Description
Bharti Airtel Limited, commonly known as Airtel, is an Indian multinational telecommunications services company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries in which it operates, providing 2G, 3G and 4G services depending upon the country of operation.
Annual Report of Airtel
By
• A.Vinaykumar
Bharti Airtel
• Largest Private Integrated Telecom Company in India • 3rd Largest Wireless Operator in the World • Largest & Fastest Growing Wireless Operator in India
• Largest Telecom Company listed on Indian Stock Exchange
GROUP 7 2
Integrated Telecom Company
? Wireless Services
– 2G/3G – Rural Market
? Enterprise Services
– Carrier – Corporate
? Telemedia Services
– Fixed Line – Broadband – DTH
? Passive Infrastructure – Bharti Infratel – Indus Tower
GROUP 7
3
Financials Snapshot
Details Customers Revenue EBITDA Cash Profit Net Income
Q2 FY 09 Y-on-Y 79.99 mn 57.00% $ 1,942 mn 42.30% $ 796 mn 36.50% $ 673 mn 20.30% $ 441 mn 26.80%
GROUP 7
4
Financial Snapshot - Ratios
Key Ratios - Airtel Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Debt-Equity Ratio 0.38 0.54 0.83 0.6 0.07 Long Term Debt-Equity Ratio 0.35 0.5 0.76 0.5 0.03 ROCE (%) 34.88 34.07 22.55 23.96 0.16 RONW (%) 39.53 43.04 31.82 23.88 -0.27
http://www.capitaline.com
Key Ratios - Industry Debt-Equity Ratio Long Term Debt-Equity Ratio ROCE (%) RONW (%)
http://www.capitaline.com
2007 2006 2005 0.35 0.21 0.27 0.3 0.19 0.24 9.72 10.28 8.25 10.11 10.62 10.87
2004 0.34 0.29 8.43 6.76
2003 0.36 0.33 3.07 0.18
GROUP 7
5
Vision 2011
• By 2011 Airtel will be the most admired brand in India:
– Loved by more customers – Targeted by top talent – Benchmarked by more businesses
Vision 2020
• To build 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.”
Mission
• “ We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more”
Core Values
• Empowering People - to do their best • Being Flexible - to adapt to the changing environment and evolving customer needs • Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit • Openness and transparency - with an innate desire to do good • Creating Positive Impact – with a desire to create a meaningful difference in society.
Objectives/Goals
• To undertake transformational projects that have a positive impact on the society and contribute to the nation building process. • To Diversify into new businesses in agriculture, financial services and retail business with world-class partners • To lay the foundation for building a “conglomerate” of future
Indian Telecom Sector
• Fastest Growing Sector – CAGR 22% (2002-07) • Second Largest Telecom Market
– – – – Lowest tariff charges in the world Wireless Subscribers – 315.3 Mn Wireline Subscribers – 38.4 Mn Teledensity – 30.6
• 23 Circles - 4 Categories ( Metro, A, B & C) • Bharti Airtel – Largest player with presence in 23 Circles
GROUP 7
11
Why Mad Rush for Telecom ??
Large number of additions in telecom subscribers
Low teledensity (depicting large untapped potential)
Telecom Advantage
200 150 100 5.1 50 53 0 2002–03 2003–04 2004–05 2005–06 76 98.4 7.0 140.3 12.8 9.1
18.3
19.9 20 16 225.21 12 8 4 0
206
Telecom Subscriber Base
2006–07 2007–08 (as of June 2007) Teledensity
GROUP 7
Teledensity (in percent)
250
24
Subscribers (in million)
12
Evolution of Telecom In India
Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.
BSNL was established by DoT ILD services was opened to competition Go-ahead to the CDMA technology 2002 2000 Internet telephony initiated Reduction of licence fees Number portability Intra-circle merger was proposed guidelines were established Attempted to (pending) boost Rural telephony 2004 2005 2006 Broadband policy 2004 was formulated— targeting 20 million subscribers by 2010 2007
Private players were allowed in Value Added Services
Independent regulator, TRAI, was established
Calling Party Pays (CPP) was implemented 2003
INDIA
1994
1992 1997
1999
National Telecom Policy (NTP) was formulated
Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued
NTP-99 led to migration from highcost fixed license fee to low-cost revenue sharing regime
Decision on 3G services (awaited) FDI limit was increased from 49 to 74 percent
ILD – International Long Distance
GROUP 7
13
Telecom Ecosystem
Indian Telecom Industry Framework
Indian Government Bodies
Independent Bodies
They formulate various policies and pass laws to regulate the telecom industry in India.
Wireless Planning and Coordination (WPC)
Department of Telecommunications
Handles spectrum allocation and management
They undertake various research activities and monitor the quality of service provided in the Indian telecom industry. They also provide various recommendations to improve the status of telecom operations in India. Telecom Regulatory Authority of India (TRAI)
DoT – Licensee and frequency management for telecom
Exclusive policy making body of DoT
Independent regulatory body
Telecom Commission
Group on Telecom and IT (GoT-IT)
Telecom Disputes Settlement and Appellate Tribunal (TDSAT)
Telecom disputes settlement body
Handles ad hoc issues of the telecom industry
GROUP 7 14
Regulatory Framework
? 74% FDI Investment
ADC
Regulation
? Lack of Transparency in Spectrum & License Allocation
USO
UASL
? 3G Policy & MNP still Pending
GROUP 7
15
Declinging Tariff – Rising Revenue
Source: TRAI Report
GROUP 7
16
Economic Factors
GDP growth rate - Averaged around 7.9 % from 2002-2009
Rising Tele-density – Target of 55% by 2011
Growing per capita income/disposable Income ?Rs 12000 in 2002 to Rs 33000 in 2008) Falling Handset Prices Moderate inflation levels which were prevalent during the past 7 years – around 5-6%
Changing Demographics
?Demand for VAS & Broadband services Among Youth ?28 % Urban Population ?Rapid Urbanization ?Rising Income level
Source: Mckinsey Report
Technology
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
Porter’s Generic Strategy
GROUP 7
20
Porter’s 5 Forces
Customer Bargaining Power
Threat of New Entrants
Threat from Competition
Threat of Substitutes
Supplier Bargaining Power
GROUP 7
21
1. Threat from Competition
Wireless Market – Top 4 garnering 75% market share
HIGH
GROUP 7
22
Competitor Analysis
Competitor Analysis
40.00% 30.00% 20.00% 10.00% 0.00% Bharti Rcom IDEA MTNL
OP Margin
Net Margin
Best OP Margins & Net Profit Margins among Peers
Company Sep-07
Bharti Rcom IDEA MTNL 43.00% 37.90% 32.80% 23.70%
Sep-08
38.00% 31.60% 26.60% 22.90%
Sep-072
26.40% 23.90% 14.10% 7.00%
Sep-083
19.30% 13.20% 6.50% 6.80%
Source: CMIE November 2008
GROUP 7
23
AMOU & ARPU Stats
Minutes of Usage per Month – Mobile Services
USA
838
India
461
China
303
Despite a low teledensity of approximately 19 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity to telecom companies.
Russia
88
ARPU* in India – Mobile Services
ARPU (USD per month)
10 8 6 4 2 0 Q1 2006 Q2 2006 Q3 2006 GSM CDMA Q4 2006 Q1 2007
The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.
GROUP 7
24
2. Customer Bargaining Power
? Lack of differentiation among Service Providers ? Cut throat Competition
HIGH
? Low Switching Costs
? Number Portability will have –Ve Impact
? Businesses & Consumers
GROUP 7
25
Market Scenario
Postpaid Vs Prepaid Customers & Market Share
GROUP 7
26
3. Suppliers Bargaining Power
LOW
GROUP 7
27
4. Threat of Substitutes
? Landline
? CDMA
? Video Conferencing
DIMINISHING MARKET
HIGH
? VOIP - Skype, Gtalk, Yahoo Messenger ? e-Mail & Social Networking Websites
BROADBAND SERVICES
GROUP 7
28
5. Threat of New Entrants
? Huge License Fees to be paid upfront & High gestation period ? Entry of MVNOs & WiMAX operators
LOW
? Spectrum Availability & Regulatory Issues
? Infrastructure Setup Cost - High ? Rapidly changing technology
GROUP 7
29
SWOT
Strengths • Largest Telecom Player in India - ~80Mn, 22.6% • Strategic Alliance with other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel • Pan India Presence • Strong Financials Weakness • Outsourcing of Core Systems • Lack of emerging market investment opportunity
Source: CMIE Report NOV 08
GROUP 7
30
SWOT
Opportunities • Bharti Infratel – Cutting Down cost in Rural area • Match Box Strategy – Scale of Penetration • Current Tele-Density – 30.6 is still low among developing countries • Low Broadband Penetration, Rural Telephony Threats • India centric – Major revenues from India • Falling ARPU & AMOU • Intense Competition & Shortage of Bandwidth
GROUP 7
31
BCG Matrix for Bharti Airtel
Stars
Mobile Services
?
Retail Insurance
DTH & IPTV Broad Band
Cows
Dogs
• Fixed Line Services
LOW
HIGH
GROUP 7
LOW
32
GE Matrix Classification
Business Strength
Strong High Medium Weak
5.00
Market Attractiveness
3.67
Medium
2.33
Low
5.00
3.67
GROUP 7
2.33
1.00
33
Factors Underlying Market Attractiveness
Factors
Resource availability Overall market size Annual Market growth rate
Weight
0.20 0.15 0.20
Rating (1 –5)
3.5 4 4
Value = (Weight * Rating)
0.7 0.6 0.8
Profitability
Competitive intensity Technological requirements
Total
0.15
0.10 0.20 1.0
4
4 4.5
0.6
0.4 0.9 4.0
GROUP 7
35
Factors Underlying Market/Biz Strength
Factors Weight Rating (1 –5)
5 3.5 4 3 3 4.5 4.5 3
Value = (Weight * Rating)
0.75 0.35 0.40 0.45 0.45 0.45 0.45 0.45 3.75
36
Market share New product development Brand Image Sales force Pricing Distribution capacity Product quality R&D Performance
Total
0.15 0.10 0.10 0.15 0.15 0.10 0.10 0.15 1.0
GROUP 7
Airtel’s GE Matrix
High High
Business Strengths
Airtel Enterprise
Low 5.00
Attractive
Mobile
Market Attractiveness
3.67 TeleMedia
Moderate Attractive
2.33
Unattractive
3.67
GROUP 7
Low 5.00
2.33
1.00
37
Airtel – Strategy
MANTRA : Focus on Core Competencies and Outsource the rest!
Product Innovation
Pricing
Core Competencies
VAS
Marketing and Branding
Strategy
• Airtel partnered with leading players in telecommunication players across the globe. • It has managed to work with the best of domain specialists globally and emerge as a world class entity. • Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.
Strategic partnerships/ Shareholders – Technology and Capital
• Warburg Pincus – a celebrated PE investor held a stake for a substantial period of time and was instrumental in providing Airtel support in its early stages. • Vodafone was a strategic investor in Airtel. • Temasek – the Singapore based investor holds a considerable stake in it. • Was also affiliated with Singapore Telecom.
Outsourcing deals in 2004
• Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles. • IBM was given the mandate to handle the back office requirements of Airtel’s presence in India
Operational Strategies.
• Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only. • Aim to be become a one stop shop for all telecommunication services under the Bharti umbrella. • Exploring opportunities in international markets. • Hived off tower infrastructure into a separate entity.
Performance till date
• Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened. • It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone. • Has coped well with regulatory changes. • Continues to attract and delight customers.
Future Strategies
• Translate its expertise in Indian markets to other emerging economies. • This could call for acquisitions globally. • Technology leadership is a must – Airtel must ensure that its reliance on GSM technology does not render it obsolete. • Indian market inspite of being the worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.
Growth Factors
Infrastructure Sharing
Rural Telephony
Growth
Factors
Managed Services
Enterprise Telecom
GROUP 7
45
Road Map – Growth Path
VPN & VoIP
WiMAX
3G
2G/2.5G
GROUP 7
46
Airtel - Strategy
Product Innovation
Pricing
Core Competencies
VAS
Marketing and Branding
MANTRA : Focus on Core Competencies and Outsource the rest!
References
• Bharti Airtel, Annual Report -2009 • Investors presentation, Bharti Airtel Limited, November 2009 • Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November 2009 • Analyst Report – Bharti Airtel, Asti C. Mehta Investment Intermediates Ltd. • Telecommunication Sector Report – March 2009, CRISIL • Capitalize Database http://capitaline.com • Indian Telecommunication Sector - August 2008, IBEF Report • “Next Big Spenders – Indian Middle Class”, Business week
GROUP 7 48
THANK YOU !!
GROUP 7
49
doc_165047440.ppt
Bharti Airtel Limited, commonly known as Airtel, is an Indian multinational telecommunications services company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries in which it operates, providing 2G, 3G and 4G services depending upon the country of operation.
Annual Report of Airtel
By
• A.Vinaykumar
Bharti Airtel
• Largest Private Integrated Telecom Company in India • 3rd Largest Wireless Operator in the World • Largest & Fastest Growing Wireless Operator in India
• Largest Telecom Company listed on Indian Stock Exchange
GROUP 7 2
Integrated Telecom Company
? Wireless Services
– 2G/3G – Rural Market
? Enterprise Services
– Carrier – Corporate
? Telemedia Services
– Fixed Line – Broadband – DTH
? Passive Infrastructure – Bharti Infratel – Indus Tower
GROUP 7
3
Financials Snapshot
Details Customers Revenue EBITDA Cash Profit Net Income
Q2 FY 09 Y-on-Y 79.99 mn 57.00% $ 1,942 mn 42.30% $ 796 mn 36.50% $ 673 mn 20.30% $ 441 mn 26.80%
GROUP 7
4
Financial Snapshot - Ratios
Key Ratios - Airtel Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Debt-Equity Ratio 0.38 0.54 0.83 0.6 0.07 Long Term Debt-Equity Ratio 0.35 0.5 0.76 0.5 0.03 ROCE (%) 34.88 34.07 22.55 23.96 0.16 RONW (%) 39.53 43.04 31.82 23.88 -0.27
http://www.capitaline.com
Key Ratios - Industry Debt-Equity Ratio Long Term Debt-Equity Ratio ROCE (%) RONW (%)
http://www.capitaline.com
2007 2006 2005 0.35 0.21 0.27 0.3 0.19 0.24 9.72 10.28 8.25 10.11 10.62 10.87
2004 0.34 0.29 8.43 6.76
2003 0.36 0.33 3.07 0.18
GROUP 7
5
Vision 2011
• By 2011 Airtel will be the most admired brand in India:
– Loved by more customers – Targeted by top talent – Benchmarked by more businesses
Vision 2020
• To build 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.”
Mission
• “ We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more”
Core Values
• Empowering People - to do their best • Being Flexible - to adapt to the changing environment and evolving customer needs • Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit • Openness and transparency - with an innate desire to do good • Creating Positive Impact – with a desire to create a meaningful difference in society.
Objectives/Goals
• To undertake transformational projects that have a positive impact on the society and contribute to the nation building process. • To Diversify into new businesses in agriculture, financial services and retail business with world-class partners • To lay the foundation for building a “conglomerate” of future
Indian Telecom Sector
• Fastest Growing Sector – CAGR 22% (2002-07) • Second Largest Telecom Market
– – – – Lowest tariff charges in the world Wireless Subscribers – 315.3 Mn Wireline Subscribers – 38.4 Mn Teledensity – 30.6
• 23 Circles - 4 Categories ( Metro, A, B & C) • Bharti Airtel – Largest player with presence in 23 Circles
GROUP 7
11
Why Mad Rush for Telecom ??
Large number of additions in telecom subscribers
Low teledensity (depicting large untapped potential)
Telecom Advantage
200 150 100 5.1 50 53 0 2002–03 2003–04 2004–05 2005–06 76 98.4 7.0 140.3 12.8 9.1
18.3
19.9 20 16 225.21 12 8 4 0
206
Telecom Subscriber Base
2006–07 2007–08 (as of June 2007) Teledensity
GROUP 7
Teledensity (in percent)
250
24
Subscribers (in million)
12
Evolution of Telecom In India
Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.
BSNL was established by DoT ILD services was opened to competition Go-ahead to the CDMA technology 2002 2000 Internet telephony initiated Reduction of licence fees Number portability Intra-circle merger was proposed guidelines were established Attempted to (pending) boost Rural telephony 2004 2005 2006 Broadband policy 2004 was formulated— targeting 20 million subscribers by 2010 2007
Private players were allowed in Value Added Services
Independent regulator, TRAI, was established
Calling Party Pays (CPP) was implemented 2003
INDIA
1994
1992 1997
1999
National Telecom Policy (NTP) was formulated
Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued
NTP-99 led to migration from highcost fixed license fee to low-cost revenue sharing regime
Decision on 3G services (awaited) FDI limit was increased from 49 to 74 percent
ILD – International Long Distance
GROUP 7
13
Telecom Ecosystem
Indian Telecom Industry Framework
Indian Government Bodies
Independent Bodies
They formulate various policies and pass laws to regulate the telecom industry in India.
Wireless Planning and Coordination (WPC)
Department of Telecommunications
Handles spectrum allocation and management
They undertake various research activities and monitor the quality of service provided in the Indian telecom industry. They also provide various recommendations to improve the status of telecom operations in India. Telecom Regulatory Authority of India (TRAI)
DoT – Licensee and frequency management for telecom
Exclusive policy making body of DoT
Independent regulatory body
Telecom Commission
Group on Telecom and IT (GoT-IT)
Telecom Disputes Settlement and Appellate Tribunal (TDSAT)
Telecom disputes settlement body
Handles ad hoc issues of the telecom industry
GROUP 7 14
Regulatory Framework
? 74% FDI Investment
ADC
Regulation
? Lack of Transparency in Spectrum & License Allocation
USO
UASL
? 3G Policy & MNP still Pending
GROUP 7
15
Declinging Tariff – Rising Revenue
Source: TRAI Report
GROUP 7
16
Economic Factors
GDP growth rate - Averaged around 7.9 % from 2002-2009
Rising Tele-density – Target of 55% by 2011
Growing per capita income/disposable Income ?Rs 12000 in 2002 to Rs 33000 in 2008) Falling Handset Prices Moderate inflation levels which were prevalent during the past 7 years – around 5-6%
Changing Demographics
?Demand for VAS & Broadband services Among Youth ?28 % Urban Population ?Rapid Urbanization ?Rising Income level
Source: Mckinsey Report
Technology
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
Porter’s Generic Strategy
GROUP 7
20
Porter’s 5 Forces
Customer Bargaining Power
Threat of New Entrants
Threat from Competition
Threat of Substitutes
Supplier Bargaining Power
GROUP 7
21
1. Threat from Competition
Wireless Market – Top 4 garnering 75% market share
HIGH
GROUP 7
22
Competitor Analysis
Competitor Analysis
40.00% 30.00% 20.00% 10.00% 0.00% Bharti Rcom IDEA MTNL
OP Margin
Net Margin
Best OP Margins & Net Profit Margins among Peers
Company Sep-07
Bharti Rcom IDEA MTNL 43.00% 37.90% 32.80% 23.70%
Sep-08
38.00% 31.60% 26.60% 22.90%
Sep-072
26.40% 23.90% 14.10% 7.00%
Sep-083
19.30% 13.20% 6.50% 6.80%
Source: CMIE November 2008
GROUP 7
23
AMOU & ARPU Stats
Minutes of Usage per Month – Mobile Services
USA
838
India
461
China
303
Despite a low teledensity of approximately 19 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity to telecom companies.
Russia
88
ARPU* in India – Mobile Services
ARPU (USD per month)
10 8 6 4 2 0 Q1 2006 Q2 2006 Q3 2006 GSM CDMA Q4 2006 Q1 2007
The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.
GROUP 7
24
2. Customer Bargaining Power
? Lack of differentiation among Service Providers ? Cut throat Competition
HIGH
? Low Switching Costs
? Number Portability will have –Ve Impact
? Businesses & Consumers
GROUP 7
25
Market Scenario
Postpaid Vs Prepaid Customers & Market Share
GROUP 7
26
3. Suppliers Bargaining Power
LOW
GROUP 7
27
4. Threat of Substitutes
? Landline
? CDMA
? Video Conferencing
DIMINISHING MARKET
HIGH
? VOIP - Skype, Gtalk, Yahoo Messenger ? e-Mail & Social Networking Websites
BROADBAND SERVICES
GROUP 7
28
5. Threat of New Entrants
? Huge License Fees to be paid upfront & High gestation period ? Entry of MVNOs & WiMAX operators
LOW
? Spectrum Availability & Regulatory Issues
? Infrastructure Setup Cost - High ? Rapidly changing technology
GROUP 7
29
SWOT
Strengths • Largest Telecom Player in India - ~80Mn, 22.6% • Strategic Alliance with other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel • Pan India Presence • Strong Financials Weakness • Outsourcing of Core Systems • Lack of emerging market investment opportunity
Source: CMIE Report NOV 08
GROUP 7
30
SWOT
Opportunities • Bharti Infratel – Cutting Down cost in Rural area • Match Box Strategy – Scale of Penetration • Current Tele-Density – 30.6 is still low among developing countries • Low Broadband Penetration, Rural Telephony Threats • India centric – Major revenues from India • Falling ARPU & AMOU • Intense Competition & Shortage of Bandwidth
GROUP 7
31
BCG Matrix for Bharti Airtel
Stars
Mobile Services
?
Retail Insurance
DTH & IPTV Broad Band
Cows
Dogs
• Fixed Line Services
LOW
HIGH
GROUP 7
LOW
32
GE Matrix Classification
Business Strength
Strong High Medium Weak
5.00
Market Attractiveness
3.67
Medium
2.33
Low
5.00
3.67
GROUP 7
2.33
1.00
33
Factors Underlying Market Attractiveness
Factors
Resource availability Overall market size Annual Market growth rate
Weight
0.20 0.15 0.20
Rating (1 –5)
3.5 4 4
Value = (Weight * Rating)
0.7 0.6 0.8
Profitability
Competitive intensity Technological requirements
Total
0.15
0.10 0.20 1.0
4
4 4.5
0.6
0.4 0.9 4.0
GROUP 7
35
Factors Underlying Market/Biz Strength
Factors Weight Rating (1 –5)
5 3.5 4 3 3 4.5 4.5 3
Value = (Weight * Rating)
0.75 0.35 0.40 0.45 0.45 0.45 0.45 0.45 3.75
36
Market share New product development Brand Image Sales force Pricing Distribution capacity Product quality R&D Performance
Total
0.15 0.10 0.10 0.15 0.15 0.10 0.10 0.15 1.0
GROUP 7
Airtel’s GE Matrix
High High
Business Strengths
Airtel Enterprise
Low 5.00
Attractive
Mobile
Market Attractiveness
3.67 TeleMedia
Moderate Attractive
2.33
Unattractive
3.67
GROUP 7
Low 5.00
2.33
1.00
37
Airtel – Strategy
MANTRA : Focus on Core Competencies and Outsource the rest!
Product Innovation
Pricing
Core Competencies
VAS
Marketing and Branding
Strategy
• Airtel partnered with leading players in telecommunication players across the globe. • It has managed to work with the best of domain specialists globally and emerge as a world class entity. • Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.
Strategic partnerships/ Shareholders – Technology and Capital
• Warburg Pincus – a celebrated PE investor held a stake for a substantial period of time and was instrumental in providing Airtel support in its early stages. • Vodafone was a strategic investor in Airtel. • Temasek – the Singapore based investor holds a considerable stake in it. • Was also affiliated with Singapore Telecom.
Outsourcing deals in 2004
• Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles. • IBM was given the mandate to handle the back office requirements of Airtel’s presence in India
Operational Strategies.
• Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only. • Aim to be become a one stop shop for all telecommunication services under the Bharti umbrella. • Exploring opportunities in international markets. • Hived off tower infrastructure into a separate entity.
Performance till date
• Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened. • It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone. • Has coped well with regulatory changes. • Continues to attract and delight customers.
Future Strategies
• Translate its expertise in Indian markets to other emerging economies. • This could call for acquisitions globally. • Technology leadership is a must – Airtel must ensure that its reliance on GSM technology does not render it obsolete. • Indian market inspite of being the worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.
Growth Factors
Infrastructure Sharing
Rural Telephony
Growth
Factors
Managed Services
Enterprise Telecom
GROUP 7
45
Road Map – Growth Path
VPN & VoIP
WiMAX
3G
2G/2.5G
GROUP 7
46
Airtel - Strategy
Product Innovation
Pricing
Core Competencies
VAS
Marketing and Branding
MANTRA : Focus on Core Competencies and Outsource the rest!
References
• Bharti Airtel, Annual Report -2009 • Investors presentation, Bharti Airtel Limited, November 2009 • Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November 2009 • Analyst Report – Bharti Airtel, Asti C. Mehta Investment Intermediates Ltd. • Telecommunication Sector Report – March 2009, CRISIL • Capitalize Database http://capitaline.com • Indian Telecommunication Sector - August 2008, IBEF Report • “Next Big Spenders – Indian Middle Class”, Business week
GROUP 7 48
THANK YOU !!
GROUP 7
49
doc_165047440.ppt