Strategic Management Airtel and Idea

Telecommunication Industry

The era of telecommunication in India started from the year of 1851 with the initiative
from Government of India near the city of Calcutta now known as Kolkata. However the rapid
growth in telecom industry came into picture after the year of 2002-03 onwards as the more
number of service providers came into existence. Since 2002-03 there is rapid change in the
technology and increase in numbers of subscribers in the Indian telecom industry till now. The
following are the milestones in the Indian telecom industry.
 1851 First operational land lines were laid by the government near Calcutta.
 1881 Telephone services introduced in India.
 1883 Merger with postal system.
 1923 Formation of Indian radio Telegraph Company.
 1932 Merger of ETC and IRT into Indian Radio and Cable Communication Company.
 1947 Nationalization of all foreign telecommunication companies to form the posts,
telephone and telegraph, a monopoly run by the Governments ministry of
communications.
 1985 Department of telecommunication established an exclusive provider of domestic
 Long-distance services that would be its own regulator.
 1986 Conversion of dot into two wholly government – owned companies the VSNL for
International telecommunication and MTNL for services in metropolitan areas.
 1997 Telecom regulatory authority created.

Indian Telecom Industry Features
 Building a modern and efficient infrastructure ensuring greater competitive environment
 Strengthening research and development for manufacturing, value added services.
 Efficient and transparent spectrum management
 To accelerate broadband penetration
 Universal service to all uncovered areas including rural areas.
 Enabling Indian telecom companies to become global players.

Global Business School | Strategic Management | 1

Major Players in Telecom Industry

Rank Operator Market Share %

1 Bharti Airtel 24.5%
2 Vodafone 19.8%
3 Idea Cellular 15.6%
4 Reliance Communications 14.6%
5 BSNL + MTNL 7.9%
6 TATA 6.9%
7 Aircel 5.5%
8 Uninor 3.6%
9 Others 1.6%

Total 100%


Market Growth
Indian telecom industry is characterized by a large subscriber base, substantial
Teledensity but low revenues per user (ARPU)

Wireless Subscribers (Million) CAGR +34.5%
1000
900
800
700
600
500
934
400 852
300 636
200 427
287
100
0
2008 2009 2010 2011 2012

(Source: Indian Telecom Market Overview Report Nov 2012 – Zinnov)

Wireline Subscribers (Millions) CAGR -4%
45
40
35
30
25
20 39 38 36 34
15 31
10
5
0
2008 2009 2010 2011 2012



Revenue of Telecom Industry (USD Billion) CAGR +4.88 %
45
40
35
30
25
20 37.4 38.4
32 31.7 33.8
15
10
5
0
2008 2009 2010 2011 2012


Teledensity in India CAGR +12.8 %
90.00%
80.00%
70.00%
60.00%
50.00%
40.00% 79.60%
73.90%
30.00% 56.60%
20.00% 39.90%
28.30%
10.00%
0.00%
2008 2009 2010 2011 2012



Average Revenue Per User (USD) CAGR -23.5 %
7

6

5

4

3 5.9
2 3.8
2.6
1 2.1 1.9
0
2008 2009 2010 2011 2012


Global Comparison of ARPU (USD)
50
45
40
35
30
25
46.5
20
15 32
10
5 8.3 1.9
0
US UK China India


 More than 3-fold increase in subscribers since 2008
 High Tele-density of 79.6% in 2012
 64.4% of the current subscribers are urban
 Indian Telecom ARPU is the lowest amongst the lowest in the world.


ARPU Spending on Voice (USD Bn)
2.5

2

1.5

1 2.04
1.5 1.44 1.27
0.5

0
2009 2010 2011 2012


Average Spending on MVAS (Mobile Value
Added Service) in USD Bn
0.6

0.5
0.4

0.3
0.48
0.2 0.39
0.31 0.34
0.1
0
2009 2010 2011 2012


Declining voice Carriers increasingly
Growing smartphone
revenue straining focusing on adding
adaption & increasing
ARPU, However per value added services
mobile penetration
user spending on to thier portfolio to
further pushing MVAS
MVAS increasing supplement revenues


Indian MVAS (Mobile Value Added Service)
Market Size (USD Bn)
8
7
6
5
4
6.8
3
5.1
2 4.3
3.1
1 1.9
0
2009 2010 2011 2012 2013 (E)


Revenue Share of MVAS Categories
Mobile App
10%
Education
7%
CRBT
32%

Games
8%

Health
7%

News SMS Based
14% 17%
Governance
5%


Telecom companies are also aggressively focusing on the fast growing data center market
in India

Data Center Market (USD bn)
7
6
5
4
3 5.8
2 4
1 2.6
1.7
0
2010 2011 2012 2013 (E)

Competitors Cost Components Cost Share
Tata Communications Power 38%
Ctrls Maintenance 21%
NetMagic Bandwidth 12%
Reliance IDC Equipment 12%
Airtel Facility 10%
Wipro Manpower 7%
Sify TOTAL 100

Cost Components
Manpower
7%
Facility
10%

Power
Equipment 38%
12%

Bandwidth
12%
Maintaince
21%


Telecom Value Chain

Subscription
Telecom Network Network Content
& Devices Subscribers
Infrastructure Equipment Operator Portals
Resellers

GTL - Nokia- Bharti Airtel Company Facebook
Infrastructure Siemens Vodafone Outlet Rediff
Indus Towers Huawei Reliance Dealers
Tata Quippo Ericsson Idea Blackberry
App stores

Core IT Requirements of Telecom Industry

Network Enterprise Partner Customer
Management Management Management Management

•Fault Management • Finance & •Partner Network •Service Activation
•Config. Accounting Management •Revenue and
Management •HR Billing
•Account •Sales & Operation •Supply Chain Management
Management Planning Management •Customer Analytics
•Performance •Facility •Contacts
Management Management •Revenue Fraud Centers/Call
•Security •DBMS3 Management Centers


PEST Analysis

Political Factors Economical Factors Socio – Cultural Technological Factors
Factors

Consumer Money Supply Lifestyle Changes Total Government
Protection Law GDP Trends Career Spending For Research
Government Interest Rates Expectation & Development
Policy Inflation Rates Consumer Focus of Technological
Antitrust Imports Activism Efforts
Regulations Price Control Growth Rate Of New Products
Protection Laws Population Internet Availability
Special
Incentives
Stability Of
Government


Economical Trends
Following are the Economical trends have huge impact on telecommunication Industry

 Money Supply
 GDP trends
 Interest Rates
 Inflation Rates
 Imports
 Price control

Money Supply (Investment from MNC’s to Indian Telecommunication Industry)
The Russian government has picked up equity amounting to US$ 670 million-US$ 700
million in Sistema Shyam TeleServices Ltd (SSTL), a joint venture between Russia-based
telecom Sistema and Shyam Group in India. Sistema holds 56.68 percent stake in Sistema Shyam
Teleservice Ltd. Russian Government holds 17.14 percent stake in SSTL.

Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech
Wireless for US$ 1.23 billion.

Japanese telecom major NTT DoCoMo acquired a 27.31 per cent equity capital of Tata
Teleservices for about US$ 2.6 billion in November 2008.

Bahrain's Batelco has signed a deal to buy 49 per cent in Chennai-based S-Tel, a GSM
service provider, for US$ 225 million.

BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16
billion in its WiMax project.

After the cancellation of license of Uninor, It‘s partner Telenor has signed a partnership
agreement with an Lakshdeep Investment & Finance which will contribute 26% in the entity and
will allow Telenor to participate in the forth coming mobile license auction.


India’s GDP
Telecommunication is an enabler of business, an increase in the number of people using
phones results in an increase in GDP. The Gross Domestic Product (GDP) in India expanded to
5.5 percent in the second quarter of 2012 and Telecommunication industry has contributed 13.6
% to the total GDP.

India’s Interest Rate
Rising interest rates have had an adverse effect on telecommunication industry stock
prices. Interest rates rise, the cost of borrowing money rises affecting the telecommunication
Industries profit after tax (PAT). The Interest rate for the year 2012 has remained at 8%.


Imports
Mobile phones shipment to India during the first half of 2012 crossed 10 crore units,
registering a growth of 16.6% over the same period over the previous years, according to Cyber
Media Research (CMR). High number of mobile phones will result in high number of
consumption of mobile simcards which will again result in increase revenue and growth for the
Industry.

India Stock Market (Sensex)

Stocks in India had a positive performance during the last year. India Stock Market
(Sensex) rallied 900 points or 4.61 percent during the last one year.


Price war in Telecommunication Industry
As competition has mounted, the companies' share prices have taken a hit, with market
leaders Bharti Airtel sliding -31.91 percent, Idea Cellular falling -11.57 percent and Reliance
Communications tumbling -28.86 percent in the past one year.

Bharti Airtel


Idea Cellular

Reliance Communication


Technological Factors
Following are the Technological factor trends that have huge impact on
telecommunication Industry
 Total Government spending for Research & Development
 Focus of Technological efforts
 New Products
 Internet availability

Total Government spending for Research & Development
Clearing the differences in sec 10AA of the SEZ Act and the union minister‘s reiteration
on the significance of SEZs will help the Indian telecommunications industry to take forward its
SEZ plans throughout the country.The enhanced deduction from 150-200% is also a positive step
on R&D investment to boost the R&D segment in the country. The estimated budget for telecom
for the year 2009-10 was Rs 16,731 crore, and the revised one was Rs 16,099 crore, for the year
2010.

Focus of Technological efforts
Most Indian service Providers are focusing on 4G technologies to enhance data Rate as
100 Mbs for single users which eventually helping TRAI to generate more revenue .

New Products
Smart Phones (Android OS 4.0, iPhone, Windows) Galaxy Tabs , HSDPA Modem, Black
berry Application are helping service providers to attract more subscribers eventually increase in
market share.

Internet Availability
BSNL, RCOM, Airtel are providing DSL services to rural and urban areas in India. These
services include IPTV, high-definition TV, 3-D TV, video-on-demand, bandwidth-on-demand
and videoconferencing. The service was built on Gigabit passive optical network (GPON)
technology by using Optical N/W.


Political Factors
Following Political Factors have huge impact on telecommunication Industry
 Consumer Protection Law
 Government Policy
 Antitrust Regulations
 Protection Laws
 Special Incentives
 Stability of government

Consumer Protection Law
On September 2009, The Supreme Court stated that Telecommunication complaint‘s
cannot be filed in Consumer Courts, as there is a special provision in Indian Telegraph Act,
Clause 7B. Hence all the Telephone complaints are considered into arbitration rather than
Consumer Courts with the help of Consumer Protection Act.
The customer faced many difficulties by this law as the arbitration was handled by the
Department of Telecom, which was difficult to approach and follow the rules by the customers.
According to the Department of Telecommunication for the past one year there were no
complaints by the customers.
On February 2012, The Supreme Court re-established the Consumer Protection Court
where in The Consumer Protection Act was an additional facility not an alternative one, wherein
the consumer can approach the Consumer Court.
All the Telecom players are licenses not the Telecom Authorities, Hence the Arbitration
is optional for the consumers.


Antitrust Regulations
Is an attempt to shift focus from curbing monopolies to promoting competition. Antitrust
laws are helping in Strategic policing on anti-competition market practices and trends in Indian
telecommunication industry.

2G spectrum scam by Telecommunication ministry
2G licenses issued to private telecom players at throwaway prices in 2008. Spectrum
scam has cost the government Rs. 1.76 lakh crore.

Government Stability and Incentives
Indian Governments stability from last 10 yrs has really helped telecommunication
industry to grow with rapid pace . TRAI had asked the stakeholders to give inputs on various
aspects including barriers in the growth of telecom equipment manufacturing in India; incentive
schemes which can enhance design and development of telecom products; factors affecting the
competitiveness of Indian manufacturers; and methods to boost research and development to
increase telecom related intellectual property from India.


Socio - Cultural Trends:
 Lifestyle Changes
 Career expectation
 Consumer activism
 Growth rate of population
 Lifestyle Changes

Lifestyle Changes
Fast-changing lifestyles are forcing telecom companies to enlarge the breadth and depth
of their services. Value-added services, such as music downloads, video-on-demand and online
games are gaining currently in India.

Career Expectation
It is predicted that Employment growth in the various occupations in the
telecommunications industry is expected to increase by 7% every year. Indian engineers witness
a huge demand in the International Telecommunication Industry, as they are considered to be
icons of high-tech executives, telecomm technicians, installers, mechanical engineers, telecomm
marketers and desktop support people in Telecomm companies all around the world.

Consumer activism
According to telecom consultant and consumer activist S N Aggarwal, in June, calls
related to telecom hassles touched a high of 39%. The National Consumer Helpline received
1,136 calls with telecom woes, out of a total of 2,914 in June.

Growth rate of population
Indian business model of being profitable despite having the lowest tariff in the world
due to large Telecom density. The big driving factor for the confidence in the growth in telecom
sector is the youth population in India. With around 40% youth population for whom
communication needs are as essential as food and water, this is a huge potential market.


Porter’s Five Force Analysis
Threat to New Entrants
Declining ARPU
Access to Optical Fiber
Network
Regulatory Charges
Threat of New Entrants
FDI Spectrum Cost
Investment Cost Restriction of operators in
a region

Bargaining power of Rivalry among Existing Players
Suppliers Excessive Competition Threat from Substitutes
FDI Price War Gmail/yahoo mail
Mobile handset Market Share of Competitors Skype
Suppliers MNP Facebook
Different types of Exit Barriers Crowd Call
products Presence of Competitors Way2sms
Spectrum Cost

Bargaining power of Buyers
Customer‘s switching costs
Buyer‘s ability to
backward intergradations
Buyer‘s Information
Product differention
Competition between
Buyers



FDI
At present 74% to 100% FDI is permitted for various telecom services. 100% FDI is
permitted in the area of telecom equipments manufacturing and provision of IT enabled services.
This has made telecom one of the major sectors attracting FDI in flows in India. The main
Objective of the TRAI to have so much FDI is to encourage competition in the telecom sector
together with better quality and affordable prices in order to meet the objectives of New Telecom
Policy, 1999.

Investment Cost
The cost of active equipment is estimated to be 40 percent of the telecom operator's total
capex, while the balance is accounted for by passive infrastructure. (For example, Bharti has
invested close to Rs. 230 billion to create the cellular infrastructure with 45,000 towers across
the country). Typically, a ground based tower costs Rs. 25-30 lakh. A roof-based tower can be
built for Rs.13-14 lakh. Additionally, cost of maintaining one tower is estimated at Rs. 60,000-
65,000 per month. However, if a telecom service provider decides to rent the passive network
from a tower company than the telecom service provider in that case would need to pay monthly
rent of Rs. 40,000 per tower for passive network and operating expenses close to Rs. 40,000-
45,000 for active network. Furthermore, tower sharing among telecom service providers is just
25% as compared to 90% in the west and some operators are not even willing to share towers.
However, with the recent announcement made by BSNL about leasing its towers which will help
both the older and newer players to penetrate into new markets. Tower sharing makes the
telecom industry moderately attractive for the new players and investors.

Threat to New Entrants


Declining ARPU (Average Revenue per User)
The market is attracting new class of consumers which are mostly rural and their ARPU
is well below Rs 250/- (probably Rs 150 – 175/-). So, managing bottom-lines at such low levels
of revenue per user will prove to be a challenge for new entrants

Access to Optical Fiber Network
The largest optical fiber has been built by the incumbent operator BSNL who is also the
long distance operator. The private sector players such as Bharti and Reliance have also
constructed optical fiber cable network connecting mainly cities and towns but their presence is
very limited in the rural areas and difficult terrains. Hence it is fairly difficult for new entrants to
lay down optical fiber connecting remote places as well.

Regulatory Charges
The regulatory charges in the telecom sector have a complicated structure because
multiple levies impede the smooth implementation of telecom projects in India. Given the
continuously-declining ARPUs, and the extremely-low tariffs, sustaining the current growth rates
of the industry requires urgent attention towards rationalizing the convoluted tax structure in the
sector.

TRAI has recommended to the DoT committee to phase out the multiple levies in this
sector with a single levy in a phased manner. Further with regard to license fees, which currently
stand at 6%-10% of total revenue, TRAI has suggested that it be reduced at a uniform rate of 6%
across all licenses.

Spectrum Cost


India's highest decision-making body (The Cabinet) fixed the base price for a 5
megahertz (MHz) chunk of radio waves in the 1,800 MHz frequency band at a staggering Rs
14,000 crore. The 1,800 MHz frequency is used by operators who use GSM technology, which
includes most incumbents and a few new players. Players like Sistema, who operate on the
competing CDMA platform, will have to pay even higher to get in: Rs 18,200 crore for 5 MHz in
the 800 MHz band. There is absolutely no rationale to fix the base prices of the auction at such
astronomical levels even if the payout is staggered over 12 years. Federation of Indian Chambers
of Commerce and Industry (FICCI) has criticized the reserve price set by the cabinet for 2G
auction saying it will result in high tariff. The industry body called it anti-consumer.

Restriction of operators in a particular region
The Government has a policy of awarding licenses to only 3-4 operators to carry out
business in a particular circle or region which also acts as a deterrent for a new company which
is trying to enter the industry.



Threat of New Entrants is low in the Telecom Industry, If any company wants to enter
the Telecom Industry they need to have high amount of capital, and then the companies have to
pay the Spectrum cost in order to carry out their operations. Later only 3-4 operators are allowed
to operate in a circle. With Declining ARPU and Regulatory charges adding more worries to the
new entrants to enter the industry, Threat of New Entrant in Telecommunication sector
remains low.

High Low


Rivalry among Existing Players

Excessive Competition
Another major concern that has come to the forefront in the recent past has been
heightened competitive intensity in the industry that has correspondingly fuelled the price war
between industry players. The Indian wireless market is one of the world‘s most competitive
markets, with 12 operators across 23 wireless ‗circles‘ and 6 to 8 competing operators in each
circle Eventually, the competition in the industry is expected to intensify further with the entry of
new players, both domestic as well as foreign players. With the competitive intensity of the
industry already at such high levels new operators might find it difficult to gather significant
share in Indian telecom market. While the new players may benefit from a faster network rollout
through tower sharing, they will face challenges in terms of high subscriber acquisition costs and
lower ARPU customers.

List of Players in the Industry
Rank Operator Market Share %

1 Bharti Airtel 24.5%
2 Vodafone 19.8%
3 Idea Cellular 15.6%
4 Reliance Communications 14.6%
5 BSNL + MTNL 7.9%
6 TATA 6.9%
7 Aircel 5.5%
8 Uninor 3.6%
9 Others 1.6%

Total 100%

Global Business School | Strategic Management 25

(source: bric-spotlight-report-india-telecom-november-
2011)

The high growth rates encouraged the government to allow even more service providers
to enter the industry. In 2008, the Indian government awarded licenses to several new
companies, opening up an opportunity for global companies to gain a foothold in the market.
Telenor of Norway, Sistema of Russia, and Etisalat of the UAE quickly acquired majority
control of new license holders and launched services. To grab market share, the new entrants
launched their services at attractive price points. When the more established players responded
with price cuts of their own, it blew up into a full-fledged price war. The growth in subscriber
additions slowed, the profit margins of even the most established companies in the industry
declined and losses piled up for the new companies. Stock prices of telecom companies, which
were investor favorites for several years, started to underperform.
In 2010, the government invited applications from existing service providers for licensing
additional telecom spectrum for providing high-end 3G services. In a deviation from its earlier
practice of fixed pricing for airwave spectrum, the government decided to give out the new
licenses on the basis of a competitive auction. The prices quoted by the bidders were several
times higher than the fixed price granted previously by the government for older licenses,
including just a year before in 2009.


Price War
The ever-increasing competitive intensity in the sector, with licenses and spectrum in
several circles allotted to newer operators, is also a concern and could lead to unrealistic pricing
levels to grab subscribers. The pricing strategy of per second billing already has taken the price
war between telecom operators to the next level. The intensifying price war could put significant
downward pressure on the industry revenue growth. Further, the ongoing price war and the
concomitant decline in telecom traffic could raise the entry barrier for new companies.

Minimum Full Talktime offered by the
Companies
Tariffs (Minimum Full Talktime)

Aircel 200
Vodafone 250
Relaince 150
Tata Docomo 200
Airtel 250
IDEA 200
BSNL 220

(source: easymobilerecharge.com)


Market Share of Competitors
The Indian telecom Market for the month of July 2012 ended with a subscriber base of
913.49 million. The overall mobile telecom density stood at 75.21% (Urban – 157.11%, Rural –
39.54%). The Urban to Rural Ratio was 63.37% to 36.63%. Active mobile subscriber base in
June 2012 was 695.82 million which increased to over 698.08 million active subscribers in July
2012. Hence, India‘s wireless telecom market has shown a positive growth.
In July 2012, about 4.98 million subscribers submitted Mobile Number Portability
(MNP) requests which are about 0.55% of the total mobile subscriber base in India.

(source – www.boneless.in)

 Bharti Airtel has strengthened its leadership position with 24.5% market share in India.
 Idea has largest proportion of active mobile users at 92.80% followed by Bharti Airtel
(90.46%) and Vodafone (89.16%)
 Top 5 players in Indian wireless telecom industry accounts for 82.3% market share in
terms of active subscriber base.
 Reliance subscriber base experienced 13.25% decline as the company disconnects 20.48
million inactive customers from its network.


MNP (Mobile Number Portability)

From the above chart its clear that Idea is the leader in terms of MNP with 36,01,099,
closely followed by Airtel with 34,56,655 with third place going to Vodafone with 26,80,438.


According to TRAI; Uninor, Airtel, Idea and Vodafone were the biggest subscriber loser for
the month of August 2012.
Uninor lost 23,83,031
Airtel 19,02,683
Idea 16,46,783
Vodafone 15,59,538
The decline in the user base of the country is due to large scale
disconnections of non active subscribers by many operators.

(Source - http://telecomtalk.info/india-mobile-subscriber-base-declines-august2012-gsms-biggies-airtel-
idea-cellular-vodafone-losses/100942/)


Exit Barriers

Telecom is a capital intensive sector with sunk costs. The production of an additional
minute of wireless call costs virtually nothing, most of the cost being upfront investment in
expensive equipment deployment.

But in India exiting the Telecom industry is quite easy there are no restrictions in India as
per the Indian Telecom regulator (TRAI) but the entry fees paid by them will not be refundable.
Operators intending to exit the business can surrender their license giving at least 60 days notice.
TRAI directs licenses to maintain the Quality of Service (QOS) even during the period when
notice for surrender of license is pending.

 Spectrum/Infrastructure can be traded/sold to other players in the industry.
 Compensation is also paid, if the Regulator or the Government is responsible for the
failure.
 Improved labor and Forex laws help the companies to release the employees easily


Presence of Competitors in each Region

With 3-4 players operating in same region, cut throat competition can be seen seen
among the competitors.

3G Network Map of India

(Source: http://sharepress.org/3g-circles-in-india.html)


Rivalry among existing players

In the traditional economic model, Competition drives profit to zero, but players in the
telecom industry strive for competitive advantage. The number of business units operating within
a particular industry indicates the rivalry among them. If the number of business operating
companies in a particular industry is small it means that the rivalry among them will also be low.
But in case of Telecom industry with 10-12 players operating in the industry the rivalry is very
high. Each operator is trying to grab the maximum market share with unrealistic pricing to grab
the customers and they even try to woo the customers of other operators into their network with
Mobile Number Portability. Hence Rivalry among Existing players is very high in
telecommunication industry.

High Low


Bargaining power of Buyers

Customer Switching Costs
The cost of new connection is very low, or one can say new connections are available for
free. Moreover, with the introduction of mobile number portability switching has become all the
more easier. Some operators have estimated the charges can be as low as Rs. 20. The TRAI
statistics for May 2010 shows subscriber switching capacity of 20% with a yearly growth rate of
12.75%. This factor gives new entrant and investors a reason to entry this industry.

Buyers' ability to backward intergradations

Not much intermediaries between the producer and the consumers. High Investment
required for backward integration which is less likely to occur. Hence no backward
integration in this case.


Information to Buyers’
With large scale print and video advertising, and Big celebrities like Anushka Sharma
(Reliance), Abhishek Bachan (IDEA), Ranbir Kapoor (Tata Docomo), A.R Rahman (Airtel)
buyers are well informed about the latest updates of the products with better offerings in
Urban as well as in Rural areas. The official websites of the players in the industry also play a
major role in keeping the buyers informed.


Product differentiation

Airtel, Reliance, Idea and all other companies have similar prices for similar
products and less likely for anyone to maintain product differentiation and hence buyers
have the option to switch over.

1GB Data Packs of various Companies
TATA Docomo
BSNL
Aircel
IDEA
Vodafone
Relaince
Airtel

0 50 100 150 200 250 300

TATA
Airtel Relaince Vodafone IDEA Aircel BSNL
Docomo
1GB Data MRP 250 255 241 250 198 250 255

(source: http://im.tech2.in.com/gallery/2012/may/3gplans_311641209465.jpg)

Competition between buyers
The individual buyers don't have any competition among themselves but Big
Organizations like IT or banks do have. Enterprise customers generate major part of the
revenues for any telecom companies like Reliance, Airtel or Idea which means higher buyer
power. But this is not significant for those who deal with individual customers


Bargaining Power of Buyers

The power of buyers is the impact which customers have on any industry. In case of
Telecom industry Bargaining Power of Customers is high with low switching cost customers can
switch from one operator to another. Also there is a little product differentiation between
operators, If one operator introduces a new scheme then within few days the same kind of
scheme is offered by rival operator. With companies providing information to buyer through
advertising and keeping them up to date. Bargaining Power of Buyers is high in
Telecommunication Industry.

High Low


Bargaining Power of Suppliers

FDI
For manufacture of Telecom Equipments - FDI up to 100% is allowed through automatic
entry route. Attracting more foreign investments and providing excellent opportunities for
domestic as well as foreigners in manufacturing sector.

No industrial license is required for setting up manufacturing units for telecom equipments.
The last few years saw many renowned telecom companies setting up their manufacturing base
in India.
 Nokia and Nokia Siemens Networks have set up their manufacturing plant in Chennai.
 Ericsson has set up GSM radio Base Station Manufacturing facility in Jaipur.
 Motorola, Foxconn has set up large manufacturing plants in Chennai. Elcoteq has set up
handset manufacturing facilities in Bangalore.
 LG Electronics has set up plant of manufacturing GSM mobile phones near Pune.
 Ericsson has launched their R&D Centre in Chennai. Flextronics has set up an SEZ in
Chennai.
 A large number of companies like Alcatel, Cisco have shown interest in setting up their
R&D centers in India.


As far as telecom industry is concerned, its‘ a service based industry which is intangible,
Therefore the role of suppliers will be very minimum. Some of the suppliers are
 Mobile Handset Suppliers: There are many handset suppliers in the market, some of
them are Nokia, Samsung, Sony, Spice, Micromax, Karbonn etc.

Company Market Share
Nokia 38.2%
Samsung 25.3%
Micromax 6.3%
Blackberry 4.7%
Karbonn 4.3%
HTC 3.0%
Spice 2.5%
LG 2.5%
Hwawei 2.4%
G‘Five 2.1%
Others 8.7%

Market Share of Mobile handset Companies in India
45
38.2
40
35
30 25.3
25
20
15
8.7
10 6.3 4.7 4.3 3 2.5 2.5 2.4 2.1
5
0

Market Share of Mobile Handset Companies in India


Revenue generated by various Companies through operations in India
Company Revenue in Revenue in Change in % Change in
2010-11 2011-12 Revenue Revenue
Nokia 12929 11925 -1004 -8.41%

Samsung 5720 7891 2171 27.5%
Micrmax 2289 1978 -311 -15.72%

Blackberry 1950 1460 -490 -33.56%
Karbonn 1004 1327 323 24.34%

HTC 450 923 473 51.24%
Spice 920 790 -130 -16.45%

LG 1834 780 -1054 -135.12%
Hwawei 626 750 124 16.53%

G’Five 1326 670 -656 -97.91%

Graphical Representation of the above data

2500
2000
1500
1000
Axis Title

500
0
-500
-1000
-1500
Samsun Microm Blackber
Nokia Karbonn HTC Spice LG Hwawei G' Five
g ax ry
-1004 2171 -311 -490 323 473 -130 -1054 124 -656

( (source - http://timesofindia.indiatimes.com/tech/itslideshow/14804339.cms)


 Optic fiber and Aluminum - other Suppliers in the industry are Optic fiber and
Aluminum.

Companies producing different types of Telecom products

(source: http://dir.indiamart.com/industry/telecom-products.html)

 Software Companies - Software assistance, where players can have edge over others.
The major software providers are TCS, Infosys, Wipro and Satyam. Big players like
Reliance and Tata have their own software solution department.


Spectrum Cost
In order to opearate or provide services in any of the circles in the country, a service
provider has to have a licence which is provided by the Department of Telecommunication
(DoT) at the time of auction.
Although the reserve price for auction is already has been set by the Cabinet before the
auction takes place. The DoT(Licence Provider) or the Supplier in our case has ―No or little
power‖. Reasons being:
 Players in the market won‘t bid if the reserve price set is too high. In case of 2012 2G
auction the reserve price which was set by the Cabinet was at staggering 14000Cr, which
was too high according to the experts in the market. The reserve price of 2G was 4 times
higher than the 2010 3G reserve price.
 High Spectrum cost will attract less numbers of bidders. No of Companies participated in
2G auction 2012 were:-
1. Airtel
2. Idea
3. Vodafone
4. Videocon
5. Telewings Communication

2008 (2G Spectrum Auction)
If the Telecom Minister is corrupt like A. Raja who dished out specctrum in 2008
auction, when he provided the licenses for a mere 1,659 crore when the price proposed to the
telecom companies was a minimum of Rs 3,622.2 crore for every unit of 2G Spectrum. This will
weaken the supplier power because of the corrupt officals.


2010 (3G Specturm Auction)
In 2010, 3G auction Government kept a reserve price of 3500 for four 3G licenses and
expected to generate 25000 crore from the auction.
The 3G licence‘s were auctioned in a highly competitative bidding. The Government
earned a revenue of whooping Rs 67,719 crore from the auction.

Reasons for such unexpected revenue?
 Low reserve price.
 More number of players participated in the auction
1. Airtel
2. Aircel
3. Idea
4. Reliance
5. S Tel
6. Tata
7. Vodafone
Apart from the above state owned BSNL and MTNL were also awarded licence, although
they did not participated in the auction. Both these state-owned operators were given a head start
by the government in the 3G space by allotting the required 3G spectrum, on the condition that
each would pay an amount which would be equivalent to the highest bid in the respective service
areas as and when the 3G auctions took place. BSNL paid the Indian government Rs10,187
crores for spectrum in all 20 circles it operates in. State-owned MTNL provides 3G services in
the other 2 circles - Delhi and Mumbai.

The auction took place over 34 days and consisted of 183 rounds of bidding. The most
expensive telecom circle was Delhi at a price of Rs3316.94 crore per operator. The five most
expensive circles were Delhi, Mumbai, Karnataka, Tamil Nadu and Andhra Pradesh. They
accounted for 65.56% of the total bids.


Table Showing Circles’ won by various companies during 2010 3G Spectrum

(source - http://en.wikipedia.org/wiki/Indian_Telecom_Spectrum_Auction)


2012 (2G Specturm Auction)
The auction took place for just 2 days and consisted 14 rounds. The bids received were
worth Rs 9,407 crore far lower than the target of 28,000 crore. Out of 144 circles of spectrum on
offer, 101 got bids. Delhi, Mumbai, Karnataka and Rajasthan circles did not receive any bids.
Players which participated in the auction were Airtel,Idea,Vodafone,Videocon and Teleswings
Communication

Table Showing Circles’ won by various companies during 2012 2G Spectrum

(source - http://en.wikipedia.org/wiki/Indian_Telecom_Spectrum_Auction)


Overall, from the above we can conclude that Although spectrum cost is decided by the
Cabinet/TRAI the bidding which takes place at the time of auction lies in the interest of the
market players. If there, are more number of competitiors and the bidding is likely to be
competitive. The exixting market players are more likely to be aggressive and more focused
about their bids.
Therefore, Spectrum cost will provide a little or No Bargaining to suppliers as its fully
driven by the bidders in the auction.


Model showing how Low Cost Spectrum can provide High Bargaining power
to Suppliers

Low Spectrum Cost Attracts more
number of Players

Aggresive bidding by Fight for circles
Players Between Players

High Revenue Higher Bargaining
through Spectrum power of Suppliers


Bargaining Power of Suppliers

Similar to buyer power, Suppliers also exert pressure on companies. The main raw
materials for the telecom industry are the telecom equipments, telecom tools, telecommunication
products, circuit breaker, electric cables etc. With thousands of companies producing these kinds
of products within India and Mobile Handsets companies having No or little impact on Telecom
players. Spectrum Cost is the only thing that the companies need to worry about, keeping
Bargaining Power of Suppliers at low.

High Low


Threat of Subsitutes


Threat from subsitutes is relatively very low as they don‘t provide the mobility as the cell
phones or telecom providers do. Above are the few examples.

Yahoomail: Yahoo mail offers free email with unlimited mail & photo storage, includes spam &
virus protection, chat & free text sms from your inbox

Gmail: 10+ GB of storage, less spam, and mobile access. Gmail is email that's intuitive,
efficient, and useful. And maybe even fun.

Facebook: Facebook is a social utility that connects people with friends and others who work,
study and live around them. People use Facebook to keep up with friends and relatives.

Way2sms: India's First web to mobile Free SMS site, wherein messages can be send to any
network free of cost.

Crowd Call: Crowd Call is basically a new and secured concept for conferencing your
friends or business clients right from your smart phone. With Crowd Call you get 10
free calls/day to call over 40 countries worldwide. There is no time limit for any call 1
call can be as long as you want and the person you are going to call does not need to
have any app installed in his phone, he just needs to have a valid phone number and
he can be invited into conference. The only thing you need is an iPhone or Android
device installed with the Crowd Call app and rest part is covered by crowd call itself,
the other party do not need to have any app installed but just a regular number and
they receive your call right by your own number. You get 10 free calls per day which
you can use to call over 40 countries, on iPhone at a time you can select 2 person to
call together and after the call is connected you can again minimize the call and call
another two persons and merge call together for free 5person conference call .


Threat of Subsitutes

Threat from subsitutes is relatively very low as they don‘t provide the mobility as the cell
phones or telecom providers do. For instance if a person who wants to speak to any person would
make use of cell phone rather than logging into his skype account and making call from there.
Therefore Threat of Subsitutes in telecom industry is very low.

High Low


Bharti Airtel

Bharti Airtel Limited, commonly known as Airtel, is an Indian 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. Airtel is
the world's fourth largest mobile telecommunications company with over 261 million subscribers
across 20 countries as of August 2012. It is the largest cellular service provider in India, with
183.61 million subscribers as of November 2012. Airtel is the third largest in-country mobile
operator by subscriber base, behind China Mobile and China Unicom.

Airtel is the largest provider of mobile telephony and second largest provider of fixed
telephony in India, and is also a provider of broadband and subscription television services. It
offers its telecom services under the Airtel brand, and is headed by Sunil Bharti Mittal. Bharti
Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification. It also acts
as a carrier for national and international long distance communication services. The company
has a submarine cable landing station at Chennai, which connects the submarine cable
connecting Chennai and Singapore.

Airtel is credited with pioneering the business strategy of outsourcing all of its business
operations except marketing, sales and finance and building the 'minutes factory' model of low
cost and high volumes. The strategy has since been copied by several operators. Its network—
base stations, microwave links, etc.—is maintained by Ericsson, Nokia Siemens
Network and Huawei, and business support is provided by IBM, and transmission towers are
maintained by another company (Bharti Infratel Ltd. in India). Ericsson agreed for the first time


to be paid by the minute for installation and maintenance of their equipment rather than being
paid up front, which allowed Airtel to provide low call rates of 1/minute (US$0.02/minute).

During the last financial year (2009–10), Bharti negotiated for its strategic
partner Alcatel-Lucent to manage the network infrastructure for the tele-media business. On 31
May 2012, Bharti Airtel awarded the three-year contract to Alcatel-Lucent for setting up
an Internet Protocol access network (mobile backhaul) across the country. This would help
consumers‘ access internet at faster speed and high quality internet browsing on mobile handsets.

HISTORY
Sunil Mittal founded the Bharti Group. In 1983, Mittal was in an agreement with
Germany's Siemens to manufacture push-button telephone models for the Indian market. In
1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in
India to offer push-button telephones, establishing the basis of Bharti Enterprises. By the early
1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless
telephones. In 1992, Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal
incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi. In
1996, cellular service was extended to Himachal Pradesh. In 1999, Bharti Enterprises acquired
control of JT Holdings, and extended cellular operations to Karnataka and Andhra Pradesh. In
2000, Bharti acquired control of Skycell Communications, in Chennai.

In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises went
public in 2002, and the company was listed on Bombay Stock Exchange and National Stock
Exchange of India. In 2003, the cellular phone operations were rebranded under the single Airtel
brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005, Bharti
extended its network to Andaman and Nicobar. This expansion allowed it to offer voice services
all across India. In 2009, Airtel launched its first international mobile network in Sri Lanka. In
2010, Airtel acquired the African operations of the Kuwait based Zain Telecom.In March 2012,
Airtel launched a mobile operation in Rwanda. Today, Airtel is the largest cellular service
provider in India and the third largest in the world.


Corporate structure
Airtel's initial corporate structure concentrated on the hierarchy of the operations inside
the company as a whole. The structure depicted the corresponding operation/region of different
in-charges and it didn't hold anyone responsible for each of its services. So, the company found it
better to restructure its corporate hierarchy. The transformed organizational structure has two
distinct Customer Business Units (CBU) with clear focus on B2C (Business to Customer)
and B2B (Business to Business) segments. Bharti Airtel's B2C business unit will
comprehensively service the retail consumers, homes and small offices, by combining the
erstwhile business units - Mobile, Telemedia, Digital TV, and other emerging businesses (like
M-commerce, M-health, M-advertising etc.). The B2C organization will consist of Consumer
Business and Market Operations. The organization has changed the style of the company as the
company do not have any brand logo till the time.

Mobile Services
Airtel operates in all telecom circles of India. Its network is present in 5,121 census
towns and 457,053 non-census towns and villages, covering approximately 86.6% of the
country‘s population as of September 2012.
Airtel is the 6th most valued brand according to an annual survey conducted by Brand
Finance and The Economic Times in 2010.

3G
On 18 May 2010, the 3G spectrum auction was completed and Airtel paid the Indian
government 122.95 billion (US$2.24 billion) for spectrum in 13 circles, the most amount
spent by an operator in that auction. Airtel won 3G licences in 13 telecom circles of India:
Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (East), Rajasthan, West
Bengal, Himachal Pradesh, Bihar, Assam, North East, and Jammu & Kashmir.Airtel also
operates 3G services in Maharashtra & Goa and Kolkata circles through an agreement
with Vodafone and in Gujarat through an agreement with Idea. This gives Airtel a 3G presence
in 15 out of 22 circles in India.


On 20 September 2010, Bharti Airtel said that it had given contracts to Ericsson
India, Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for
providing 3G services in the country. These vendors would plan, design, deploy and maintain
3G–HSPA (third generation, high speed packet access) networks in 13 telecom circles where the
company had won 3G licences. While Airtel awarded network contracts for seven 3G circles to
Ericsson India, NSN would manage networks in three circles. Chinese telecom equipment
vendor Huawei Technologies was introduced as the third partner for three circles.

Airtel 3G services are available in 200 cities through its network and in 500 cities
through intra-circle roaming arrangements with other operators. Airtel had about 5.4 million 3G
customers of which 4 million are 3G data customers as of September 2012.

4G
On 19 May 2010, the broadband wireless access (BWA) or 4G spectrum auction in India
ended. Airtel paid 33.1436 billion for spectrum in 4
circles: Maharashtra, Karnataka, Punjab and Kolkata. The company was allocated 20 MHz of
BWA spectrum in 2.3 GHz frequency band. Airtel's TD-LTE network is built and operated
by ZTE in Kolkata, Huawei in Karnataka, Ericsson in Punjab and Nokia Siemens
Networks in Maharashtra. On 10 April 2012, Airtel launched 4G services using TD-
LTE technology in Kolkata, becoming the first company in India to offer 4G services. On 24
May 2012, Airtel announced an agreement to acquire a 49% stake in Qualcomm Asia Pacific
(India). Qualcomm holds 4G spectrum and licenses in Delhi, Haryana, Kerala and Mumbai. As
per the agreement, by the end of 2014, Airtel will assume full ownership and financial
responsibility for 4G operations in these 4 circles.
Airtel had 3180 4G subscribers as of May 2012


WiFi
Airtel has plans to launch WiFi services in India. It intends to start offering WiFi services
in Delhi NCR, Mumbai and Bangalore in initial phase. All plans will be on secure wireless
broadband internet with unlimited usage and will be session or time based. Users can use the
service by finding a hotspot, selecting 'airtel WiFi Zone', activating the voucher and then login to
start browsing. Airtel intends to partner with establishments to setup hotspots which will be
termed WiFi Hangout for an establishment owner and WiFi Partner for the cafe and restaurant
owners. Airtel WiFi Partners can offer services at zero investments and can earn commission on
every WiFi session sold.

Network Experience Centre
Airtel has a Network Experience Centre (NEC) which observes end to end customer
experience, in near real time, along with the standard network elements on Airtel's operations.
The NEC is located in in Manesar, Haryana and went live on 31 October 2012. It is the first such
facility in India and will be able to monitor Airtel's network performance across mobile, fixed
line, broadband, DTH, M-Commerce, enterprise services, International Cable Systems and
internet peering points from a single location. It will monitor all Airtel and partner NOCs. In case
of an emergency, the NEC will enable the operator to prioritize actions to restore normalcy and
reduce resolution time. The NEC houses a video wall with 3600 square feet of solid state LED
screen to monitor Airtel's telecom network. The clear span of the roof is 49 m x 18 m and the
beams, which are fireproof and about 8 feet deep, have been specially designed to hold the
structure without columns. The NEC was designed specifically to be used as a command center
in case of national emergencies and natural catastrophes. The facility is earthquake proof and
also provides for a single control of command and a fully redundant technology layout.

iPhone
The iPhone 3G was rolled out in India in 2008 by Airtel. However, high prices and
contract bonds discouraged consumers and it was not as successful as the iPhone is in other
markets of the world. Airtel introduced the iPhone 4 on 27 May 2011 and the iPhone 5 on 2
November 2012.


Telemedia
Under the Telemedia segment, Airtel provides broadband internet access through DSL,
internet leased lines as well as MPLS (multiprotocol label switching) solutions, as well
as IPTV and fixed line telephone services. Until 18 September 2004, Bharti provided fixed line
telephony and broadband services under the Touchtel brand. Bharti now provides all telecom
services including fixed line services under a common brand airtel. As of September 2012, Airtel
provides Telemedia services to 3.3 million customers in 87 cities, of which 1.4 million have
subscribed to broadband/internet services.

Airtel Broadband provides broadband and IPTV services. Airtel provides both capped as
well as unlimited download plans. However, Airtel's unlimited plans are subject to free usage
policy (FUP), which reduces speed after the customer crosses a certain data usage limit. In some
plans, Airtel provides only 256kbit/s beyond FUP, which is lower than the TRAI specified limit
of half the subscriber's original speed. The maximum speed available for home users is 16Mbit/s.

In May 2012, Airtel Broadband and some other Indian ISPs temporarily blocked file
sharing websites such as vimeo.com megavideo.com, thepiratebay.se etc. with out giving any
legal information to the customers. The block was due to a Madras High Court issued ‗John Doe‘
order taken by Chennai-based Copyright Lab. In response to a petition filed by Vinay B, a
resident of Shimoga, Karnataka, the District Consumer Disputes Redressal Forum ordered Airtel
to pay 20,000 to the petitioner for "deficiency in internet service" thereby causing mental agony
to the complainant. ―By misinterpreting the Madras High Court order, Airtel blocked entire
websites. It is needless to say that the company‘s actions amount to deficiency in service as well
as unfair trade practice,‖ said the forum


Chairman’s speech of Bharti Airtel

At the industry level, telecom is in the midst of a tectonic shift. Data is clearly the future
of mobile telecom and Airtel is gearing itself up for this. New generation mobile technologies
with much faster data capabilities are steadily taking root, opening up mind-boggling
possibilities in new service areas like healthcare, banking, commerce and education.

During the year, Bharti Airtel led from the front as it systematically rolled out 3G
network, across India, making Airtel the most robust network in the country.

Airtel also launched 3G networks in seven African markets. Airtel Launch of 4G services
in April 2012 marked another watershed for the Indian telecom industry. This is the first
technology platform that India has launched simultaneously with its global release, helping move
the Indian telecom industry to a global standard.

“Airtel Money” was a distinctive service Launch for them during the year in India and
eight other African markets.
Besides being the first of its kind, M-commerce service offered by an operator in India, it
is also India‘s first mobile- based service to offer instant money transfer.

Cancellation of several 2G licenses allotted to other telecom operators by the Hon'ble
Supreme Court was one such significant event. The issue of pricing of 2G spectrum in India is
however still hanging fire.

Airtel reconnecting with its prime target audience - the youth - with a path breaking
brand campaign in India – ―Har Friend Zaroori Hai‖. The campaign had a universal appeal and
resonated deeply among the target segment.

The other major youth related theme that Airtel developed across all our operations was
that of sports. While it introduced ―Formula One‖ in the Indian sub-continent, in Africa, Airtel
connected with youth through Airtel's Rising Stars program for football enthusiasts.


VISION

By 2015 Airtel will be the most loved brand, enriching the lives of millions.

Enriching lives means putting the customer at the heart of everything we do. We will
meet their needs based on our deep understanding of their ambitions, wherever they are. By
having this focus we will enrich our own lives and those of our other key stakeholders. Only then
will we be thought of as exciting, innovation, on their side and a truly world class company.

MISSION

Recruit & Maintain Caliber Working Staff
Provides Customer Specific Software Solution
Continues Improvement in Software Quality
Not remain as Only Software Solution Provider, but be as Continues Service Provider
To empower stakeholders in services and inventories to deal with associated

QUALITY POLICY
We will deliver error free service to our customer by doing our jobs right and first time
every time.


PORTER 5 Forces Model Analysis

Porter 5 Forces Model
Bargaining Power of Buyers (High) • Low switching costs for buyers
• Huge competition between the
existing players in the market.
Bargaining Power of Suppliers (Low) • Large pool of suppliers in the
market
• Have access to other countries
supply
Industry Rivalry (High) • Players like Vodafone are big
competitor
• Existing Players are also eating up
the market share
Threats of new Entrants (Low) • Not easy to match Airtel‘s
distribution network and marketing
know how
Threat of Substitutes (Low) • Threat is less as substitutes have
less mobility

High Low


ISSUE PRIORITY MATRIX
BHARTI AIRTEL

Probable Impact on Corporation
HIGH MEDIUM LOW

Antitrust New Products Price control
HIGH Regulations

Focus of Government Special Incentives
MEDIUM Technological Policy (b)
efforts

Government Protection Laws Protection Laws
LOW Policy (a) (a) (b)


Antitrust Regulations (High High)
Bharti Airtel are in trouble ahead with Telecom Commission recommending that they
would have to give up the entire 900Mhz band of Spectrum(being used for 2G services, which
gives wider coverage) they hold when their licenses come up for renewal in 2014. In order to
continue operations, Bharti would have to compete with other players in fresh auction for this
band of spectrum. Bharti Airtel & Vodafone hold over ¾ of the superior 900 Mhz spectrum.

New Products (High Medium)
Airtel began taking preorders for Apple‘s much awaited iPhone 5S ahead of its retail
debut on November 2nd 2012. iPhone supports Nano Simcard which will be available in all Airtel
Stores with effect from 2nd November 2012. Bharti will provide attractive tariff schemes and free
minutes for the iPhone. It will be a unique advantage to customer who opt to buy the gadget from
them, as Ebay & Olx.in are selling the iPhone in black market for 58000/- for 16GB and
1,06,000/- for 64GB where as Airtel will be providing the same Phone for 45000/- 16GB and
59,500/- for 64GB. Airtel has also come out with five monthly plans at discounted rates for its
post-paid customers buying iPhone 5.

Price control (High low)
Bharti Airtel will bid for 5 Circles, Bharti will not bid for circles where they are already
in comfortable position and will be instead planning to fill in gaps in their coverage. Airtel
deposited 102.75 crore in advance for the 2G auction indicating to bid in a maximum of 5
circles.

Focus of Technological Efforts (Medium High)
Airtel which had bagged the 4G spectrum in four telecom circles in Kolkata,
Maharashtra, Punjab and Karnataka has launched its 4G services in Kolkata and Bangalore and
enjoys the monopoly in this market. Other players are yet to launch 4G services in the market.
4G has 4 times more speed than 3G.


Government Policy (b) (Medium Medium)
Government has constituted a six member group to consider various issues arising out of
ban on bulk Short Messages Service (SMS) and Multimedia Message Service (MMS) because
the Government has received representation from association of the deaf and others opposing the
citing difficulties faced by them while communicating. If the TRAI lifts the ban on 100 SMS per
day then there will reduction in the revenue of the Airtel, as earlier Bharti used to charge
0.50ps/per SMS after 100 SMS/per day.

Special Incentives (Medium Low)
Telecom regulator TRAI approved a hike in processing fee for all mobile recharge
coupons priced above Rs 20/- but has left it unchanged for the vouchers below that. The
Authority has decided to increase the ceiling on Processing Fee on Top up vouchers to Rs 3/-
from Rs 2/- in respect of Top-up vouchers having maximum retail price of Rs 20/- and above.
The order will affect 90% of the prepaid users. Bharti telecom with its 20.67% market share will
generate more revenue from this decision.

Government Policy (a) (Low High)
As a result of the high base price of spectrum for the upcoming auctions, call rates will
rise by 30-40 percent. Base price of Rs 14,000 crore for 1800Mhz band and Rs 18,200 for 800
Mhz based on the recommendations made by sectoral regular TRAI. This will affect the market
share of Airtel as their tariffs are already priced high compare to its competitors and they face
huge competition in the 2G segment.


Protection Laws (a) (Low Medium)
Notices are to be issued to telecom firms asking them to stop 3G roaming service outside
their licensed area with immediate effect as the government was losing revenue because of their
agreements. Airtel who paid 12,295 crores for spectrum in 13 circles, the largest spender in 3G
auction in 2010 is likely to be impacted more than its competitors.

Protection Laws (Low Low)
Airtel faces the largest number of complaints among all the operators for rejecting MNP
requests by its subscribers. It has been accused of violating and deviating from compiling with
MNP regulations (denying the ID proof such as Aadhar Card and Voter ID)


EFAS of Airtel (Opportunity)

Opportunity Weights Rating Weighted Score Comments
India’s GDP 0.02 2 0.04 More number of people will opt
for mobile services if income
increases.
Imports 0.06 2 0.12 Increase in number of Mobile
phones will lead to increase in
subscribers.
Technological 0.16 3 0.48 Airtel operates in eleven 3G
Effort circles, with four 4G circles but
still huge market to cover.
New Products 0.09 3 0.27 Airtel has come up with iPhone
5S, 3G & 4G data card.
Internet 0.06 3 0.18 Airtel is present in Data card as
Availability well as broadband.
Lifestyle 0.10 2 0.20 Airtel keeps on coming with new
Changes campaign depending on the
changing lifestyle of the people.
The latest campaign ―Jo Tera Ha
voh Mera Hai‖
Growth Rate 0.04 3 0.12 Airtel‘s market leadership will
of Population provide the benchmark to
capture new market.


EFAS of Airtel (Threats)

Threats Weights Rating Weighted Score Comments
FDI 0.06 3 0.18 Airtel can compete with the
foreign players on pricing and
service basis.
Price War 0.16 4 0.64 More number of players will
lead to high bargaining power of
the buyers.
Interest Rates 0.09 4 0.36 Airtel‘s expansion/acquisition in
other countries will come at a
cost. If the cost of borrowing is
high. This will result in reduce
PAT.
Consumer 0.07 1 0.7 As Airtel has the highest number
Protection of consumer complaints,
Consumer Protection law may be
Law
a concerned.
2G Scam 0.09 2 0.18 Company name may come under
scam.
Total 1 3.41

Airtel's EFAS
GDP Imports
Consumer 2% 6%
Protection Law
7% 2G Scam
9% Technological Effort
16%

Interest Rate
9%

New Products
9%
Price War
16%

FDI Internet Avalability
6% 6%
Growth Rate
of population Lifestyle Changes
4% 10%


IFAS of Airtel (Strengths)

Strengths’ Weights Rating Weighted Score Comments
Market 0.12 4 0.48 With a market share of 24%,
Leader Market leadership is Airtel‘s
major strength.
Strategic 0.1 3 0.30 Strategic shareholders provide
Stakeholders the much needed innovations
and ideas to survive in the
(Sony, Nokia,
market.
Erikson)
Brand Name 0.09 3 0.27 Being the oldest player in the
market for more than 15 years.
Airtel is duly recognized by its
Brand name.
Strong 0.1 3 0.30 Changing Advertising campaign
Advertising & according to market trends and
targeting the youths is the new
Celebrity way Airtel has managed to hold
Brand the top position in telecom
Ambassador market.
Wide 0.1 3 0.30 Wide customer base brings in
Customer high revenue.
Base
Monopoly in 0.11 4 0.44 Presence of 4G in 2 out of 4
4G circles, while the other players
are yet planning to enter.
Presence in 0.07 3 0.21 Global business as Airtel is
more than 20 present in developing economies
of the world.
countries
Other Brands 0.05 2 0.10 It‘s a conglomerate with
likes Airtel TV presence in telephone devices
and the has market share of 14%
& Beetel
in the emerging DTH industry.
High ARPU 0.06 3 0.18 Airtel has a high ARPU
compared to its competitors in
the market.


IFAS of Airtel (Weakness)

Weakness Weights Rating Weighted Score Comments
Untapped 0.15 4 0.60 Mobile penetration is only half
Rural Market in India. Signaling possible
opportunity for Airtel.
Customer 0.05 3 0.15 Airtel has most number of
Complaints customer complaints, signaling
weak customer service provided
are higher by the market leader.
according to
TRAI
Total 1 3.33

IFAS of Airtel
Customer Complaints
5%

Market Leader
12%
Untapped Rural
Market Strategic
15% Stakeholders
10%
High ARPU
6%
Brand Name
9%
Other Brands
5%
Strong
Advertising
Presence in more Wide 10%
Monoploy
than 20 Countries Customer
in 4G
7% Base
11%
10%


SFAS OF AIRTEL
Strategic Weights Rating Weig Duration Comments
Factor hted
Score S M L
Market 3 0.21  More number of people will opt
Leader 0.07 for mobile services if income
increases.
Strategic 0.09 3 0.27 Strategic shareholders provide the
Stakeholde much needed innovations and
ideas to survive in the market.
rs (Sony,
Nokia,
Erikson)
Monopoly 0.11 3 0.33 Presence of 4G in 2 out of 4
in 4G circles, while the other players are
yet planning to enter.
Untapped 0.15 4 0.60 Mobile penetration is only half in
Rural India. Signaling possible
opportunity for Airtel.
Market
Technologi 0.16 3 0.48 Airtel operates in eleven 3G
cal Effort circles, with four 4G circles but
still huge market to cover.
New 0.09 3 0.27 Airtel has come up with iPhone
Products 5S, 3G & 4G data card.
Lifestyle 0.08 2 0.16 Airtel keeps on coming with new
Changes campaign depending on the
changing lifestyle of the people.
The latest campaign ―Jo Tera Ha
voh Mera Hai‖
Price War 0.16 4 0.64 More number of players will lead
to high bargaining power of the
buyers.
Interest 0.09 4 0.36 Airtel‘s expansion/acquisition in
Rates other countries will come at a cost.
If the cost of borrowing is high.
This will result in reduce PAT.
TOTAL 1.00 3.32


SFAS of Airtel

Interest Rates Market Leader
9% 7%

Strategic
Shareholders
9%

Price War
16%

Monopoly in 4G
11%

LifeStyle Changes
8%

Untapped Rural
Market
15%
New Products
9%

Technological efforts
16%


TWOS of
STRENGTHS WEAKNESS

AIRTEL

Strategic Management Airtel and Idea

Strategic Management Airtel and Idea

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Andere mochten auch

Andere mochten auch (20)

Ähnlich wie Strategic Management Airtel and Idea

Ähnlich wie Strategic Management Airtel and Idea (20)

Mehr von Hardeep Hundal

Mehr von Hardeep Hundal (7)

Strategic Management Airtel and Idea