Description
Airtel Project
Project on: Telecommunication Services
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TELECOMMUNICATION
Introduction
Telecommunication is one of the prime support services needed for rapid growth and modernization of various sectors of the economy, the sector has grown rapidly in recent years, its growth needs to be accelerated further. It is also one of the fastest growing sectors in India and has immense potential for growth. The Telecommunication activity is commercial in nature and people are willing to pay for it. Of all infrastructure sectors, it is perhaps best suited for private sector participation which would help to create competitive environment and improve quality of services to consumers. Private investment is expected to play a major role supplementing the efforts of the public sector in expanding capacity and also providing competition with the system. In the area of value-added services, the private sector would continue to play a dominant role. The quantum of investment by the private operators would basically be determined by the rate of return on such investments – both basic as well as value-added services. The Telecom sector has witnessed some fundamental structural and institutional reforms in past decades. Telecom equipment manufacturing was completely deregulated in 1991. Value-added services (including cellular services) were thrown open to private sector participation in 1992. Basic Services were opened to private participation in 1994 by dividing country into 21 Telecom Circles and allowing one private operator per Circle to compete with DOT (DEPARTMENT OF TELECOMMUNICATION). An Independent Telecom Regulatory Authority of India was setup in 1997. A new policy for Internet Service Providers (ISPs) was announced in 1998 allowing independent services providers to enter the sector ending the earlier monopoly of VSNL.
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Characteristics of the Telecom Sector
Supply
Intense competition has resulted in prompt service to the subscribers. However, smaller towns and villages continue to have waiting periods on account of non-availability of adequate infrastructure.
Demand
Given the low penetration levels in the country and continuously falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.
Entry and Exit Barriers
Telecom industry is characterized by high entry and exit barriers. Service providers need to invest huge capital to build or hire the necessary infrastructure for providing services to customers. For e.g. Tata Teleservices in India invested an amount of Rs.7, 533 crores for setting up the required infrastructure. Because of the high cost of capital involved, in most countries, the government owned telecom service organization enjoys a monopoly. Thus, the telecom industry is heavilyregulated by the government. Even in an open industry where the private players are allowed to operate, if a player finds it difficult to compete and wants to quit the industry, finding a right buyer is a formidable task. The buyer should be willing to pay the huge amount, enter the market and face the challenges.
Bargaining power of suppliers
Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers.
Bargaining power of customers
A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.
Competition
The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities. Reducing tariffs will hurt the new entrants, as they will be unable to recover their high capital investments.
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Contribution to the GDP (Gross Domestic Product) of the Country (%):
The Indian Telecom Service industry is contributing 2.71% to the total GDP. The year-wise telecom service sector share in GDP is given below
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MARKET SEGMENTATION
Market segmentation is the basic step for any service provider before deciding on the segment to be served and the marketing strategy required to serve it. The market for telecom industry can be divided into following segments based on the consumer-
Individual
The most important segment is that of individual customers or households. Because of the monopoly of government owned telecommunications sector in India people earlier paid very high prices. After the basic telephone services were opened for private players in 1994, many players entered the market and the prices came down owing to competition. The number of individual users for telephones increased significantly, as the reach improved and service efficiency increased. India however lags behind many other developing countries in telephone line density. Following table gives the brief idea of the teledensity in some developed or developing countries of the world:COUNTRY UK Australia USA Brazil China India Sri Lanka Indonesia Pakistan Nepal Bangladesh TELEDENSITY 143.13 126.18 116.43 42.38 42.32 10.38 9.57 9.17 4.42 1.70 1.56
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Corporate
Corporate communication includes the communication of information between two units in two different locations of a city, of a country or in two different. countries. Business communication can take any form, telephonic conversation letter, e-mail, and fax etc. It is important that the message be conveyed clear and fast, without any distortions for the business to function effectively and efficiently. Telecom industry' relics heavily on the corporate sector for it's business. The corporate sector contributes to the heavy traffic on telephone lines during the daytime. This has led the telecom companies to offer lower tariffs in the early mornings and late evenings to shift the demand when most businesses arc closed.
Rural
During the monopoly of the government owned service providers, the worst affected customer was the rural customer. The reach was bad and the quality of service provided was even worse. The telecom revolution of the late '80s and early '90s saw a change in the rural telecom scene. Because of the government's initiative to lay down cables in rural areas and provide basic telephone services at subsidized prices, the reach of telecom services to remote areas has improved. The efficiency of the services has also improved.
Urban
In urban areas, the number of telephone subscribers is significantly higher than rural areas. This is because of not only the available infrastructure but also the presence of educated masses, which arc comfortable using technology and therefore use it more frequently. In fact, Urban India has grown to become dependent on telecom services. This is one of the reasons why most cellular service providers start their business in the cities first and then proceed to capture the rural areas.
On the basis of the product/service offered, telecom industry can be divided into following segments 1. 2. 3. 4. Fixed wire line/wireless services Mobile services Internet services Video telecom service
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MOBILE TELEPHONY AND ITS CHANGING SCENERIO IN INDIA
Exactly ten years ago, Jyoti Basu in Calcutta called Sukh Ram in Delhi in what was the first mobile phone call in India. Brick sized cell phones used to cost Rs. 45,000 and each call costed Rs. 16.5/minute. Back then, cell phone was a status symbol. Today, there are over 60 million mobile connections in India (expected to double in number in next 12 months). A local call costs around Rs 1/min and a cell phone can be purchased for less than Rs. 2000. Wireless technology has been a boon for India. In a country where setting up wired infrastructure is very expensive and time consuming, wireless is the perfect solution to connect remote villages. The timing was also just right as India escaped the burden of legacy technology and reaped the benefits of latest GSM technology. Cell phones have not been just about technology. They have brought about a cultural change in the country. SMS is the favorite means of communication for everybody today. The revolution in computing in countries like India will also come through mobile phones. What PC did to offices and then to masses in developed countries, mobile phones will do in developing countries. Time was when it took several years to get a new telephone connection in India. Now, there is less pressure than ever before for fixed landlines as mobile phone subscribers appear poised to outnumber those with a fixed line. By year's end, India may become one of the few countries where the mobile revolution is complete and the mobile reigns supreme, just ten years after it was first introduced. Every month, India adds another 1.5 million mobile subscribers to the 28 million mobile phone users registered last December. In January 2003, one year before, India had just 10 million mobile subscribers when mobile telephony was introduced in India in 1994, there were just a few service providers, such as Airtel. It was a heavily regulated sector with prohibitive license fees, high call charges of 30 cents per minute and expensive handsets. Then, only the privileged could use a mobile in India. But in the last four years, call charges have fallen and license fees have become more manageable. The distribution of different Mobile services operating in India with the exact nos. of mobile users is as mentioned in the Map shown here. We can arrive at the conclusion that Airtel is PAN INDIA SERVICE PROVIDER with largest user network. Next we are going to present the a report about Airtel in particular about there Vision, Business structure, present situation, future plans, hierarchy, their working, their Ad campaigns, competitions.
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GEOGRAPHICAL DISTRBUTION OF SERVICE PROVIDERS
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BHARTI ENTERPRISES
Company Profile
Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 25,885,709 customers as on July 31, 2006, consisting of 24,337,837 GSM mobile and 1,547,872 broadband & telephone customers. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU?s) - mobile services, broadband & telephone services (B&T) & enterprise services. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 90 cities. The Enterprise services group has two subunits - carriers (long distance services) and services to corporate. All these services are provided under the Airtel brand. Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE).
Partners
The company has a strategic alliance with SingTel. The investment made by SingTel is one of the largest investments made in the world outside Singapore, in the company. The company also has a strategic alliance with Vodafone. The investment made by Vodafone in Bharti is one of the largest single foreign investments made in the Indian telecom sector. The company?s mobile network equipment partners include Ericsson and Nokia. In the case of the broadband and telephone services and enterprise services (carriers), equipment suppliers include Siemens, Nortel, Corning, among others. The Company also has an information technology alliance with IBM for its group-wide information technology requirements and with Nortel for call center technology requirements. The call center operations for the mobile services have been outsourced to IBM Daksh, Hinduja TMT, Teletech & Mphasis. Bharti Enterprises has successfully focused its strategy on telecom while straddling diverse fields of business. From the creation of 'Airtel', one of India's finest brands, to becoming the largest manufacturer and exporter of world class telecom terminals under its 'Beetel' brand, Bharti has created a significant position for itself in the global telecommunications sector. Bharti Airtel Limited is today acknowledged as one of India's finest companies, and its flagship brand 'Airtel', has over 25 million customers across the length and breadth of India. While a joint venture with Teletech Inc., USA marked Bharti?s successful foray into the Customer Management Services business, Bharti Enterprises? dynamic diversification has continued with the company venturing into telecom software development. Recently, Bharti has successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and USA.
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LIST OF SEPARATE ENTITITES OF BHARTI GROUP
Bharti Airtel Ltd
Bharti Airtel Ltd is India's leading provider of telecommunications services. The company has 4 distinct Business divisions - Mobile & telephone services, broadband services, long distance services and enterprise services. Bharti TeleTech Ltd Bharti Teletech Ltd manufactures and exports world-class telecom equipment under the brand 'Beetel'. Telecom Seychelles Ltd Telecom Seychelles Ltd provides telecom services in Seychelles, under the brand 'Airtel'. Bharti Telesoft Ltd Bharti Telesoft Ltd delivers best-in-class, revenue-critical VAS products and services to telecom carriers. TeleTech Services (India) Ltd Teletech Services (India) Ltd is joint venture with Teletech Inc., USA. It offers a range of Customer Management Services. FieldFresh Foods Pvt Ltd FieldFresh Foods Pvt. Ltd. is Bharti's venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and USA.
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BHARTI AIRTEL : A FACT FILE
Name: Bharti Airtel Limited Business Description
Provides mobile, broadband & telephone (fixed line) and enterprise services (carriers & services to corporate) Established July 07, 1995, as a Public Limited Company Highlights for Second Quarter and Half Year Ended September 30, 2007 ? Market leader with a market share of all India mobile subscribers at 21.4% ? Highest ever-net addition of 41.1 lakh customers in a single quarter. ? Q2 Total Revenues of Rs.4,357 crore (up 61% Y-o-Y) ? Q2 EBITDA of Rs. 1,702 crore (up 67% Y-o-Y) ? Q2 Cash Profit of Rs. 1,644 crore (up 75% Y-o-Y) ? Q2 Net Profit of Rs. 934 crore (up 79% Y-o-Y) and Net Profit crosses 1,600 crores
Market Capitalization
Customer Base 24,337,837 GSM mobile and 1,547,872 broadband & telephone (fixed line) customers (Status as at month ended July 31, 2006)
Operational Network
Provides GSM mobile services in all the 23-telecom circles in India, and was the first private operator to have an all India presence. Provides broadband (DSL) and telephone services (fixed line) in 90 cities in India.
Organization Structure
As an outcome of a restructuring exercise conducted within the company; a new integrated organizational structure has emerged; with realigned roles, responsibilities and reporting relationships of Bharti?s key team players. With effect from March 01, 2006, this unified management structure of 'One Airtel' will enable continued improvement in the delivery of the Group?s strategic vision.
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MARKET SHARE OF AIRTEL
Group Company Airtel(GSM) Reliance (CDMA + GSM) Vodafone Essar(GSM) BSNL(GSM) Tata (CDMA) IDEA(GSM) Aircel(GSM) Spice(GSM) MTNL(GSM) BPL(GSM) HFCL (CDMA) Shyam (CDMA)
Total Subscribers 52961289 39069417 38562804 31945006 21035918 20222263 9025593 3661423 2889726 1220611 218947 101191
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Buying behavior
IT research firm In-Stat predicts that the global market for wireless handsets will grow 23 percent to USD 136 billion in 2006, and may exceed USD 250 billion in 2011. In Stat said the wireless market has reached USD 110 billion in 2005. The firms pointed out that after 2006 the growth rate would be slower. So depending upon the Market behavior for Handsets the buying behavior for Service Provider will also be bit slow in the year 2007.3G is the latest innovation India is goin? through. Airtel is goin? to start its operation soon on 3 -G network system where the user will have the facility of online TV shows etc. on the mobile Phone itself. In Stat said that the prediction is not preordained. According to the study it depends upon phone manufacturers continuing to add features that consumers? value and the rest of the industry can support. The greatest challenge is to just add the features different customers want without adding unneeded cost or complexity from unneeded or unwanted features from the service provider. The report includes end-user survey results that explore current customer attitudes as well as how it corresponds to there past buying behavior. In Stat said the goal for wireless phone manufacturers and service provider is to make customers forget they ever tolerated a phone or service without the new innovations. This has happened as the mobile phone has advanced dramatically in the past several years. According to the survey, very few U.S. users, less than 5 percent, do not use at least one of the technological innovations introduced over this period. Consumers seem ready to embrace other new features, including location-based services and Bluetooth connectivity, but only a narrow segment have interest in multimedia features and camera phones use will see a decline, predicts In-Stat. "Big trends over the next five years include adoption of wireless phones as a mobile wallet that and more users will carry multiple devices," says Bill Hughes, In-Stat analyst. "The primary changes in phones over the next five years are that they will become more capable, incorporate beefier security, and be more targeted as organizations have greater involvement in the wireless service decisions of their employees. Perhaps more importantly, they will help us be safer."
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The key findings of the research, "The Big Trends for Cell Phones, 2006-2011” are:
Worldwide sales of mobile phones will rise from 935 million units in 2006 to more than double that 2011 and with this service providers will also have a rise. Smart Phone sales will surpass 480 million units by 2011and to cash it on all the service Providers are launching different useful facilities to cash it on the rising trend of Smart Phone Usage. Nokia is by far the most popular phone brand among survey respondents who obtained their phone through work or for private uses and Airtel is the most trusted network in which companies like to operate. The research covers the worldwide mobile phone market and their service provider and predicts future developments for wireless phones over the next five years. The research takes into consideration the entire wireless phone value chain, which consists of phone manufacturers, supplier ecosystem, distributors, carriers, and in many cases, the organization to which many customers belong.
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MARKETING MIX
Unlike manufacturing organizations that focus on the four P's of the marketing mix, service organizations need to concentrate on seven P's. i.e. product, price, place, promotion, people, physical evidence and process. Let us discuss how telecom service providers attempt to design these seven P's to constitute appropriate marketing mix and face the challenges in the telecom industry:
PRODUCT/SERVICE
Technology and the changing needs of customers have prompted the telecom industry to introduce different products, services and their variations to the customer. This has also helped some of the players create a market for their services, instead of competing with other players in the cluttered market. However, telecom players are forced to continuously introduce innovative services to sustain and thrive in the highly competitive market. Mobile services Mobile services allow customers to communicate while on the move. Mobile service providers divide a region into cells and establish a radio base station (RBS) in each cell. All RPSs are connected to a central switching center from where the entire system is monitored. Mobile service providers offer limited mobility and roaming facilities. Limited mobility allows users to communicate within a given area. Roaming facility allows users to communicate over the mobile, wherever they are in the country (international roaming is also offered by some service providers). For example, a customer from Mumbai can use his mobile effectively even when visiting Hyderabad using the roaming facility. Mobile services can be categorized as follows: ? Cellular phone service: It includes satellite mobile communications service, in-flight telephone service, packet communication service and cellular services. ? Personal Handyphone System (PHS) service: Personal Handyphone system (PHS) works as a cordless phone at home and as a mobile phone outside. PHS services are offered on personal digital assistants (PDA) and notebook PCs. ? Pager service: It enables users to receive text messages. The person who sends the message bears the cost while the person owning the pager pays subscription. This service is now also available on mobile phones in the form of SMS service. SMS service has become a great marketing tool and is being used by many companies to promote their products/services. Companies conduct contests where the audience/customers are required to respond through an SMS.
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Internet It allows people to access information including text, voice and images from anywhere in the world and in real time. For example, a person in India can send written messages to his friend in the US. talk to him and even view the image of his friend on the computer monitor.
Video telecom services They include video conferencing, videophone, videotext, etc. They are used by various service providers including road transportation, railways, airways, corporate, banks, hotels, educational institutes and government departments.
PRICE
Service providers can use cost-based, competition based or demand-based pricing. Most service providers in the telecom industry today are resorting to competition based pricing, which has led to low prices of the services. This has proved to be quite beneficial for the customers, but the telecom companies are struggling to make profits. In the fixed line industry, customers have only one option of payment, that of post-paid. That is, customers pay a fixed amount as rent and the usage charges at the end of the billing period, in cellular industry, service providers offer two options to customers, pre-paid and post-paid. In case of prepaid service, customers buy a card available from retail outlets to activate or recharge their service. The price of the card covers the rent fixed by the service provider plus the cost of certain amount of airtime. For example, Airtel offers different cards with different amounts of airtime and allows its customers to choose from them depending on their need. Though initially, prepaid service was available only for mobile phone users. The customer can make the payment by cash/cheque/credit card at one of the service provider's outlets. Some service providers also allow online payment through Internet.
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PLACE
Applications for new telephone connections or for transferring a connection from one place to another were accepted only in one major telephone exchange located in the city. One had to personally go to the office, stand in the queue and make the payments. There was another department for receiving complaints. It took a long time, even a year, to obtain a telephone connection. After the entry of private players like Tata and Bharti, things have improved. Mobile service providers like Airtel have one-stop shops where customers can purchase handsets, get new connections, subscribe to various value-added services and pay their bills on the spot. Airtel has done this by setting up Customer relationship centers which can be easily located by people in their own localities.
PROMOTION
Telecom service providers use direct marketing, advertisements in newspapers, T.V., Radio, billboards in public places, etc. to promote their services. In 2002, Airtel used a TV commercial endorsed not by film stars or sports stars but by a successful music composer, A.R. Rahman to promote its brand. Rahman also composed five exclusive symphonies downloadable as ring tones for Airtel users. Telecom services also sponsor some contests or events to attract public attention and gain wide publicity. For example, in 2003. Reliance Info sponsored a contest for a successful Bollywood film, Kal Ho Na Ho. Owing to the intense competition in the cellular service sector; the promotion campaigns are quite innovative. AR Rahman?s „SIGNATURE TUNE?
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BRAND AMBASSADOR TWO OF INDIA?s BIGGEST CELEBRITIES SACHIN TENDULKAR & SHAHRUKH KHAN
AIRTEL –EXPRESS YOURSELF Brands often lose their way when their communication deviates from a tried and tested property just to be different. This is not a situation that cannot be salvaged, though. Brands stray when they try to be different for the sake of being different. The desire to be different is pretty common in advertising. And this desire to be different usually means a break from the past. AIRTEL?s Ads are a trend setting Ads and considered a landmark Product promotion, which they are doing for their Broad Band and telephone services are also a land mark promotion campaign. Promotions, whose need is increasingly being felt by the surging services sector, will click if they realize marketing objectives and reinforce brand values. Other precautions too need to be taken in the case of promotions. For instance, too many promotions can be detrimental to the health of a brand. A brand, which is perpetually on price-off, would not only lose key brand attributes but also consumer interest. The consumer's reasoning being `if a product is cheaper now, does it mean I was being overcharged earlier'? Similarly, if a brand is always doling out freebies, sales would be affected when there are no freebies on offer.
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PEOPLE
Customer relation is crucial to telecom service providers in winning new customers and retaining the existing customers, when customers report any problem with the service, service provider should send people immediately to get the problem rectified. However, when Airtel is considered, things changed, because they emphasized on customer satisfaction. They ensured that their service personnel answered customer ?s queries promptly and professionally and attend their problems immediately. Airtel has done this by setting up Airtel Relationship Centers, Customer Service Centers and Payment Assistance Centers. This has brought a change in the working of the telecom industry as a whole. Also Airtel has various Grievance Redressal Officers and Nodal Officers which can be easily communicated through E-mail, phone or through post.
PHYSICAL EVIDENCE
Telecom service is intangible. A user cannot judge the quality of the service offered by a service provider unless he uses it. Airtel provides some tangible products to customers to service as physical evidence. They provide customers with a telephone directory that includes names and addresses of all their subscribers. Every year, an updated directory is provided to all subscribers free of cost. However, mobile service providers do not provide such directory because mobile phones are considered personal devices. It also provides many brochures, pamphlets.
PROCESS
Telecom service providers should offer reliable, continuous, quality service to customers. If a customer asked for a phone connection, he got it within three days. It has a computerized system that receives complaints from customers round the clock and service personnel attend the customer within 24 hours. One can also obtain the bill information by contacting the number provided for the purpose. Also Airtel gives commitment of having a follow up to any address from their customers.
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COMPETITION AND CHALLENGES AHEAD FOR AIRTEL
The year 2002 was the defining year for the growth of telecom services in the country. By the end of the year, the country was having eight basic and 12 cellular operators, including stateowned Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), offering services across the country. The mobile phone market is a rapidly growing and dynamic one. The strategy for all the companies is to consistently build on the three pillars of innovative products/services, technology and customer service and offer relevant value. With BSNL's launch, are the private players worried All the service providers are also getting more and more technology savvy to keep a pace with the changing scenario. Following is the List of major GSM service provider in the Country.
MAJOR MARKET PLAYERS
The major competitor of AIRTEL is Vodafone & BSNL on GSM network. Telecom is rolling out like never before. And that 100-million mark doesn't look too far away. The mobile subscriber base crossed 65 million in September 2005, an over-30 percent increase over the previous year.
AIRTEL
Last quarter, market leader Airtel (22 per cent market share, over 15 million mobile subscribers, source: Cellular Operators Association of India) witnessed its highest-ever net addition of 1.8 million mobile customers in a single quarter. And it's not slowing down; the company's busy rolling out networks, targeting its presence in over 4,500 towns and locations (from 3,200 in September) in the next three-four months.
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Vodafone
Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular licence for Mumbai. Vodafone Essar now has operations in 16 circles covering 86% of India's mobile customer base, with over 49.1 million customers With the acquisition of BPL Mobile, its subscriber base is increased to about 13.5 million later this month when the merger is formalized - pushing it up to the No. 2 slot. Of course, right now, the focus is more on its orange-pink transformation. FEW POSITIVE STEPS TAKEN BY BHARTI Group?s AIRTEL TO STAY AHEAD OF THE CONDITION ARE AS FOLLOWS:
USP’s
According to Sanjay Kapoor, Joint President, Mobility at Bharti the number of cellular subscribers in India will treble to 300 million in the next three to five years. In the year ended March 2005, Bharti increased its net ads by 67 per cent, compared with the market?s growth of 55 per cent. In the year to March 2006, Bharti?s new subscriber growth was 78 percent, versus 73 per cent in the broader market. Instead of funneling huge CAPEX on infrastructure, processes and people, he tested what he considered a “true utility computing model” by outsourcing the company?s call center and business IT systems, They have plans to outsource content and service delivery systems in the near term. To carry it out, they partnered with the likes of IBM, Nortel and Oracle and utilized different payment models from revenue per share to cost per all, depending on what works for the parties involved. AIRTEL has on-demand model, which has effectively supported the company?s rapid growth curve. Bharti now serves 18 million subscribers and targets to reach 100 million marks in four to five years? time. The company has also unified its fixed line, ISP, IDD and mobile business under one brand, Bharti Airtel. Now operators could test blended formula that puts into account revenue, churn rate, customer statistics as part of the equation and decide on which agreement with work best. They have ventured into Broadband for Internet Telephony as well as landline. 3G Network is to be started in two months time to make it more user-friendly and give users more value for their Money by showing Live streaming on Mobile itself.
AIRTEL IS A PAN INDIA MOBILE SERVISE PROVIDER WITH INFRASTRUCTURE AND FACILITY AND A WIDE VISION FOR GROWTH.
BEST
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SWOT ANALYSIS
Following is the SWOT Analysis of AIRTEL
STRENGTH ? Very focused on telecom. ? Leadership in fast growing cellular segment. ? Pan-India footprint. ? The only Indian operator, other than VSNL, that has an international submarine cable. ? The fast-expanding IPLC market. ? Latest technology and low cost advantage. ? Huge market.
WEAKNESS ? Price Competition from BSNL and MTNL ? Untapped Rural market
? Competition from other cellular and mobile operators. ? Saturation point in Basic telephony service
OPPORTUNITIES
THREATS
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STRENGTH
? VERY FOCUSED ON TELECOM Bharti Airtel is largely focused on the telecom; around 93% of the total revenue comes from telecom (Total telecom revenue Rs 3,326).
? LEADERSHIP IN FAST GROWING CELLULAR SEGMENT Airtel is holding leadership position in cellular market. Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 27,239,757 customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071 broadband & telephone customers. ? PAN INDIA FOOTPRINT Airtel offers the most expansive roaming network. Letting you roam anywhere in India with its Pan-India presence, and trot across the globe with International Roaming spread in over 240 networks. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 92 cities. ? THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING INTERNATIONAL SUBMARINE CABLES Airtel, the monopoly breaker shattered the Telecom monopoly in the International Long Distance space with the launch of International Submarine cable Network i2i jointly with Singapore Telecommunications Ltd. in the year 2002. This has brought a huge value to the IPLC customers, delivering them an option besides the incumbent carrier, to connect to the outside world.
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WEAKNESS
? Price Competition from BSNL and MTNL Airtel is tough competition from the operators like BSNL and MTNL as these two operators are offering services at a low rate. ? Untapped Rural market Although Airtel have strong Presence throughout the country but still they are far away from the Indian rural part and generally this part is covered by BSNL so indirectly Airtel is loosing revenue from the rural sector.
OPPORTUNITIES
? THE FAST EXTENDING IPLC MARKET An IPLC (international private leased circuit) is a point-to-point private line used by an organization to communicate between offices that are geographically dispersed throughout the world. An IPLC can be used for Internet access, business data exchange, video conferencing, and any other form of telecommunication. Airtel Enterprise Services and SingTel jointly provide IPLCs on the Network i2i. The Landing Station in Singapore is managed by SingTel and by Airtel in Chennai (India). Each Landing Station has Power Feeding Equipment, Submarine Line Terminating Equipment and SDH system to power the cable, add wavelengths and convert the STM-64 output to STM-1 data streams respectively. ? LATEST TECHNOLOGY AND LOW COST ADVANTAGE The costs of introducing cellular services for Airtel are marginal in nature, as it needs only to augment its cellular switch/equipment capacity and increase the number of base stations. The number of cities, towns and villages it has covered already works to its advantage as putting more base stations for cellular coverage in these areas comes with negligible marginal cost. Besides such cost advantages, it has also other cost advantages for the latest cellular technology. As a late entrant into the cellular market, it has dual advantage of latest technology with modern features, unlike other private cellular operators who started their service more than 4-5 years back and low capital cost due to advantages of large scale buying of cellular switch/equipment. ? HUGE MARKET The cellular telephony market is presently expanding at a phenomenal / whopping rate every year and there is still vast scope for Airtel to enter /expand in this market. Besides there is a vast rural segment where the cellular services have not made much headway and many customers are looking towards Airtel for providing the service to them. With its wide and extensive presence even in the remotest areas, Airtel poised to gain a big market share in this segment when it expands cellular services into the rural areas.
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THREATS
? COMPETITION FROM OTHER CELLULAR It is time for BSNL to improve/expand its cellular services. Fierce and cut-throat competition is already in place with the markets ever abuzz with several tariff reductions and announcement of attractive packages, trying to grab most of the „mind share? of the „king? - „the consumer?, whose benefits are increasing with passing of everyday. If BSNL is not innovative and agile, its cellular service will be a flop. It needs to be proactive with attractive packaging, pricing and marketing policies lest its presence in the market be treated with disdain by the private cellular companies. The launch of WLL services by Reliance Infocomm has aggravated the situation. ? MARKET MATURITY IN BASIC TELEPHONY SEGMENT Although Airtel entered in the basic telephony market it?s a biggest there for the company as the basic telephony market has reached.
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FUTURE OF TELECOM INDUSTRY IN INDIA
According to a Frost & Sullivan study for the period of 2002-2006, the telecommunication market in India is expected to increase by 13%annually. The teledensity in India is expected to increase to 10% because of the aggressive marketing efforts of telecom players. Major telecom players in India are MTNL. BSNL, Tata Indicom, Reliance Infocomm, Airtel (Bharti Telecom), Vodafone and BPL. According to Morgan Stanley's report, the telecom market in India (including basic, mobile. NLD. 1LD and data service) will increase to Rs. 81000 crore in 2007 from Rs.41.000 crore in 2002. According to report presented by Nasscom and Morgan Stanley, mobile service segment will be the fastest growing segment in India with revenues increasing to 12.41 billion dollars in 2004-05. The subscriber base of cellular service providers using WLL-CDMA technology will increase by 86.6% (amounting to 14 million subscribers) in 20044)5 whereas the increase will be only 40% (amounting to 35 million) in the subscriber base of providers using GSM technology. The revenue of the cellular operators using WLL-CDMA technology will increase to 681.32 million dollars. Telecom players are reducing their prices drastically to attract customers and increase their market share. The price war has also extended to NLD and 1LD services. Therefore, telecom players are concentrating on effective utilization of existing infrastructure rather than making investments on advanced technology and enhancing the quality of their services. According to a report, basic communication service providers are not able to meet the benchmark for quality set by TRA. For example According to TRAI, broadband refers to alwayson data connection that is able to support various interactive services, and has the capability of a minimum download speed of 255 Kilobits per second. However, few ISPs offer the service of this quality. In telecom industry, there have been many mergers, acquisitions and tie-ups between various service providers. The players seem to be consolidating to achieve economics of scale and improve their profitability. There may be further consolidation in the telecommunication market Tatas merged with Birla-AT&T. Bharti Telecom acquired Spice Telecom and Batata entered into strategic lie-up with BPL cellular. Further. Tata Teleservices acquired VSNL in 2002 and Tata's Idea bought Escotel. To enhance its basic telephone service business, Tata also tied up with Hughes Telecom. There may be further consolidation in the telecom industry leading to only a few major players operating in the industry.
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CONCLUSION
Clearly, a country?s ability to benefit from this revolution depends heavily on the modernity of Telecommunications network. Countries that can acquire and assess information on demand and then integrate them usefully into there industrial structure through modern telecommunications network is most likely to experience high rates of growth. Large-scale use of information and telecommunication technologies directly influences productivity, cost effectiveness and competitiveness in industries with high levels of product differentiations and low levels of unit prices. An advanced telecommunications system is equally important for services like banking, trading, retailing, transportation, and maintenance and insurance where information and real-time communications are vital to the production process. A reduction in costs of these services will directly enhance international competitiveness within the entire economic system.
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Questionnaire
Q. Now coming over to Marketing of Services. How do you identify your customer? Q. What are the further services you are focusing on to satisfy your customers? Q. What are the major threats from your competitors? Q. Would you like to low your current price for the rural people? Q. Which strategies you will follow to become the market leader?
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doc_819592192.pdf
Airtel Project
Project on: Telecommunication Services
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TELECOMMUNICATION
Introduction
Telecommunication is one of the prime support services needed for rapid growth and modernization of various sectors of the economy, the sector has grown rapidly in recent years, its growth needs to be accelerated further. It is also one of the fastest growing sectors in India and has immense potential for growth. The Telecommunication activity is commercial in nature and people are willing to pay for it. Of all infrastructure sectors, it is perhaps best suited for private sector participation which would help to create competitive environment and improve quality of services to consumers. Private investment is expected to play a major role supplementing the efforts of the public sector in expanding capacity and also providing competition with the system. In the area of value-added services, the private sector would continue to play a dominant role. The quantum of investment by the private operators would basically be determined by the rate of return on such investments – both basic as well as value-added services. The Telecom sector has witnessed some fundamental structural and institutional reforms in past decades. Telecom equipment manufacturing was completely deregulated in 1991. Value-added services (including cellular services) were thrown open to private sector participation in 1992. Basic Services were opened to private participation in 1994 by dividing country into 21 Telecom Circles and allowing one private operator per Circle to compete with DOT (DEPARTMENT OF TELECOMMUNICATION). An Independent Telecom Regulatory Authority of India was setup in 1997. A new policy for Internet Service Providers (ISPs) was announced in 1998 allowing independent services providers to enter the sector ending the earlier monopoly of VSNL.
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Characteristics of the Telecom Sector
Supply
Intense competition has resulted in prompt service to the subscribers. However, smaller towns and villages continue to have waiting periods on account of non-availability of adequate infrastructure.
Demand
Given the low penetration levels in the country and continuously falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.
Entry and Exit Barriers
Telecom industry is characterized by high entry and exit barriers. Service providers need to invest huge capital to build or hire the necessary infrastructure for providing services to customers. For e.g. Tata Teleservices in India invested an amount of Rs.7, 533 crores for setting up the required infrastructure. Because of the high cost of capital involved, in most countries, the government owned telecom service organization enjoys a monopoly. Thus, the telecom industry is heavilyregulated by the government. Even in an open industry where the private players are allowed to operate, if a player finds it difficult to compete and wants to quit the industry, finding a right buyer is a formidable task. The buyer should be willing to pay the huge amount, enter the market and face the challenges.
Bargaining power of suppliers
Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers.
Bargaining power of customers
A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.
Competition
The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities. Reducing tariffs will hurt the new entrants, as they will be unable to recover their high capital investments.
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Contribution to the GDP (Gross Domestic Product) of the Country (%):
The Indian Telecom Service industry is contributing 2.71% to the total GDP. The year-wise telecom service sector share in GDP is given below
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MARKET SEGMENTATION
Market segmentation is the basic step for any service provider before deciding on the segment to be served and the marketing strategy required to serve it. The market for telecom industry can be divided into following segments based on the consumer-
Individual
The most important segment is that of individual customers or households. Because of the monopoly of government owned telecommunications sector in India people earlier paid very high prices. After the basic telephone services were opened for private players in 1994, many players entered the market and the prices came down owing to competition. The number of individual users for telephones increased significantly, as the reach improved and service efficiency increased. India however lags behind many other developing countries in telephone line density. Following table gives the brief idea of the teledensity in some developed or developing countries of the world:COUNTRY UK Australia USA Brazil China India Sri Lanka Indonesia Pakistan Nepal Bangladesh TELEDENSITY 143.13 126.18 116.43 42.38 42.32 10.38 9.57 9.17 4.42 1.70 1.56
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Corporate
Corporate communication includes the communication of information between two units in two different locations of a city, of a country or in two different. countries. Business communication can take any form, telephonic conversation letter, e-mail, and fax etc. It is important that the message be conveyed clear and fast, without any distortions for the business to function effectively and efficiently. Telecom industry' relics heavily on the corporate sector for it's business. The corporate sector contributes to the heavy traffic on telephone lines during the daytime. This has led the telecom companies to offer lower tariffs in the early mornings and late evenings to shift the demand when most businesses arc closed.
Rural
During the monopoly of the government owned service providers, the worst affected customer was the rural customer. The reach was bad and the quality of service provided was even worse. The telecom revolution of the late '80s and early '90s saw a change in the rural telecom scene. Because of the government's initiative to lay down cables in rural areas and provide basic telephone services at subsidized prices, the reach of telecom services to remote areas has improved. The efficiency of the services has also improved.
Urban
In urban areas, the number of telephone subscribers is significantly higher than rural areas. This is because of not only the available infrastructure but also the presence of educated masses, which arc comfortable using technology and therefore use it more frequently. In fact, Urban India has grown to become dependent on telecom services. This is one of the reasons why most cellular service providers start their business in the cities first and then proceed to capture the rural areas.
On the basis of the product/service offered, telecom industry can be divided into following segments 1. 2. 3. 4. Fixed wire line/wireless services Mobile services Internet services Video telecom service
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MOBILE TELEPHONY AND ITS CHANGING SCENERIO IN INDIA
Exactly ten years ago, Jyoti Basu in Calcutta called Sukh Ram in Delhi in what was the first mobile phone call in India. Brick sized cell phones used to cost Rs. 45,000 and each call costed Rs. 16.5/minute. Back then, cell phone was a status symbol. Today, there are over 60 million mobile connections in India (expected to double in number in next 12 months). A local call costs around Rs 1/min and a cell phone can be purchased for less than Rs. 2000. Wireless technology has been a boon for India. In a country where setting up wired infrastructure is very expensive and time consuming, wireless is the perfect solution to connect remote villages. The timing was also just right as India escaped the burden of legacy technology and reaped the benefits of latest GSM technology. Cell phones have not been just about technology. They have brought about a cultural change in the country. SMS is the favorite means of communication for everybody today. The revolution in computing in countries like India will also come through mobile phones. What PC did to offices and then to masses in developed countries, mobile phones will do in developing countries. Time was when it took several years to get a new telephone connection in India. Now, there is less pressure than ever before for fixed landlines as mobile phone subscribers appear poised to outnumber those with a fixed line. By year's end, India may become one of the few countries where the mobile revolution is complete and the mobile reigns supreme, just ten years after it was first introduced. Every month, India adds another 1.5 million mobile subscribers to the 28 million mobile phone users registered last December. In January 2003, one year before, India had just 10 million mobile subscribers when mobile telephony was introduced in India in 1994, there were just a few service providers, such as Airtel. It was a heavily regulated sector with prohibitive license fees, high call charges of 30 cents per minute and expensive handsets. Then, only the privileged could use a mobile in India. But in the last four years, call charges have fallen and license fees have become more manageable. The distribution of different Mobile services operating in India with the exact nos. of mobile users is as mentioned in the Map shown here. We can arrive at the conclusion that Airtel is PAN INDIA SERVICE PROVIDER with largest user network. Next we are going to present the a report about Airtel in particular about there Vision, Business structure, present situation, future plans, hierarchy, their working, their Ad campaigns, competitions.
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GEOGRAPHICAL DISTRBUTION OF SERVICE PROVIDERS
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BHARTI ENTERPRISES
Company Profile
Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 25,885,709 customers as on July 31, 2006, consisting of 24,337,837 GSM mobile and 1,547,872 broadband & telephone customers. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU?s) - mobile services, broadband & telephone services (B&T) & enterprise services. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 90 cities. The Enterprise services group has two subunits - carriers (long distance services) and services to corporate. All these services are provided under the Airtel brand. Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE).
Partners
The company has a strategic alliance with SingTel. The investment made by SingTel is one of the largest investments made in the world outside Singapore, in the company. The company also has a strategic alliance with Vodafone. The investment made by Vodafone in Bharti is one of the largest single foreign investments made in the Indian telecom sector. The company?s mobile network equipment partners include Ericsson and Nokia. In the case of the broadband and telephone services and enterprise services (carriers), equipment suppliers include Siemens, Nortel, Corning, among others. The Company also has an information technology alliance with IBM for its group-wide information technology requirements and with Nortel for call center technology requirements. The call center operations for the mobile services have been outsourced to IBM Daksh, Hinduja TMT, Teletech & Mphasis. Bharti Enterprises has successfully focused its strategy on telecom while straddling diverse fields of business. From the creation of 'Airtel', one of India's finest brands, to becoming the largest manufacturer and exporter of world class telecom terminals under its 'Beetel' brand, Bharti has created a significant position for itself in the global telecommunications sector. Bharti Airtel Limited is today acknowledged as one of India's finest companies, and its flagship brand 'Airtel', has over 25 million customers across the length and breadth of India. While a joint venture with Teletech Inc., USA marked Bharti?s successful foray into the Customer Management Services business, Bharti Enterprises? dynamic diversification has continued with the company venturing into telecom software development. Recently, Bharti has successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and USA.
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LIST OF SEPARATE ENTITITES OF BHARTI GROUP
Bharti Airtel Ltd
Bharti Airtel Ltd is India's leading provider of telecommunications services. The company has 4 distinct Business divisions - Mobile & telephone services, broadband services, long distance services and enterprise services. Bharti TeleTech Ltd Bharti Teletech Ltd manufactures and exports world-class telecom equipment under the brand 'Beetel'. Telecom Seychelles Ltd Telecom Seychelles Ltd provides telecom services in Seychelles, under the brand 'Airtel'. Bharti Telesoft Ltd Bharti Telesoft Ltd delivers best-in-class, revenue-critical VAS products and services to telecom carriers. TeleTech Services (India) Ltd Teletech Services (India) Ltd is joint venture with Teletech Inc., USA. It offers a range of Customer Management Services. FieldFresh Foods Pvt Ltd FieldFresh Foods Pvt. Ltd. is Bharti's venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and USA.
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BHARTI AIRTEL : A FACT FILE
Name: Bharti Airtel Limited Business Description
Provides mobile, broadband & telephone (fixed line) and enterprise services (carriers & services to corporate) Established July 07, 1995, as a Public Limited Company Highlights for Second Quarter and Half Year Ended September 30, 2007 ? Market leader with a market share of all India mobile subscribers at 21.4% ? Highest ever-net addition of 41.1 lakh customers in a single quarter. ? Q2 Total Revenues of Rs.4,357 crore (up 61% Y-o-Y) ? Q2 EBITDA of Rs. 1,702 crore (up 67% Y-o-Y) ? Q2 Cash Profit of Rs. 1,644 crore (up 75% Y-o-Y) ? Q2 Net Profit of Rs. 934 crore (up 79% Y-o-Y) and Net Profit crosses 1,600 crores
Market Capitalization
Customer Base 24,337,837 GSM mobile and 1,547,872 broadband & telephone (fixed line) customers (Status as at month ended July 31, 2006)
Operational Network
Provides GSM mobile services in all the 23-telecom circles in India, and was the first private operator to have an all India presence. Provides broadband (DSL) and telephone services (fixed line) in 90 cities in India.
Organization Structure
As an outcome of a restructuring exercise conducted within the company; a new integrated organizational structure has emerged; with realigned roles, responsibilities and reporting relationships of Bharti?s key team players. With effect from March 01, 2006, this unified management structure of 'One Airtel' will enable continued improvement in the delivery of the Group?s strategic vision.
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MARKET SHARE OF AIRTEL
Group Company Airtel(GSM) Reliance (CDMA + GSM) Vodafone Essar(GSM) BSNL(GSM) Tata (CDMA) IDEA(GSM) Aircel(GSM) Spice(GSM) MTNL(GSM) BPL(GSM) HFCL (CDMA) Shyam (CDMA)
Total Subscribers 52961289 39069417 38562804 31945006 21035918 20222263 9025593 3661423 2889726 1220611 218947 101191
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Buying behavior
IT research firm In-Stat predicts that the global market for wireless handsets will grow 23 percent to USD 136 billion in 2006, and may exceed USD 250 billion in 2011. In Stat said the wireless market has reached USD 110 billion in 2005. The firms pointed out that after 2006 the growth rate would be slower. So depending upon the Market behavior for Handsets the buying behavior for Service Provider will also be bit slow in the year 2007.3G is the latest innovation India is goin? through. Airtel is goin? to start its operation soon on 3 -G network system where the user will have the facility of online TV shows etc. on the mobile Phone itself. In Stat said that the prediction is not preordained. According to the study it depends upon phone manufacturers continuing to add features that consumers? value and the rest of the industry can support. The greatest challenge is to just add the features different customers want without adding unneeded cost or complexity from unneeded or unwanted features from the service provider. The report includes end-user survey results that explore current customer attitudes as well as how it corresponds to there past buying behavior. In Stat said the goal for wireless phone manufacturers and service provider is to make customers forget they ever tolerated a phone or service without the new innovations. This has happened as the mobile phone has advanced dramatically in the past several years. According to the survey, very few U.S. users, less than 5 percent, do not use at least one of the technological innovations introduced over this period. Consumers seem ready to embrace other new features, including location-based services and Bluetooth connectivity, but only a narrow segment have interest in multimedia features and camera phones use will see a decline, predicts In-Stat. "Big trends over the next five years include adoption of wireless phones as a mobile wallet that and more users will carry multiple devices," says Bill Hughes, In-Stat analyst. "The primary changes in phones over the next five years are that they will become more capable, incorporate beefier security, and be more targeted as organizations have greater involvement in the wireless service decisions of their employees. Perhaps more importantly, they will help us be safer."
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The key findings of the research, "The Big Trends for Cell Phones, 2006-2011” are:
Worldwide sales of mobile phones will rise from 935 million units in 2006 to more than double that 2011 and with this service providers will also have a rise. Smart Phone sales will surpass 480 million units by 2011and to cash it on all the service Providers are launching different useful facilities to cash it on the rising trend of Smart Phone Usage. Nokia is by far the most popular phone brand among survey respondents who obtained their phone through work or for private uses and Airtel is the most trusted network in which companies like to operate. The research covers the worldwide mobile phone market and their service provider and predicts future developments for wireless phones over the next five years. The research takes into consideration the entire wireless phone value chain, which consists of phone manufacturers, supplier ecosystem, distributors, carriers, and in many cases, the organization to which many customers belong.
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MARKETING MIX
Unlike manufacturing organizations that focus on the four P's of the marketing mix, service organizations need to concentrate on seven P's. i.e. product, price, place, promotion, people, physical evidence and process. Let us discuss how telecom service providers attempt to design these seven P's to constitute appropriate marketing mix and face the challenges in the telecom industry:
PRODUCT/SERVICE
Technology and the changing needs of customers have prompted the telecom industry to introduce different products, services and their variations to the customer. This has also helped some of the players create a market for their services, instead of competing with other players in the cluttered market. However, telecom players are forced to continuously introduce innovative services to sustain and thrive in the highly competitive market. Mobile services Mobile services allow customers to communicate while on the move. Mobile service providers divide a region into cells and establish a radio base station (RBS) in each cell. All RPSs are connected to a central switching center from where the entire system is monitored. Mobile service providers offer limited mobility and roaming facilities. Limited mobility allows users to communicate within a given area. Roaming facility allows users to communicate over the mobile, wherever they are in the country (international roaming is also offered by some service providers). For example, a customer from Mumbai can use his mobile effectively even when visiting Hyderabad using the roaming facility. Mobile services can be categorized as follows: ? Cellular phone service: It includes satellite mobile communications service, in-flight telephone service, packet communication service and cellular services. ? Personal Handyphone System (PHS) service: Personal Handyphone system (PHS) works as a cordless phone at home and as a mobile phone outside. PHS services are offered on personal digital assistants (PDA) and notebook PCs. ? Pager service: It enables users to receive text messages. The person who sends the message bears the cost while the person owning the pager pays subscription. This service is now also available on mobile phones in the form of SMS service. SMS service has become a great marketing tool and is being used by many companies to promote their products/services. Companies conduct contests where the audience/customers are required to respond through an SMS.
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Internet It allows people to access information including text, voice and images from anywhere in the world and in real time. For example, a person in India can send written messages to his friend in the US. talk to him and even view the image of his friend on the computer monitor.
Video telecom services They include video conferencing, videophone, videotext, etc. They are used by various service providers including road transportation, railways, airways, corporate, banks, hotels, educational institutes and government departments.
PRICE
Service providers can use cost-based, competition based or demand-based pricing. Most service providers in the telecom industry today are resorting to competition based pricing, which has led to low prices of the services. This has proved to be quite beneficial for the customers, but the telecom companies are struggling to make profits. In the fixed line industry, customers have only one option of payment, that of post-paid. That is, customers pay a fixed amount as rent and the usage charges at the end of the billing period, in cellular industry, service providers offer two options to customers, pre-paid and post-paid. In case of prepaid service, customers buy a card available from retail outlets to activate or recharge their service. The price of the card covers the rent fixed by the service provider plus the cost of certain amount of airtime. For example, Airtel offers different cards with different amounts of airtime and allows its customers to choose from them depending on their need. Though initially, prepaid service was available only for mobile phone users. The customer can make the payment by cash/cheque/credit card at one of the service provider's outlets. Some service providers also allow online payment through Internet.
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PLACE
Applications for new telephone connections or for transferring a connection from one place to another were accepted only in one major telephone exchange located in the city. One had to personally go to the office, stand in the queue and make the payments. There was another department for receiving complaints. It took a long time, even a year, to obtain a telephone connection. After the entry of private players like Tata and Bharti, things have improved. Mobile service providers like Airtel have one-stop shops where customers can purchase handsets, get new connections, subscribe to various value-added services and pay their bills on the spot. Airtel has done this by setting up Customer relationship centers which can be easily located by people in their own localities.
PROMOTION
Telecom service providers use direct marketing, advertisements in newspapers, T.V., Radio, billboards in public places, etc. to promote their services. In 2002, Airtel used a TV commercial endorsed not by film stars or sports stars but by a successful music composer, A.R. Rahman to promote its brand. Rahman also composed five exclusive symphonies downloadable as ring tones for Airtel users. Telecom services also sponsor some contests or events to attract public attention and gain wide publicity. For example, in 2003. Reliance Info sponsored a contest for a successful Bollywood film, Kal Ho Na Ho. Owing to the intense competition in the cellular service sector; the promotion campaigns are quite innovative. AR Rahman?s „SIGNATURE TUNE?
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BRAND AMBASSADOR TWO OF INDIA?s BIGGEST CELEBRITIES SACHIN TENDULKAR & SHAHRUKH KHAN
AIRTEL –EXPRESS YOURSELF Brands often lose their way when their communication deviates from a tried and tested property just to be different. This is not a situation that cannot be salvaged, though. Brands stray when they try to be different for the sake of being different. The desire to be different is pretty common in advertising. And this desire to be different usually means a break from the past. AIRTEL?s Ads are a trend setting Ads and considered a landmark Product promotion, which they are doing for their Broad Band and telephone services are also a land mark promotion campaign. Promotions, whose need is increasingly being felt by the surging services sector, will click if they realize marketing objectives and reinforce brand values. Other precautions too need to be taken in the case of promotions. For instance, too many promotions can be detrimental to the health of a brand. A brand, which is perpetually on price-off, would not only lose key brand attributes but also consumer interest. The consumer's reasoning being `if a product is cheaper now, does it mean I was being overcharged earlier'? Similarly, if a brand is always doling out freebies, sales would be affected when there are no freebies on offer.
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PEOPLE
Customer relation is crucial to telecom service providers in winning new customers and retaining the existing customers, when customers report any problem with the service, service provider should send people immediately to get the problem rectified. However, when Airtel is considered, things changed, because they emphasized on customer satisfaction. They ensured that their service personnel answered customer ?s queries promptly and professionally and attend their problems immediately. Airtel has done this by setting up Airtel Relationship Centers, Customer Service Centers and Payment Assistance Centers. This has brought a change in the working of the telecom industry as a whole. Also Airtel has various Grievance Redressal Officers and Nodal Officers which can be easily communicated through E-mail, phone or through post.
PHYSICAL EVIDENCE
Telecom service is intangible. A user cannot judge the quality of the service offered by a service provider unless he uses it. Airtel provides some tangible products to customers to service as physical evidence. They provide customers with a telephone directory that includes names and addresses of all their subscribers. Every year, an updated directory is provided to all subscribers free of cost. However, mobile service providers do not provide such directory because mobile phones are considered personal devices. It also provides many brochures, pamphlets.
PROCESS
Telecom service providers should offer reliable, continuous, quality service to customers. If a customer asked for a phone connection, he got it within three days. It has a computerized system that receives complaints from customers round the clock and service personnel attend the customer within 24 hours. One can also obtain the bill information by contacting the number provided for the purpose. Also Airtel gives commitment of having a follow up to any address from their customers.
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COMPETITION AND CHALLENGES AHEAD FOR AIRTEL
The year 2002 was the defining year for the growth of telecom services in the country. By the end of the year, the country was having eight basic and 12 cellular operators, including stateowned Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), offering services across the country. The mobile phone market is a rapidly growing and dynamic one. The strategy for all the companies is to consistently build on the three pillars of innovative products/services, technology and customer service and offer relevant value. With BSNL's launch, are the private players worried All the service providers are also getting more and more technology savvy to keep a pace with the changing scenario. Following is the List of major GSM service provider in the Country.
MAJOR MARKET PLAYERS
The major competitor of AIRTEL is Vodafone & BSNL on GSM network. Telecom is rolling out like never before. And that 100-million mark doesn't look too far away. The mobile subscriber base crossed 65 million in September 2005, an over-30 percent increase over the previous year.
AIRTEL
Last quarter, market leader Airtel (22 per cent market share, over 15 million mobile subscribers, source: Cellular Operators Association of India) witnessed its highest-ever net addition of 1.8 million mobile customers in a single quarter. And it's not slowing down; the company's busy rolling out networks, targeting its presence in over 4,500 towns and locations (from 3,200 in September) in the next three-four months.
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Vodafone
Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular licence for Mumbai. Vodafone Essar now has operations in 16 circles covering 86% of India's mobile customer base, with over 49.1 million customers With the acquisition of BPL Mobile, its subscriber base is increased to about 13.5 million later this month when the merger is formalized - pushing it up to the No. 2 slot. Of course, right now, the focus is more on its orange-pink transformation. FEW POSITIVE STEPS TAKEN BY BHARTI Group?s AIRTEL TO STAY AHEAD OF THE CONDITION ARE AS FOLLOWS:
USP’s
According to Sanjay Kapoor, Joint President, Mobility at Bharti the number of cellular subscribers in India will treble to 300 million in the next three to five years. In the year ended March 2005, Bharti increased its net ads by 67 per cent, compared with the market?s growth of 55 per cent. In the year to March 2006, Bharti?s new subscriber growth was 78 percent, versus 73 per cent in the broader market. Instead of funneling huge CAPEX on infrastructure, processes and people, he tested what he considered a “true utility computing model” by outsourcing the company?s call center and business IT systems, They have plans to outsource content and service delivery systems in the near term. To carry it out, they partnered with the likes of IBM, Nortel and Oracle and utilized different payment models from revenue per share to cost per all, depending on what works for the parties involved. AIRTEL has on-demand model, which has effectively supported the company?s rapid growth curve. Bharti now serves 18 million subscribers and targets to reach 100 million marks in four to five years? time. The company has also unified its fixed line, ISP, IDD and mobile business under one brand, Bharti Airtel. Now operators could test blended formula that puts into account revenue, churn rate, customer statistics as part of the equation and decide on which agreement with work best. They have ventured into Broadband for Internet Telephony as well as landline. 3G Network is to be started in two months time to make it more user-friendly and give users more value for their Money by showing Live streaming on Mobile itself.
AIRTEL IS A PAN INDIA MOBILE SERVISE PROVIDER WITH INFRASTRUCTURE AND FACILITY AND A WIDE VISION FOR GROWTH.
BEST
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SWOT ANALYSIS
Following is the SWOT Analysis of AIRTEL
STRENGTH ? Very focused on telecom. ? Leadership in fast growing cellular segment. ? Pan-India footprint. ? The only Indian operator, other than VSNL, that has an international submarine cable. ? The fast-expanding IPLC market. ? Latest technology and low cost advantage. ? Huge market.
WEAKNESS ? Price Competition from BSNL and MTNL ? Untapped Rural market
? Competition from other cellular and mobile operators. ? Saturation point in Basic telephony service
OPPORTUNITIES
THREATS
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STRENGTH
? VERY FOCUSED ON TELECOM Bharti Airtel is largely focused on the telecom; around 93% of the total revenue comes from telecom (Total telecom revenue Rs 3,326).
? LEADERSHIP IN FAST GROWING CELLULAR SEGMENT Airtel is holding leadership position in cellular market. Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 27,239,757 customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071 broadband & telephone customers. ? PAN INDIA FOOTPRINT Airtel offers the most expansive roaming network. Letting you roam anywhere in India with its Pan-India presence, and trot across the globe with International Roaming spread in over 240 networks. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 92 cities. ? THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING INTERNATIONAL SUBMARINE CABLES Airtel, the monopoly breaker shattered the Telecom monopoly in the International Long Distance space with the launch of International Submarine cable Network i2i jointly with Singapore Telecommunications Ltd. in the year 2002. This has brought a huge value to the IPLC customers, delivering them an option besides the incumbent carrier, to connect to the outside world.
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WEAKNESS
? Price Competition from BSNL and MTNL Airtel is tough competition from the operators like BSNL and MTNL as these two operators are offering services at a low rate. ? Untapped Rural market Although Airtel have strong Presence throughout the country but still they are far away from the Indian rural part and generally this part is covered by BSNL so indirectly Airtel is loosing revenue from the rural sector.
OPPORTUNITIES
? THE FAST EXTENDING IPLC MARKET An IPLC (international private leased circuit) is a point-to-point private line used by an organization to communicate between offices that are geographically dispersed throughout the world. An IPLC can be used for Internet access, business data exchange, video conferencing, and any other form of telecommunication. Airtel Enterprise Services and SingTel jointly provide IPLCs on the Network i2i. The Landing Station in Singapore is managed by SingTel and by Airtel in Chennai (India). Each Landing Station has Power Feeding Equipment, Submarine Line Terminating Equipment and SDH system to power the cable, add wavelengths and convert the STM-64 output to STM-1 data streams respectively. ? LATEST TECHNOLOGY AND LOW COST ADVANTAGE The costs of introducing cellular services for Airtel are marginal in nature, as it needs only to augment its cellular switch/equipment capacity and increase the number of base stations. The number of cities, towns and villages it has covered already works to its advantage as putting more base stations for cellular coverage in these areas comes with negligible marginal cost. Besides such cost advantages, it has also other cost advantages for the latest cellular technology. As a late entrant into the cellular market, it has dual advantage of latest technology with modern features, unlike other private cellular operators who started their service more than 4-5 years back and low capital cost due to advantages of large scale buying of cellular switch/equipment. ? HUGE MARKET The cellular telephony market is presently expanding at a phenomenal / whopping rate every year and there is still vast scope for Airtel to enter /expand in this market. Besides there is a vast rural segment where the cellular services have not made much headway and many customers are looking towards Airtel for providing the service to them. With its wide and extensive presence even in the remotest areas, Airtel poised to gain a big market share in this segment when it expands cellular services into the rural areas.
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THREATS
? COMPETITION FROM OTHER CELLULAR It is time for BSNL to improve/expand its cellular services. Fierce and cut-throat competition is already in place with the markets ever abuzz with several tariff reductions and announcement of attractive packages, trying to grab most of the „mind share? of the „king? - „the consumer?, whose benefits are increasing with passing of everyday. If BSNL is not innovative and agile, its cellular service will be a flop. It needs to be proactive with attractive packaging, pricing and marketing policies lest its presence in the market be treated with disdain by the private cellular companies. The launch of WLL services by Reliance Infocomm has aggravated the situation. ? MARKET MATURITY IN BASIC TELEPHONY SEGMENT Although Airtel entered in the basic telephony market it?s a biggest there for the company as the basic telephony market has reached.
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FUTURE OF TELECOM INDUSTRY IN INDIA
According to a Frost & Sullivan study for the period of 2002-2006, the telecommunication market in India is expected to increase by 13%annually. The teledensity in India is expected to increase to 10% because of the aggressive marketing efforts of telecom players. Major telecom players in India are MTNL. BSNL, Tata Indicom, Reliance Infocomm, Airtel (Bharti Telecom), Vodafone and BPL. According to Morgan Stanley's report, the telecom market in India (including basic, mobile. NLD. 1LD and data service) will increase to Rs. 81000 crore in 2007 from Rs.41.000 crore in 2002. According to report presented by Nasscom and Morgan Stanley, mobile service segment will be the fastest growing segment in India with revenues increasing to 12.41 billion dollars in 2004-05. The subscriber base of cellular service providers using WLL-CDMA technology will increase by 86.6% (amounting to 14 million subscribers) in 20044)5 whereas the increase will be only 40% (amounting to 35 million) in the subscriber base of providers using GSM technology. The revenue of the cellular operators using WLL-CDMA technology will increase to 681.32 million dollars. Telecom players are reducing their prices drastically to attract customers and increase their market share. The price war has also extended to NLD and 1LD services. Therefore, telecom players are concentrating on effective utilization of existing infrastructure rather than making investments on advanced technology and enhancing the quality of their services. According to a report, basic communication service providers are not able to meet the benchmark for quality set by TRA. For example According to TRAI, broadband refers to alwayson data connection that is able to support various interactive services, and has the capability of a minimum download speed of 255 Kilobits per second. However, few ISPs offer the service of this quality. In telecom industry, there have been many mergers, acquisitions and tie-ups between various service providers. The players seem to be consolidating to achieve economics of scale and improve their profitability. There may be further consolidation in the telecommunication market Tatas merged with Birla-AT&T. Bharti Telecom acquired Spice Telecom and Batata entered into strategic lie-up with BPL cellular. Further. Tata Teleservices acquired VSNL in 2002 and Tata's Idea bought Escotel. To enhance its basic telephone service business, Tata also tied up with Hughes Telecom. There may be further consolidation in the telecom industry leading to only a few major players operating in the industry.
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CONCLUSION
Clearly, a country?s ability to benefit from this revolution depends heavily on the modernity of Telecommunications network. Countries that can acquire and assess information on demand and then integrate them usefully into there industrial structure through modern telecommunications network is most likely to experience high rates of growth. Large-scale use of information and telecommunication technologies directly influences productivity, cost effectiveness and competitiveness in industries with high levels of product differentiations and low levels of unit prices. An advanced telecommunications system is equally important for services like banking, trading, retailing, transportation, and maintenance and insurance where information and real-time communications are vital to the production process. A reduction in costs of these services will directly enhance international competitiveness within the entire economic system.
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Questionnaire
Q. Now coming over to Marketing of Services. How do you identify your customer? Q. What are the further services you are focusing on to satisfy your customers? Q. What are the major threats from your competitors? Q. Would you like to low your current price for the rural people? Q. Which strategies you will follow to become the market leader?
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