market – Lowest tariff charges in the world – Wireless Subscribers – 315.3 Mn – Wireline Subscribers – 38.4 Mn – Teledensity – 30.6• 23 Circles - 4 Categories ( Metro, A, B & C)• Bharti Airtel – Largest player with presence in 23 Circles GROUP 7 11
Why Mad Rush for Telecom ?? Large number of additions Low teledensity (depicting Telecom in telecom subscribers large untapped potential) Advantage 0.4 % 250 C AGR 4 24 Teledensity (in percent) Subscribers (in million) 18.3 19.9 20 200 12.8 16 150 9.1 12 225.21 100 7.0 206 8 5.1 140.3 50 98.4 4 53 76 0 0 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (as of June 2007) Telecom Subscriber Base Teledensity GROUP 7 12
Evolution of Telecom In India Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry. 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 ILD – International Long Distance GROUP 7 13
Telecom Ecosystem Indian Telecom Industry Framework Indian Government Bodies Independent Bodies They formulate various policies and pass laws to regulate the telecom industry in They undertake various research activities and India. monitor the quality of service provided in the Indian telecom industry. They also provide variousWireless Planning recommendations to improve the status of telecom Handles spectrum allocationand Coordination operations in India.(WPC) and management DoT – Licensee and Telecom RegulatoryDepartment of Authority of India (TRAI) Independent regulatory bodyTelecommunications frequency management for telecomTelecom Telecom Disputes Telecom disputes Exclusive policy making body Commission Settlement and Appellate settlement body of DoT Tribunal (TDSAT)Group on Telecom Handles ad hoc issues ofand IT (GoT-IT) the telecom industry GROUP 7 14
Regulatory Framework 74% FDI Investment Lack of Transparency in Spectrum & License Allocation 3G Policy & MNP still Pending GROUP 7 15
Economic Factors GDP growth rate - Averaged around 7.9 % from 2002-2008 Rising Tele-density – Target of 45% by 2010 Growing per capita income/disposable Income Rs 12000 in 2002 to Rs 33000 in 2008) Falling Handset Prices Moderate inflation levels which were prevalent during the past 7 years – around 5-6%
Changing DemographicsDemand for VAS & Broadbandservices Among Youth28 % Urban PopulationRapid UrbanizationRising Income level Source: Mckinsey Report
TechnologyCDMA – 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
1. Threat from CompetitionWireless Market – Top 4 garnering 75% market share HIGH GROUP 7 22
Competitor Analysis OP Margin Net Margin Company Sep-07 Sep-08 Sep-072 Sep-083 Best OP Margins & Net Profit Margins Bharti 43.00% 38.00% 26.40% 19.30% among Peers 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% Source: CMIE November 2008 GROUP 7 23
AMOU & ARPU Stats Minutes of Usage per Month – Mobile Services USA 838 Despite a low teledensity of approximately 19 India 461 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity China 303 to telecom companies.Russia 88 ARPU* in India – Mobile Services 10ARPU (USD per month) 8 6 The declining ARPU implies that India Inc. is tapping a 4 large market at the bottom of the pyramid by reducing 2 tariffs; thereby, enhancing affordability. 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 GSM CDMA GROUP 7 24
2. Customer Bargaining Power Lack of differentiation among Service HIGH Providers Cut throat Competition Low Switching Costs Number Portability will have –Ve Impact Businesses & Consumers GROUP 7 25
Market Scenario Postpaid Vs Prepaid Customers & Market Share GROUP 7 26
4. Threat of Substitutes Landline DIMINISHING MARKET HIGH CDMA Video Conferencing BROADBAND SERVICES VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites GROUP 7 28
5. Threat of New Entrants Huge License Fees to be paid upfront & High gestation period LOW Entry of MVNOs & WiMAX operators Spectrum Availability & Regulatory Issues Infrastructure Setup Cost - High Rapidly changing technology GROUP 7 29
SWOTStrengths Weakness• Largest Telecom Player in • Outsourcing of Core India - ~80Mn, 22.6% Systems• Strategic Alliance with other • Lack of emerging market stakeholders in Bharti Airtel investment opportunity include Sony-Ericsson, Nokia - and Sing Tel• Pan India Presence• Strong Financials Source: CMIE Report NOV 08 GROUP 7 30
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• Low Broadband Penetration, Rural Telephoney GROUP 7 31
BCG Matrix for Bharti AirtelHIGH Mobile Services DTH & IPTV Broad BandLOW HIGH LOW GROUP 7 32
GE Matrix Classification Business Strength Strong Medium Weak 5.00 HighMarket Attractiveness 3.67 Medium 2.33 Low GROUP 7 33 5.00 3.67 2.33 1.00
Business Strength Current market share Brand image Brand equity Production capacity Corporate image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness GROUP 7 34
Factors Underlying Market/Biz Strength Factors Weight Rating Value = (1 –5) (Weight * Rating) Market share 0.15 5 0.75 New product development 0.10 3.5 0.35 Brand Image 0.10 4 0.40 Sales force 0.15 3 0.45 Pricing 0.15 3 0.45 Distribution capacity 0.10 4.5 0.45 Product quality 0.10 4.5 0.45 R&D Performance 0.15 3 0.45 Total 1.0 3.75 GROUP 7 36
Airtel’s GE Matrix High Business Strengths Low High Attractive 5.00 Market Attractiveness Airtel Enterprise Mobile 3.67 Moderate TeleMedia Attractive 2.33 Unattractive Low GROUP 7 37 5.00 3.67 2.33 1.00
Airtel – StrategyMANTRA : Focus on Core Competencies and Outsource the rest!
Strategy• Airtel partnered with leading players in telecommunication players across the globe.• It has managed to work with the best of domain specialists globally and emerge as a world class entity.• Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.
Strategic partnerships/Shareholders – Technology andCapital• Warburg Pincus – a celebrated PE investor held a stake for a substantial period of time and was instrumental in providing Airtel support in its early stages.• Vodafone was a strategic investor in Airtel.• Temasek – the Singapore based investor holds a considerable stake in it.• Was also affiliated with Singapore Telecom.
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
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.
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.
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.