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Presented By: -
Ambika Khanna
Arjun Trehan
Arpita Gupta
Chitra Chakrobarty
Divjot Singh
Mahendra Rathi
Nitesh Saboo
Nilanjan Maitra
Nishant Rana
Ramesh Ramanathan
Rahul Dwivedi
Ravish TandonNishita Saxena
Shikha Gupta
Sumit Chandoke
Strategic Management
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Indian Telecom Sector
Fastest Growing Sector CAGR 22% (2002-08)
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 23Circles
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Why Mad Rush forTelecom ??
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225.21
206140.3
98.47653
19.9
5.17.0
9.112.8
18.3
0
50
100
150
200
250
200203 200304 200405 200506 200607 200708 (as
of June
2007)
Subscribers(in
million)
0
4
8
1216
20
24
Teledensity(inpercent)
Telecom Subscriber Base Teledensity
Large number of
additions in telecomsubscribers
Low teledensity
(depicting largeuntapped potential)
Telecom
Advantage
CAGR40
.4%
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4
Go-ahead tothe CDMA
technology
INDI A
Privateplayers wereallowed inValue Added
Services
NationalTelecomPolicy (NTP)wasformulated
1992
1994
1997
Independentregulator,TRAI, wasestab
lished
NTP-99 led tomigration fromhigh-cost fixedlicense fee to low-cost revenue
sharing regime
1999
2000
2002
BSNL wasestablishedby DoT
ILDservices wasopened tocompetition
Internettelephonyinitiated
Reductionof licencefees
2003
Calling PartyPays (CPP) wasimplemented
UnifiedAccessLicensing(UASL)regime wasintroducedReference
Interconnect order wasissued
2004
Intra-circlemergerguidelines wereestablished
Broadbandpolicy 2004wasformulatedtargeting 20millionsubscribersby 2010
2005
FDI limit wasincreasedfrom 49 to 74percent
Attemptedto boostRural
telephony
2006
Number portabilitywas proposed(pending)
Decision on 3Gservices(awaited)
2007
Department of Telecommunication (DoT) is the main bodyformulating laws and various regulations for the Indian telecom
industry.
ILD International Long Distance
Evolution of Telecom In India
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Telecom Ecosystem
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Indian Telecom Industry Framework
Indian GovernmentBodies
Independent Bodies
WirelessPlanning andCoordination(WPC)
Department ofTelecommunications
TelecomCommission
Group onTelecom and IT(GoT-IT)
TelecomRegulatoryAuthority of India(TRAI)
Telecom DisputesSettlement andAppellate Tribunal(TDSAT)
Handles spectrumallocation andmanagement
DoT Licensee andfrequencymanagement fortelecom
Exclusive policy makingbody of DoT
Handles ad hocissues of thetelecom industry
Independent regulatorybody
Telecom disputessettlement body
They formulate various policies andpass laws to regulate the telecomindustry in India.
They undertake various researchactivities and monitor the quality ofservice provided in the Indian telecomindustry. They also provide variousrecommendations to improve the statusof telecom operations in India.
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Vision 2010
By 2010 Airtel will be the mostadmired brand in India:
Loved by more customers
Targeted by top talent
Benchmarked by more businesses
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Vision 2020
To build India's finest businessconglomerate by 2020
Supporting education ofunderprivileged children throughBharti Foundation
Strategic Intent:
To create a conglomerate of the future bybringing about Big Transformationsthrough Brave Actions.
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Mission
We at Airtel always think in freshand innovative ways about the needsof our customers and how we want
them to feel. We deliver what wepromise and go out of our way todelight the customer with a little bit
more
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Demand for VAS &Broadband services Among
Youth
28 % Urban Population
Rapid Urbanization
Rising Income level
Changing Demographics
Source: Mckinsey Report
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CDMA Already there arebig players in thissegment Reliance ,
Tata
3G Value added servicespotential still to betapped fully
2G/3G GSM Currently
commands 70% ofmobile subscribers inIndia
Technology
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I t t T
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Integrate Te ecomCompany(Product Portfolio)
Wireless Services
2G/3G
Rural Market
TelemediaServices
Fixed Line
Broadband
DTH
Enterprise Services
Carrier
Corporate
PassiveInfrastructure
Bharti Infratel Indus Tower
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Bharti AirtelCorporatestructure
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Wireless Market Share -India
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SWOT ANALYSISStrengths
Largest Telecom player in India subscriber baseover 100mn
Pan India Presence
High Pat Margins 24.8%
Low debt on books D/E of 0.3 Good ARPU of RS 199
Strategic Alliance with other stakeholders in BhartiAirtel include Sony-Ericsson, Nokia - and Sing Tel
Experience of launching 3G services in SriLanka High cash balance of $1bn
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SWOT ANALYSISWeakness
Tariff war at its peak
Increased competition due to new licenses &issuance of cross over technology
ARPU drop is a certainty, expect drop of about
20% M & A regulations restrict attractive synergies
DTH a big worry
Land Line & fixed line service are in a matured
stage
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SWOT ANALYSIS
Opportunity Lot of scope in rural areas
Current Tele-Density 37 is still low amongdeveloping countries
Low broadband penetration company wellequipped to take business to next level
Fast extending International Private Lease Circuitmarket, only player other than VSNL to have
International Submarine cable network
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SWOT ANALYSIS
Threat India centric - Major revenues from India
93% revenues from Bharti Televentures, only 7%from other group companies
Mobile Number Portability by Jan 2010 impacton margins
Inability to obtain 3G spectrum in key circle
Revision of spectrum usage charges
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BCG Matrix for Bharti Airtel
LOWHIGH
HIGH
LOW
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Porters 5 Forces
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1. Threat from Competition
Wireless Market Top 4 garnering 75%market share
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HIGH
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Competitor Analysis
OP Margin Net Margin
Company
Sep-07Sep-08Sep-072
Sep-083
Bharti 43.00% 38.00% 26.40% 19.30%
Rcom 37.90% 31.60% 23.90% 13.20%IDEA 32.80% 26.60% 14.10% 6.50%
MTNL 23.70% 22.90% 7.00% 6.80%
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Best OP Margins& Net Profit
Margins among
Peers
Source: CMIE November 2008
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AMOU & ARPU Stats
838
461
303
88Russia
China
India
USA
0
2
4
6
8
10
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
ARPU
(USD
perm
onth
GSM CDMA
Minutes of Usage per Month Mobile
Services
ARPU* in India Mobile Services
Despite a low teledensity of approximately
19 percent, India has the second highest
minutes of usage per month. This offers
huge growth opportunity to telecom
companies.
The declining ARPU implies that India Inc. is
tapping a large market at the bottom of the
pyramid by reducing tariffs; thereby,
enhancing affordability.
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2. Customer BargainingPower
Lack of differentiation among
Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have Ve
Impact
Businesses & Consumers
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HIGH
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Market Scenario
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Postpaid Vs Prepaid Customers & Market Share
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4. Threat of Substitutes
Landline
CDMA
Video Conferencing
VOIP - Skype, Gtalk, Yahoo Messenger
e-Mail & Social Networking Websites
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BROADBANDSERVICES
DIMINISHINGMARKET
HIGH
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5. Threat of New Entrants
Huge License Fees to be paid upfront & High
gestation period
Entry of MVNOs & WiMAX operators
Spectrum Availability & Regulatory Issues
Infrastructure Setup Cost - High
Rapidly changing technology
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LOW
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Airtel Strategy
MANTRA : Focus on Core Competenciesand Outsource the rest!
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Strategy
Airtel partnered with leading players intelecommunication players across theglobe.
It has managed to work with the best ofdomain specialists globally and emerge asa world class entity.
Partnerships include operational contracts
with marquee vendors and strategicinvestors ranging from private equityinvestors to global telecom giants.
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S i hi / Sh h ld
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Strategic partnerships/ Shareholders Technology and Capital
Warburg Pincus a celebrated PE investor held astake for a substantial period of time and wasinstrumental in providing Airtel support in its earlystages.
Vodafone was a strategic investor in Airtel.
Temasek the Singapore based investor holds aconsiderable stake in it.
Was also affiliated with Singapore Telecom.
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Operational Strategies.
Higher emphasis on ARPU/min stark contrastwith other operators who concentrate on ARPUonly.
Aim to be become a one stop shop for alltelecommunication services under the Bhartiumbrella.
Exploring opportunities in international markets.
Hived off tower infrastructure into a separateentity.
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Performance till date
Bharti Airtel has enjoyed an excellent run eversince the telecom sector opened.
It has managed to hold on to its leadershipposition inspite of the presence of other playerswith deep pockets Ambanis, Tatas, Birlas andVodafone.
Has coped well with regulatory changes.
Continues to attract and delight customers.
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Strategies
Translate its expertise in Indian markets toother emerging economies.
This could call for acquisitions globally.
Technology leadership is a must Airtelmust ensure that its reliance on GSMtechnology does not render it obsolete.
Indian market inspite of being the worldslargest is still not matured. Opportunitiesabound in the hinterland which must beexploited.
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To Diversify into new businesses inagriculture, financial services andretail business with world-class
partners
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Growth Factors
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Road Map Growth Path
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VPN &VoIP
WiMAX
3G
2G/2.5G
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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, Asit C. MehtaInvesment Intermediates Ltd.
Telecommunication Sector Report March 2009,CRISIL
Capitaline Database http://capitaline.com Indian Telecommunication Sector - August 2008,
IBEF Report Next Big Spenders Indian Middle Class,
Businessweek
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THANK YOU !!
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