Description
The PPT that includes various aspects of Airtel and its journey in India including the strategic decisions.
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Telecom Industry Industry scenario- World Industry scenario- India History of telecom Bharti Airtel – Introduction Milestones & history Critical success factors for the business The product portfolio. Geographical Presence Performance over the years Frameworks SWOT Analysis Porter?s Five forces analysis Value Chain Analysis BCG Matrix Mckinsey?s 7 S model Strategies adopted Corporate level Business Level Our views Recommendations Summary and conclusions.
?
? ?
The global telecommunications industry was estimated USD 1.71 trillion in 2005 77% came from telecommunications services Revenues
? Fixed Lines – USD 449 billion ? Mobile Services – USD 572 billion ? Telecom Related services-USD 50 billion
?
?
North America has highest share in Fixed lines Max number of mobile services in Europe.
? ? ? ? ? ? ? ? ? ?
364 million connections is the 3rd largest in the world . The second largest wireless network in the world. 9 million telephones are being added every month Target of 500 million connections by 2010 The total number of telephones has increased from 76.53 million in 2004 to 363.95 million in 2008. More than nine million subscribers are being added every month during the current fiscal year. Tele- density has also increased from 12.7 per to 31.50 per cent in the past 2 years. Rural tele-density increased to 13.4 per cent in October 2008 Urban tele-density on the other hand has been 74.61 per cent Wireless subscribers have grown at a compound annual growth rate (CAGR) of 87.7 per cent per annum since 2003.
Changing Demographics
?Demand for VAS & Broadband services Among Youth ?28 % Urban Population ?Rapid Urbanization ?Rising Income level
Source: Mckinsey Report
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
2G/3G
VoIP
Technology
CDMA
WIMAX
? ? ? ?
?
?
Removal of State Policies Reduction in entry barriers to new firms Creation of a level playing field between incumbents and new entrants Forward looking and even-handed regulation which has promoted competition and also effective consumer interests. Introduction of Broadband Wireless Access(BWA) services will enhance the penetration as well as growth of broadband subscribers. To provide infrastructure support for mobile services, a scheme has been launched by the Government to provide support for setting up and managing infrastructure sites for the provision of mobile services.
?
?
?
Bharti Airtel, is Asia?s leading integrated telecom services provider with operations in India and Sri Lanka. Bharti Airtel Limited is a group company of Bharti Enterprises. Bharti Enterprises is one of India?s leading business groups with interests in telecom, retail, manufacturing, agri business and financial services. The company is structured into four strategic business units
? ? ? ?
The mobile business offers services in India and Sri Lanka. The Telemedia business provides broadband, IPTV and telephone services in 95 Indian cities. The Digital TV business provides Direct-to-Home TV services across India. The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to telcos.
?
By 2010 Airtel will be the most admired brand in India:
? Loved by more customers ? Targeted by top talent ? Benchmarked by more businesses
?
?
?
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.”
?
“ 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”
?
?
?
?
This business unit delivers end to end telecom solutions to India?s large corporate. It providing full suite of communication services across data, voice and managed services. It specializes in providing customized solutions to address unique requirements of different industry verticals; Manufacturing and distribution, media, education, telecom, Government and PSUs and retail among others.
•
• •
•
Carrier business unit provides long distance wholesale voice and data services to carrier customers as well as to other business units of Airtel. It also offers virtual calling card services in the overseas markets. The business unit owns a state of the art national and international long distance network infrastructure It to provide connectivity services both within India and connecting India to the world.
?
Voice Services
? ?
Mobile Services
? 1st Private fixed line provider ? Value Added Services like calling line identification, Conferencing, dynamic lock etc ? GSM cards in 21 telecom circles across the country
Satellite Services
?
Managed Data & Internet Services
? Broadband IP satellite and DAMA/PAMA services ? VPN and Satellite based IPLCs for redundancy reasons
? MPLS ? ATM and Customized Solutions ? Web Hosting ? BCRS services
?
Managed e-Business Services
? ? ? ? ? ? ? ?
Current Market Share Brand Image Production capacity Corporate Image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness
Factors Underlying Market Attractiveness
Factors Weight Rating (1 –5)
0.20 0.20 0.20 0.15 0.10 0.15 3.5 4 4 4 4 4.5
Value = (Weight * Rating)
0.7 0.8 0.8 0.6 0.4 0.675
Resource availability Overall market size Annual Market growth rate Profitability Competitive intensity Technological requirements Total
1.0
3.975
Factors Underlying Market/Biz Strength
Factors Market share New product development Weight
0.15 0.15
Rating (1 –5)
5 3.5
Value = (Weight * Rating)
0.75 0.525
Brand Image
Sales force Pricing
0.10
0.15 0.15
4
3 3
0.40
0.45 0.45
Distribution capacity
Product quality R&D Performance Total
0.10
0.10 0.10
4.5
4.5 3
0.45
0.45 0.30
1.0
3.775
Market Overview Market Capitalization (As on Nov 30, 2009) Market Price Book Value* EPS* Price/Book* Price/Earning* Industry Price/Earning Rs.1,138bn Rs.299.70 Rs.72.50 23.91 4.13 12.53 12.20
Key Highlights - 2009
• Incremental Revenue of close to Rs.100bn • Over 32mm new customers added
• Launch of new services in Sri Lanka
• Introduction of new services like DTH & IPTV • Market penetration has increased to 5,060 census towns and 414,906 non-census towns • Expanded services to Lakshadweep, becoming the first private operator to do so
* As per latest stand alone adjusted profit after extra-ordinary items
Particulars Total Customer Base (000?s) Revenue (Rs.mn) EBITDA (Rs.mn)
2007 39,013 184,202 74,407
2008 64,268 270,122 114,018
2009 96,649 373,521 152,858
Growth 35% 27% 27%
PAT (Rs.mn)
Capital Employed (Rs.mn)
40,621
157,750
63,954
258,130
78,590
375,301
25%
33%
Particulars EBITDA Margin Net Profit Margin
2004 33.9% 11.6%
2005 37.6% 14.9%
2006 35.7% 17.4%
2007 40.4% 22.1%
2008 42.2% 23.7%
2009 40.9% 21.0%
Return on Stockholder?s Equity
Return on Capital Employed Net Debt to EBITDA Interest Coverage Ratio Book Value
12.0%
23.7%
32.0%
43.1%
38.5%
30.9%
9.9%
15.7%
21.5%
31.6%
33.3%
30.7%
2.48 times 5.24 times Rs.26.5 2
1.34 times 9.65 times Rs.28.7 0
1.00 times 17.45 times Rs.38.8 7
0.58 times 26.47 times Rs.60. 59
0.36 times 29.51 times Rs.114. 46
0.55 times 30.38 times Rs.153. 45
• • • • • •
Strengths Market Leader in the fast growing telecom sector. Pan India footprint, market penetration of close to 80% of the whole of India Only Indian operator other than VSNL to have an international submarine cable Increasing international presence Very Strong and improving financials Strategic alliances with other stakeholders like Nokia, Singtel etc.
• • •
•
Weaknesses Relatively untapped Rural Market when compared to BSNL and MTNL Outsourcing of Core systems Serious challenges threatening its leadership position in the Indian telecom Market Steadily falling ARPU
Opportunities • A Fast Expanding IPLC market • A huge Indian market with favorable demographics • Bharti Infratel – Cutting down cost in rural areas • Current Tele-Density – 30.6 is still low among developing countries • Low Broadband Penetration
Threats • Increasing cut-throat competition which has led to a price war • Falling ARPU for the entire sector • Shortage of bandwidth • India centric – Major Revenues from India • Saturation Point in basic telephony services
Customer Bargaining Power
Threat of New Entrants
Threat from Competition
Threat of Substitutes
Supplier Bargaining Power
Industry highly prone to price wars
Entry of NTT DOCOMO
Bidding process by the Government Threat from those industries where Airtel is not the market leader like Broadband & DTH but can be close substitutes for Telephony
High
Lack of distribution among service providers
Cut throat competition Low switching costs Number Portability will have a negative impact
Low
Outsourcing Deals Network outsourcing & maintenance Vendors Features & Advantages •Pricing linked to capacity •Payments linked to ? usage & network quality ?Service level agreements (SLAs) •Ease in network planning
Assured network quality
Information Technology
•Pricing & payment as a percentage of revenues •SDP-to deliver Service Delivery Platform enabling delivery of content to end-user device like mobiles, PCs etc. •SLA?s for quality & development •Bharti Airtel •Indus Towers •IBM Daksh •Mphasis •Hinduja TMT •Aegis BPO •Nortel •Increased focus on sharing of passive infrastructure •Reduced capex spend •Enhanced & consistent customer experience •Common platform across the group •Scalable business model to meet business needs
Passive infrastructure
Call Centre Outsourcing
Landline ? CDMA
? ?
DIMINISHING MARKET
HIGH
Video Conferencing
VOIP-Skype, Gtalk, Yahoo Messenger BROADBAND ? E-mail & Social Networking Websites SERVICES ? DTH Based Internet Service-TV becomes an access to world wide web
?
Low Because ? 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 ? Breakthrough entry of DOCOMO in partnership with TATA which has Previously Low, now High changed entire market dynamics.
GE Matrix Classification
Business Strength
Strong High
Medium
Weak
5.00
Market Attractiveness
3.67
Medium
2.33
Low
5.00
3.67
2.33
1.00
Airtel’s GE Matrix
High High Attractive Mobile Airtel Enterprise 3.67 TeleMedia Moderate Attractive Business Strengths Low 5.00
Market Attractiveness
2.33
Unattractive
Low 5.00
3.67
2.33
1.00
? ? ?
It?s a Star High Market Share High Potential High Market Share
? Leading Market share among competitors in the industry ? Very high Brand recall
?
High Market Growth
? Emergence of rural markets ? Fascination of high end users towards 3G and video telephony
? ? ? ?
Question Mark High Market growth and Low market share New entrant into the market Market Share is low because of
? High cost competition ? Ability of BSNL and local providers to provide cheap services ? Airtel has a potential to grow because ensures quality which is paramount in internet service
?
High Market Potential
? Increasing laptop usage - demand for portability of internet
? ?
?
Question mark – could move towards dog Low market share and high potential for market to grow Low Market Share ? Fierce competition in DTH market ? Market has not totally evlved out of cable TV ? Continuous entry of new players in the market without even a single one to have reached break-even yet. High Potential for market to grow
?
?
Premature market – penetration of DTH services is still low
? Huge threat from obsolescence of technology
? ? IPTV technology Eg. Ipod sends walkman out of business
?
Move towards dog because…
? ? ?
Dog Low Market Share and Low Market growth Low Market Share
? BSNL rules due to first mover for almost a century
?
Low Market growth
? Market is moving towards mobile phones
?
Effort to push it towards ? before final divesting
? By providing free landline with broadband services
Telecom
Broadband
DTH
Landline services
? ?
Strategy : delivering growth through innovation and affordability.
Systems :
? Outsourced all operations and total focus is on marketing. ? They believe in focusing on core competencies and outsource the rest.
? ? ? ? ? ?
?
Lean organization Outsourcing Network Deployment- Nokia and Ericsson IT services – IBM Customer Contact Centers – Nortel Different Payment Model from revenue per share to cost per all. Free incoming calls to its mobile phone user.
Shared Values : We at Airtel
? Always think in fresh & innovative ways about the needs of customers. ? Deliver what is promised ? Go out of way to delight the customer with a little bit more.
Flows from top to bottom
? In real life, he's friendly and warm. He's one of those rare head honchos who'll personally return calls. ? But more importantly, he's probably the most-successful Indian businessman in the post-reforms era, after the country embarked on the liberalisation path in 1991. ? Meet Sunil Mittal, who controls the $2.5bn Bharti group in India with interests in telecom and retail, and has struck a joint venture deal with Wal-Mart, the US retail giant. ? After leading the decade-long revolution in mobile telephony, and bagging the largest customer base of 27m, he's today enchanted with retail and agriculture.
Engaged Employee
?Do Right Things ?Have A Shared Purpose ?Ensure Synergy
High Productivity
High Effectiveness
?
Differentiate based on some attributes that allow the consumers to perceive the product as different from that of the competition.
Free digital EPABX with free leased lines (no connectivity charges). New initiatives like Google search on Airtel live, downloads etc . Long term HR strategy - Gallup Great Workplace Award.
?
? ?
Serve a specific segment instead of catering to the entire market. This segment may be a special group of customers, a specific geographic area, or a particular product or service line.
Focusing on the customers who are having more than Rs10000 monthly landline billing. Service to a specific geographic area
?
?
?
Differentiation Strategy :
Focus Strategy :
?
Partnerships – Vendors and strategic investors ranging from private equity investors to global telecom giants.
?
? ?
?
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 –
?
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.(2004) IBM was given the mandate to handle the back office requirements of Airtel?s presence in India
?
? ?
Rural Strategies
?
Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only. Exploring opportunities in international markets. Hived off tower infrastructure into a separate entity.
Product Innovation
Match Box strategy.
Pricing
Core Competencies
VAS
Marketing and Branding
? TARGETING?
Positioned in premium category aimed at elite class of society.
? ?
“Power to keep in touch”
Airtel decided that the brand should always connote leadership–be it in network, innovations, offerings,
services
? ?
Sponsored games like Golf CHANGING CAMPAIGNS - Constant Innovation.
?
Two appeals to connect to the users
? Emotional ? Humorous
? ? ? ?
“Power to keep in touch”
“Touch tomorrow” “Live every moment” “Express yourself”
? ? ?
Google AdSense BidVertisers Sponsor online games at Zapak.com
SALES PROMOTION ? “Friendz” pre-paid plan ? “Ladies special” plan ? “Senior citizen” plan
? ? ? ?
?
?
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
•
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.
Infrastructure Sharing
Rural Telephony
Growth
Factors
Managed Services
•
Enterprise Telecom
•
?
NETWORK EXPANSION. TARGETTING ALL SEGMENTS. WOOING THE RURAL AREAS. NEW ADVERTISING STRATEGY. NEW TECHNOLOGY. TAPPING UNTAPPED MARKET
?
?
?
?
?
?
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
VPN & VoIP
WiMAX
?
3G
?
2G/2.5G
?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
PRICING Depending on the market conditions / competition from cellular or wll-mobile service providers and also to suit local conditions, there should be flexible pricing mechanism (either at central or local level). IMPROVEMENT IN TECHNOLOGY Airtel should immediately shift to third generation switches by replacing its c-dot switches. This will improve the quality of service to desired level and provide simultaneous integration with the nationwide network. The special distribution of the transmission towers should be increased to avoid “no signal pockets” ESTABLISHMENT OF DISTRIBUTION CHANNELS Airtel should establish widespread and conspicuous distribution to match that of the competitors. The distribution network shall make the product visible and available at convenient locations. UNTAPPED RURAL MARKET Large part of Indian rural market is still untapped therefore airtel is required to bring that area under mobility. 25
?
?
?
? ?
?
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 http://www.pib.nic.in/release/release.asp?reli d=46117
? ? ? ? ?
?
Lean organization Outsourcing Network Deployment- Nokia and Ericsson IT services – IBM Customer Contact Centers – Nortel Different Payment Model from revenue per share to cost per all. Free incoming calls to its mobile phone user.
?
Vodafone?s entry in Indian telecom market
posed 1st real threat to BAL?s supremacy. Vodafone planned to invest $ 2 billion to establish and introduce new 3G technologies. Vodafone?s application of allocation of spectrum
?
?
to expand from 16 to 23 telecom circles.
?
Vodafone entry increased competition and better services to customer.
? ?
Managed services is another segment that is attracting telecom companies. On account of the rapidly growing subscriber base, service providers find it difficult to manage their infrastructure and network management operations. In such cases, they completely or partially outsource their infrastructure or network management operations.
To reduce their network deployment costs, many service providers are considering infrastructure sharing offers the following advantages: Improved service quality
? ?
Increased affordability for customers
Faster roll out of services in rural and remote areas Significant reduction in initial set up costs Increased environmental aesthetics
?
?
?
?
Enterprise Telecom Services includes key services, such as voice over Internet protocol (VoIP), dedicated telecom communication systems; IT infrastructure enabled unified communication services, etc. Telecom service providers are increasingly targeting enterprises by providing dedicated services and is expected to witness major developments in near future.
?
Virtual Private Network is a private data network that provides connectivity within closed user groups via public telecommunication infrastructure. Competition is likely to heat up in the VPN segment as DoT has relaxed the norms for private players.
?
3G The Indian government plans to auction the spectrum for 3G services by inviting bids from domestic as well as foreign players, and creating a competitive environment that offers better services to consumers. Therefore, the 3G spectrum is among the major investment opportunities and growth drivers of the telecom industry. The immense potential for 3G is reflected by the 30–40 percent annual growth in Value-Added Services. Cell phone manufacturers are striving to develop USD 100 priced
?
3G handsets for the Indian market. India expects to replicate its 2G growth in 3G services Value Added Services:The VAS industry was worth USD 632 million in 2006–07. The industry is estimated to grow by 60 percent in 2007–08 and become an USD 1,011 million opportunity. The VAS industry is currently focussing on the entertainment sector, such as the Indian film industry and cricket; however, there is scope for growth in other avenues as utility-based services, such as location information and mobile transactions.
?
?
?
?
?
WiMAX has been one of the most significant developments in wireless communication in the recent past. Since this mode of communication provides network access in inaccessible locations at a speed of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India, especially wireless services. Thus, it will lead to the increased use of telecom services, Internet, valueadded services and enterprise services. WiMAX is expected to accelerate economic growth and assist in providing better education, healthcare and entertainment services. It is estimated that India will have 13 million WiMAX subscribers by 2012.
?
Aircel is the pioneer in WiMAX technology in India. The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX. Bharti, Reliance and VSNL have Rural Telephony: As the government targets to increase rural teledensity from the current 2 percent to 25 percent by 2012, rural telephony will require major investments. This segment will boost the demand for telecom services, equipment, Internet services and other value-added services; thereby, offering great market opportunities for telecom players.
?
? ?
?
VALUE
CHAIN AT
AIRTEL
? ? ? ? ?
? ? ? ?
Created by McKinsey as a analysing framework which it uses in-house to consult for companies Strategy: Strategy is created to maintain and make competitive benefit over the competition. Structure: Structure is the way the organization is constructed and who reports to whom. Systems: In systems the daily activities and events that staff members join in to get the job done. Shared values: Shared values are also called “super ordinate goals”. These values are the center values of the company that are evidenced in the corporate culture and the general work. Style: you have to adopt the style of leadership. Staff: In staff employees and their general capabilities are included. Skills: Skills are the actual skills of the employees who are working for the company. If organization wants to perform well then these seven elements are needed to be associated and equally
doc_655389996.pptx
The PPT that includes various aspects of Airtel and its journey in India including the strategic decisions.
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Telecom Industry Industry scenario- World Industry scenario- India History of telecom Bharti Airtel – Introduction Milestones & history Critical success factors for the business The product portfolio. Geographical Presence Performance over the years Frameworks SWOT Analysis Porter?s Five forces analysis Value Chain Analysis BCG Matrix Mckinsey?s 7 S model Strategies adopted Corporate level Business Level Our views Recommendations Summary and conclusions.
?
? ?
The global telecommunications industry was estimated USD 1.71 trillion in 2005 77% came from telecommunications services Revenues
? Fixed Lines – USD 449 billion ? Mobile Services – USD 572 billion ? Telecom Related services-USD 50 billion
?
?
North America has highest share in Fixed lines Max number of mobile services in Europe.
? ? ? ? ? ? ? ? ? ?
364 million connections is the 3rd largest in the world . The second largest wireless network in the world. 9 million telephones are being added every month Target of 500 million connections by 2010 The total number of telephones has increased from 76.53 million in 2004 to 363.95 million in 2008. More than nine million subscribers are being added every month during the current fiscal year. Tele- density has also increased from 12.7 per to 31.50 per cent in the past 2 years. Rural tele-density increased to 13.4 per cent in October 2008 Urban tele-density on the other hand has been 74.61 per cent Wireless subscribers have grown at a compound annual growth rate (CAGR) of 87.7 per cent per annum since 2003.
Changing Demographics
?Demand for VAS & Broadband services Among Youth ?28 % Urban Population ?Rapid Urbanization ?Rising Income level
Source: Mckinsey Report
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
2G/3G
VoIP
Technology
CDMA
WIMAX
? ? ? ?
?
?
Removal of State Policies Reduction in entry barriers to new firms Creation of a level playing field between incumbents and new entrants Forward looking and even-handed regulation which has promoted competition and also effective consumer interests. Introduction of Broadband Wireless Access(BWA) services will enhance the penetration as well as growth of broadband subscribers. To provide infrastructure support for mobile services, a scheme has been launched by the Government to provide support for setting up and managing infrastructure sites for the provision of mobile services.
?
?
?
Bharti Airtel, is Asia?s leading integrated telecom services provider with operations in India and Sri Lanka. Bharti Airtel Limited is a group company of Bharti Enterprises. Bharti Enterprises is one of India?s leading business groups with interests in telecom, retail, manufacturing, agri business and financial services. The company is structured into four strategic business units
? ? ? ?
The mobile business offers services in India and Sri Lanka. The Telemedia business provides broadband, IPTV and telephone services in 95 Indian cities. The Digital TV business provides Direct-to-Home TV services across India. The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to telcos.
?
By 2010 Airtel will be the most admired brand in India:
? Loved by more customers ? Targeted by top talent ? Benchmarked by more businesses
?
?
?
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.”
?
“ 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”
?
?
?
?
This business unit delivers end to end telecom solutions to India?s large corporate. It providing full suite of communication services across data, voice and managed services. It specializes in providing customized solutions to address unique requirements of different industry verticals; Manufacturing and distribution, media, education, telecom, Government and PSUs and retail among others.
•
• •
•
Carrier business unit provides long distance wholesale voice and data services to carrier customers as well as to other business units of Airtel. It also offers virtual calling card services in the overseas markets. The business unit owns a state of the art national and international long distance network infrastructure It to provide connectivity services both within India and connecting India to the world.
?
Voice Services
? ?
Mobile Services
? 1st Private fixed line provider ? Value Added Services like calling line identification, Conferencing, dynamic lock etc ? GSM cards in 21 telecom circles across the country
Satellite Services
?
Managed Data & Internet Services
? Broadband IP satellite and DAMA/PAMA services ? VPN and Satellite based IPLCs for redundancy reasons
? MPLS ? ATM and Customized Solutions ? Web Hosting ? BCRS services
?
Managed e-Business Services
? ? ? ? ? ? ? ?
Current Market Share Brand Image Production capacity Corporate Image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness
Factors Underlying Market Attractiveness
Factors Weight Rating (1 –5)
0.20 0.20 0.20 0.15 0.10 0.15 3.5 4 4 4 4 4.5
Value = (Weight * Rating)
0.7 0.8 0.8 0.6 0.4 0.675
Resource availability Overall market size Annual Market growth rate Profitability Competitive intensity Technological requirements Total
1.0
3.975
Factors Underlying Market/Biz Strength
Factors Market share New product development Weight
0.15 0.15
Rating (1 –5)
5 3.5
Value = (Weight * Rating)
0.75 0.525
Brand Image
Sales force Pricing
0.10
0.15 0.15
4
3 3
0.40
0.45 0.45
Distribution capacity
Product quality R&D Performance Total
0.10
0.10 0.10
4.5
4.5 3
0.45
0.45 0.30
1.0
3.775
Market Overview Market Capitalization (As on Nov 30, 2009) Market Price Book Value* EPS* Price/Book* Price/Earning* Industry Price/Earning Rs.1,138bn Rs.299.70 Rs.72.50 23.91 4.13 12.53 12.20
Key Highlights - 2009
• Incremental Revenue of close to Rs.100bn • Over 32mm new customers added
• Launch of new services in Sri Lanka
• Introduction of new services like DTH & IPTV • Market penetration has increased to 5,060 census towns and 414,906 non-census towns • Expanded services to Lakshadweep, becoming the first private operator to do so
* As per latest stand alone adjusted profit after extra-ordinary items
Particulars Total Customer Base (000?s) Revenue (Rs.mn) EBITDA (Rs.mn)
2007 39,013 184,202 74,407
2008 64,268 270,122 114,018
2009 96,649 373,521 152,858
Growth 35% 27% 27%
PAT (Rs.mn)
Capital Employed (Rs.mn)
40,621
157,750
63,954
258,130
78,590
375,301
25%
33%
Particulars EBITDA Margin Net Profit Margin
2004 33.9% 11.6%
2005 37.6% 14.9%
2006 35.7% 17.4%
2007 40.4% 22.1%
2008 42.2% 23.7%
2009 40.9% 21.0%
Return on Stockholder?s Equity
Return on Capital Employed Net Debt to EBITDA Interest Coverage Ratio Book Value
12.0%
23.7%
32.0%
43.1%
38.5%
30.9%
9.9%
15.7%
21.5%
31.6%
33.3%
30.7%
2.48 times 5.24 times Rs.26.5 2
1.34 times 9.65 times Rs.28.7 0
1.00 times 17.45 times Rs.38.8 7
0.58 times 26.47 times Rs.60. 59
0.36 times 29.51 times Rs.114. 46
0.55 times 30.38 times Rs.153. 45
• • • • • •
Strengths Market Leader in the fast growing telecom sector. Pan India footprint, market penetration of close to 80% of the whole of India Only Indian operator other than VSNL to have an international submarine cable Increasing international presence Very Strong and improving financials Strategic alliances with other stakeholders like Nokia, Singtel etc.
• • •
•
Weaknesses Relatively untapped Rural Market when compared to BSNL and MTNL Outsourcing of Core systems Serious challenges threatening its leadership position in the Indian telecom Market Steadily falling ARPU
Opportunities • A Fast Expanding IPLC market • A huge Indian market with favorable demographics • Bharti Infratel – Cutting down cost in rural areas • Current Tele-Density – 30.6 is still low among developing countries • Low Broadband Penetration
Threats • Increasing cut-throat competition which has led to a price war • Falling ARPU for the entire sector • Shortage of bandwidth • India centric – Major Revenues from India • Saturation Point in basic telephony services
Customer Bargaining Power
Threat of New Entrants
Threat from Competition
Threat of Substitutes
Supplier Bargaining Power
Industry highly prone to price wars
Entry of NTT DOCOMO
Bidding process by the Government Threat from those industries where Airtel is not the market leader like Broadband & DTH but can be close substitutes for Telephony
High
Lack of distribution among service providers
Cut throat competition Low switching costs Number Portability will have a negative impact
Low
Outsourcing Deals Network outsourcing & maintenance Vendors Features & Advantages •Pricing linked to capacity •Payments linked to ? usage & network quality ?Service level agreements (SLAs) •Ease in network planning
Assured network quality
Information Technology
•Pricing & payment as a percentage of revenues •SDP-to deliver Service Delivery Platform enabling delivery of content to end-user device like mobiles, PCs etc. •SLA?s for quality & development •Bharti Airtel •Indus Towers •IBM Daksh •Mphasis •Hinduja TMT •Aegis BPO •Nortel •Increased focus on sharing of passive infrastructure •Reduced capex spend •Enhanced & consistent customer experience •Common platform across the group •Scalable business model to meet business needs
Passive infrastructure
Call Centre Outsourcing
Landline ? CDMA
? ?
DIMINISHING MARKET
HIGH
Video Conferencing
VOIP-Skype, Gtalk, Yahoo Messenger BROADBAND ? E-mail & Social Networking Websites SERVICES ? DTH Based Internet Service-TV becomes an access to world wide web
?
Low Because ? 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 ? Breakthrough entry of DOCOMO in partnership with TATA which has Previously Low, now High changed entire market dynamics.
GE Matrix Classification
Business Strength
Strong High
Medium
Weak
5.00
Market Attractiveness
3.67
Medium
2.33
Low
5.00
3.67
2.33
1.00
Airtel’s GE Matrix
High High Attractive Mobile Airtel Enterprise 3.67 TeleMedia Moderate Attractive Business Strengths Low 5.00
Market Attractiveness
2.33
Unattractive
Low 5.00
3.67
2.33
1.00
? ? ?
It?s a Star High Market Share High Potential High Market Share
? Leading Market share among competitors in the industry ? Very high Brand recall
?
High Market Growth
? Emergence of rural markets ? Fascination of high end users towards 3G and video telephony
? ? ? ?
Question Mark High Market growth and Low market share New entrant into the market Market Share is low because of
? High cost competition ? Ability of BSNL and local providers to provide cheap services ? Airtel has a potential to grow because ensures quality which is paramount in internet service
?
High Market Potential
? Increasing laptop usage - demand for portability of internet
? ?
?
Question mark – could move towards dog Low market share and high potential for market to grow Low Market Share ? Fierce competition in DTH market ? Market has not totally evlved out of cable TV ? Continuous entry of new players in the market without even a single one to have reached break-even yet. High Potential for market to grow
?
?
Premature market – penetration of DTH services is still low
? Huge threat from obsolescence of technology
? ? IPTV technology Eg. Ipod sends walkman out of business
?
Move towards dog because…
? ? ?
Dog Low Market Share and Low Market growth Low Market Share
? BSNL rules due to first mover for almost a century
?
Low Market growth
? Market is moving towards mobile phones
?
Effort to push it towards ? before final divesting
? By providing free landline with broadband services
Telecom
Broadband
DTH
Landline services
? ?
Strategy : delivering growth through innovation and affordability.
Systems :
? Outsourced all operations and total focus is on marketing. ? They believe in focusing on core competencies and outsource the rest.
? ? ? ? ? ?
?
Lean organization Outsourcing Network Deployment- Nokia and Ericsson IT services – IBM Customer Contact Centers – Nortel Different Payment Model from revenue per share to cost per all. Free incoming calls to its mobile phone user.
Shared Values : We at Airtel
? Always think in fresh & innovative ways about the needs of customers. ? Deliver what is promised ? Go out of way to delight the customer with a little bit more.
Flows from top to bottom
? In real life, he's friendly and warm. He's one of those rare head honchos who'll personally return calls. ? But more importantly, he's probably the most-successful Indian businessman in the post-reforms era, after the country embarked on the liberalisation path in 1991. ? Meet Sunil Mittal, who controls the $2.5bn Bharti group in India with interests in telecom and retail, and has struck a joint venture deal with Wal-Mart, the US retail giant. ? After leading the decade-long revolution in mobile telephony, and bagging the largest customer base of 27m, he's today enchanted with retail and agriculture.
Engaged Employee
?Do Right Things ?Have A Shared Purpose ?Ensure Synergy
High Productivity
High Effectiveness
?
Differentiate based on some attributes that allow the consumers to perceive the product as different from that of the competition.
Free digital EPABX with free leased lines (no connectivity charges). New initiatives like Google search on Airtel live, downloads etc . Long term HR strategy - Gallup Great Workplace Award.
?
? ?
Serve a specific segment instead of catering to the entire market. This segment may be a special group of customers, a specific geographic area, or a particular product or service line.
Focusing on the customers who are having more than Rs10000 monthly landline billing. Service to a specific geographic area
?
?
?
Differentiation Strategy :
Focus Strategy :
?
Partnerships – Vendors and strategic investors ranging from private equity investors to global telecom giants.
?
? ?
?
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 –
?
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.(2004) IBM was given the mandate to handle the back office requirements of Airtel?s presence in India
?
? ?
Rural Strategies
?
Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only. Exploring opportunities in international markets. Hived off tower infrastructure into a separate entity.
Product Innovation
Match Box strategy.
Pricing
Core Competencies
VAS
Marketing and Branding
? TARGETING?
Positioned in premium category aimed at elite class of society.
? ?
“Power to keep in touch”
Airtel decided that the brand should always connote leadership–be it in network, innovations, offerings,
services
? ?
Sponsored games like Golf CHANGING CAMPAIGNS - Constant Innovation.
?
Two appeals to connect to the users
? Emotional ? Humorous
? ? ? ?
“Power to keep in touch”
“Touch tomorrow” “Live every moment” “Express yourself”
? ? ?
Google AdSense BidVertisers Sponsor online games at Zapak.com
SALES PROMOTION ? “Friendz” pre-paid plan ? “Ladies special” plan ? “Senior citizen” plan
? ? ? ?
?
?
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
•
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.
Infrastructure Sharing
Rural Telephony
Growth
Factors
Managed Services
•
Enterprise Telecom
•
?
NETWORK EXPANSION. TARGETTING ALL SEGMENTS. WOOING THE RURAL AREAS. NEW ADVERTISING STRATEGY. NEW TECHNOLOGY. TAPPING UNTAPPED MARKET
?
?
?
?
?
?
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
VPN & VoIP
WiMAX
?
3G
?
2G/2.5G
?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
PRICING Depending on the market conditions / competition from cellular or wll-mobile service providers and also to suit local conditions, there should be flexible pricing mechanism (either at central or local level). IMPROVEMENT IN TECHNOLOGY Airtel should immediately shift to third generation switches by replacing its c-dot switches. This will improve the quality of service to desired level and provide simultaneous integration with the nationwide network. The special distribution of the transmission towers should be increased to avoid “no signal pockets” ESTABLISHMENT OF DISTRIBUTION CHANNELS Airtel should establish widespread and conspicuous distribution to match that of the competitors. The distribution network shall make the product visible and available at convenient locations. UNTAPPED RURAL MARKET Large part of Indian rural market is still untapped therefore airtel is required to bring that area under mobility. 25
?
?
?
? ?
?
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 http://www.pib.nic.in/release/release.asp?reli d=46117
? ? ? ? ?
?
Lean organization Outsourcing Network Deployment- Nokia and Ericsson IT services – IBM Customer Contact Centers – Nortel Different Payment Model from revenue per share to cost per all. Free incoming calls to its mobile phone user.
?
Vodafone?s entry in Indian telecom market
posed 1st real threat to BAL?s supremacy. Vodafone planned to invest $ 2 billion to establish and introduce new 3G technologies. Vodafone?s application of allocation of spectrum
?
?
to expand from 16 to 23 telecom circles.
?
Vodafone entry increased competition and better services to customer.
? ?
Managed services is another segment that is attracting telecom companies. On account of the rapidly growing subscriber base, service providers find it difficult to manage their infrastructure and network management operations. In such cases, they completely or partially outsource their infrastructure or network management operations.
To reduce their network deployment costs, many service providers are considering infrastructure sharing offers the following advantages: Improved service quality
? ?
Increased affordability for customers
Faster roll out of services in rural and remote areas Significant reduction in initial set up costs Increased environmental aesthetics
?
?
?
?
Enterprise Telecom Services includes key services, such as voice over Internet protocol (VoIP), dedicated telecom communication systems; IT infrastructure enabled unified communication services, etc. Telecom service providers are increasingly targeting enterprises by providing dedicated services and is expected to witness major developments in near future.
?
Virtual Private Network is a private data network that provides connectivity within closed user groups via public telecommunication infrastructure. Competition is likely to heat up in the VPN segment as DoT has relaxed the norms for private players.
?
3G The Indian government plans to auction the spectrum for 3G services by inviting bids from domestic as well as foreign players, and creating a competitive environment that offers better services to consumers. Therefore, the 3G spectrum is among the major investment opportunities and growth drivers of the telecom industry. The immense potential for 3G is reflected by the 30–40 percent annual growth in Value-Added Services. Cell phone manufacturers are striving to develop USD 100 priced
?
3G handsets for the Indian market. India expects to replicate its 2G growth in 3G services Value Added Services:The VAS industry was worth USD 632 million in 2006–07. The industry is estimated to grow by 60 percent in 2007–08 and become an USD 1,011 million opportunity. The VAS industry is currently focussing on the entertainment sector, such as the Indian film industry and cricket; however, there is scope for growth in other avenues as utility-based services, such as location information and mobile transactions.
?
?
?
?
?
WiMAX has been one of the most significant developments in wireless communication in the recent past. Since this mode of communication provides network access in inaccessible locations at a speed of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India, especially wireless services. Thus, it will lead to the increased use of telecom services, Internet, valueadded services and enterprise services. WiMAX is expected to accelerate economic growth and assist in providing better education, healthcare and entertainment services. It is estimated that India will have 13 million WiMAX subscribers by 2012.
?
Aircel is the pioneer in WiMAX technology in India. The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX. Bharti, Reliance and VSNL have Rural Telephony: As the government targets to increase rural teledensity from the current 2 percent to 25 percent by 2012, rural telephony will require major investments. This segment will boost the demand for telecom services, equipment, Internet services and other value-added services; thereby, offering great market opportunities for telecom players.
?
? ?
?
VALUE
CHAIN AT
AIRTEL
? ? ? ? ?
? ? ? ?
Created by McKinsey as a analysing framework which it uses in-house to consult for companies Strategy: Strategy is created to maintain and make competitive benefit over the competition. Structure: Structure is the way the organization is constructed and who reports to whom. Systems: In systems the daily activities and events that staff members join in to get the job done. Shared values: Shared values are also called “super ordinate goals”. These values are the center values of the company that are evidenced in the corporate culture and the general work. Style: you have to adopt the style of leadership. Staff: In staff employees and their general capabilities are included. Skills: Skills are the actual skills of the employees who are working for the company. If organization wants to perform well then these seven elements are needed to be associated and equally
doc_655389996.pptx