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airtel brand wars
Bharti Airtel is the largest private telecom company in India and the third largest wireless operator globally. It has a pan-India presence and offers wireless, telemedia, enterprise and passive infrastructure services. Airtel has the best operating and net profit margins among Indian peers. Its vision is to be the most admired brand in India by 2010 and build India's finest business conglomerate by 2020. Airtel follows a strategy of partnering with global technology and capital partners and outsourcing non-core operations. This strategy has helped Airtel achieve strong financial performance and maintain its leadership position in the competitive Indian telecom market. Going forward, Airtel aims to leverage its Indian expertise globally and expand
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airtel brand wars
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- 2. Bharti Airtel • LargestPrivate 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 2
- 3. Integrated Telecom Company WirelessServices – 2G/3G – Rural Market Telemedia Services – Fixed Line – Broadband – DTH Enterprise Services – Carrier – Corporate Passive Infrastructure – Bharti Infratel – Indus Tower 3
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- 5. Financial Snapshot -Ratios 5 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
- 6. Vision 2010 • By2010 Airtel will be the most admired brand in India: – Loved by more customers – Targeted by top talent – Benchmarked by more businesses
- 7. Vision 2020 • Tobuild 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.”
- 8. Mission • “ Weat 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”
- 9. Core Values • EmpoweringPeople - 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.
- 10. Objectives/Goals • To undertaketransformational 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
- 11. 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 11
- 12. Why Mad Rushfor Telecom ?? 12 225.21 206 140.3 98.4 7653 19.9 5.1 7.0 9.1 12.8 18.3 0 50 100 150 200 250 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (as of June 2007) Subscribers(inmillion) 0 4 8 12 16 20 24 Teledensity(inpercent) Telecom Subscriber Base Teledensity Large number of additions in telecom subscribers Low teledensity (depicting large untapped potential) Telecom Advantage CAGR 40.4%
- 13. 13 Go-ahead to the CDMA technology INDIA Privateplayers 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 of Telecom In India
- 14. Telecom Ecosystem 14 Indian TelecomIndustry FrameworkIndian Telecom Industry Framework Indian Government Bodies Independent Bodies Wireless Planning and Coordination (WPC) Department of Telecommunications Telecom Commission Group on Telecom and IT (GoT-IT) Telecom Regulatory Authority of India (TRAI) Telecom Disputes Settlement and Appellate Tribunal (TDSAT) Handles spectrum allocation and management DoT – Licensee and frequency management for telecom Exclusive policy making body of DoT Handles ad hoc issues of the telecom industry Independent regulatory body Telecom disputes settlement body They formulate various policies and pass laws to regulate the telecom industry in India. 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.
- 15. Regulatory Framework 74%FDI Investment Lack of Transparency in Spectrum & License Allocation 3G Policy & MNP still Pending 15
- 16. Declinging Tariff –Rising Revenue 16 Source: TRAI Report
- 17. 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% Economic Factors
- 18. Demand for VAS& Broadband services Among Youth 28 % Urban Population Rapid Urbanization Rising Income level Changing Demographics Source: Mckinsey Report
- 19. CDMA – Alreadythere 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 Technology
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- 22. 1. Threat fromCompetition Wireless Market – Top 4 garnering 75% market share 22 HIGH
- 23. Competitor Analysis OP MarginNet 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% 23 Best OP Margins & Net Profit Margins among Peers Source: CMIE November 2008
- 24. AMOU & ARPUStats 838 461 303 88Russia China India USA 0 2 4 6 8 10 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 ARPU(USDpermonth) GSM CDMA 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. 24
- 25. 2. Customer BargainingPower Lack of differentiation among Service Providers Cut throat Competition Low Switching Costs Number Portability will have –Ve Impact Businesses & Consumers 25 HIGH
- 26. Market Scenario 26 Postpaid VsPrepaid Customers & Market Share
- 27. 3. Suppliers BargainingPower 27 LOW
- 28. 4. Threat ofSubstitutes Landline CDMA Video Conferencing VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites 28 BROADBAND SERVICES DIMINISHING MARKET HIGH
- 29. 5. Threat ofNew 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 29 LOW
- 30. SWOT Strengths • Largest TelecomPlayer in India - ~80Mn, 22.6% • Strategic Alliance with other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel • Pan India Presence • Strong Financials Weakness • Outsourcing of Core Systems • Lack of emerging market investment opportunity Source: CMIE Report NOV 08 30
- 31. SWOT Opportunities • 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 Threats • India centric – Major revenues from India • Falling ARPU & AMOU • Intense Competition & Shortage of Bandwidth 31
- 32. BCG Matrix forBharti Airtel LOWHIGH HIGHLOW 32 Mobile Services DTH & IPTV Broad Band
- 33. GE Matrix ClassificationMarketAttractiveness StrongMedium Weak LowMediumHigh Business Strength 5.00 1.002.333.67 5.00 3.67 2.33 33
- 34. Factors Weight Rating (1–5) Value = (Weight * Rating) Resource availability 0.20 3.5 0.7 Overall market size 0.15 4 0.6 Annual Market growth rate 0.20 4 0.8 Profitability 0.15 4 0.6 Competitive intensity 0.10 4 0.4 Technological requirements 0.20 4.5 0.9 Total 1.0 4.0 Factors Underlying Market Attractiveness 35
- 35. Factors Weight Rating (1–5) Value = (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 Factors Underlying Market/Biz Strength 36
- 36. Airtel’s GE Matrix BusinessStrengths MarketAttractiveness Low High LowHigh Attractive Moderate Attractive Unattractive Mobile Airtel TeleMedia 5.00 1.002.333.67 5.00 3.67 2.33 Enterprise 37
- 37. Airtel – Strategy MANTRA: Focus on Core Competencies and Outsource the rest!
- 38. Strategy • Airtel partneredwith 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.
- 39. Strategic partnerships/ Shareholders –Technology and Capital • 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.
- 40. Outsourcing deals in2004 • 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
- 41. Operational Strategies. • Higheremphasis 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.
- 42. 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.
- 43. Future Strategies • Translateits 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.
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- 45. Road Map –Growth Path 46 VPN & VoIP WiMAX 3G 2G/2.5G
- 46. Airtel - Strategy MANTRA: Focus on Core Competencies and Outsource the rest!
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- 48. References • Bharti Airtel,Annual Report -2008 • Investors presentation, Bharti Airtel Limited, November 2008 • Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November 2008 • Analyst Report – Bharti Airtel, Asit C. Mehta Invesment Intermediates Ltd. • Telecommunication Sector Report – March 2008, CRISIL • Capitaline Database http://capitaline.com • Indian Telecommunication Sector - August 2007, IBEF Report • “Next Big Spenders – Indian Middle Class”, Businessweek 49
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Editor's Notes
- #7 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
- #16 MNP – Mobile Number Portability
- #20 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
- #29 Cellular Services address the communication needs and staying connected. Hence a necessity There is no substitute that can replace it completely.
- #33 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.
- #38 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 ….