BHARTI AIRTEL

(GSM MOBILE SERVICES)

STRATEGIC MANAGEMENT
GROUP 2:
Rakesh S K
Giriraj Navander
Anjani Krishna K S
Narla Venkat Nikhil
Ajay Milind Halepaty
Koppineni V N S Rohit Kumar
R

INTRODUCTION
Incorporated on July 7, 1995 for promoting telecommunications services.
It is one of Indias leading private sector providers of telecommunications
services with more than 249.31 million customers with market share of
22.48%.
The net profit for the financial year 2014-15 was 65,401 million
The ROE of Airtel is 8.52%
Growth rate of the company is 7% for the financial year 2014-15
Growth rate of the Indian telecom industry for financial year 2014-15 is 11%

Purpose of the Analysis:

To find out which strategy has Airtel Company adopted, whether they follow cost
leadership or differentiation or both. And what factors influence their strategies.

Major Players in Telecom

Industry

Rank

Operator

Market Share %

Bharti Airtel

22.48%

Vodafone

18.16%

Idea Cellular

14.58%

Reliance Communications

13.17%

BSNL + MTNL

10.99%

TATA

7.07%

Aircel

7.66%

Uninor

3.80%

Others (Sistema, Videocon, Loop & Quadrant)

2.09%
Total

100%

POLITICAL FACTORS
Regulatory bodies TRAI
Lack of Transparency in
Spectrum & License
Allocation

SOCIAL FACTORS

ECONOMIC FACTORS
Fast Growing Sector
CAGR 11%
Tariff rates declining since
the year 2000
Declining ARPU but
increasing subscriber base

PEST Analysis

Customers notion
regarding brand and status
symbol
Cost factor is major
concern to customers
Likes and dislikes of a
teenager and adult not the
same

TECHNOLOGICAL
FACTORS
e-commerce portal
R&D driven industry
Introduction of newer
products/ services/ plans
3G, 4G and high speed
broadband in the market

Porters Five forces analysis of

Indian Telecom Industry
es Analysis
Bargaining
power of
Buyers
HIGH

Barriers to
Entry
HIGH

Bargaining
power of
Suppliers
MODERATE

Indust
ry
Rivalr
y
HIGH

Threat of
Substitute
s
MODERATE

SWOT Analysis
STRENGTHS
Internal

S1
S2
S3
S4
S5

Current Market Share

Brand Image
R&D Capabilities
Distribution Network
Network Coverage

OPPORTUNITIES
External

O1 3G expansion
O2 4G introduction
O3 Low rural
penetration
O4 m Commerce

WEAKNESSES
W1 Infrastructure issues
W2 Higher price

THREATS
T1 Increased
competition
T2 Regulatory Issues
T3 Vulnerability to
recession
T4 Mobile number
portability

Porters Generic Competitive

Strategies of AIRTEL
Cost Leadership

Outsourcing
Telecom Tower
Infrastructure service
providers (Bharati Infratel
Ltd)
Building Mobile Towers
(Indus Towers)
Acquisitions
Efficient and Innovative
Techniques in Operations

Differentiation

Beetel Teletech Ltd

Unique Plans
Services
Exclusive Apps

Even though major

companies have
outsourced their
operations, Airtel has
edge in cost

Cost Leadership

Outsourcing

Bharti Airtel has cost advantage in outsourcing as their average cost per customer
is comparatively less than their competitors.
Company
Customer
Outsourcing
Base
Cost
They make
Airtel
249 mn
800 mn
rather than buy,
Vodafone
184 mn
1 bn
thus minimizing
their costs.
Idea
162.8 mn
800 mn

Telecom Tower Infrastructure service providers

Bharti Infratel Limited is amongst Indias leading telecom tower infrastructure

service providers.
The company deploys, owns and manages telecom towers infrastructure, for
various mobile operators across 18 states of India.
It has a vast footprint of over 34,000+ towers and holds a 42% stake in Indus
TowersLtd.
Indus Towers, a Joint Venture between Bharti Infratel, Vodafone India & Aditya
Birla Telecom.

Here, airtel does

not have to incur
various initial
costs.

Cost Leadership (Cont..)

Acquisitions
For a company into the telecom service business cannot maintain growth without
expansion.
Whenever Airtel entered a new state in India it was only through the acquisition of
an existing player in that state.
Airtel entered Andhra Pradesh and Karnataka by acquiring stake in JT Mobiles.
It entered Kolkata by acquiring Spice cell.
Airtel entered Tamil Nadu by acquiring Sky cell in Chennai circle.
Airtel is even trying now to make its globalpresence by acquiring Zain in Africa

Cost Leadership (Cont..)

Airtels R&D has

substantially
facilitated for the
reduction of costs,
through innovations

Efficient and Innovative Techniques in Operations

Deployed over two-third of sites on sharing and this process continues for new sites
as well, reducing the energy consumption by a minimum 30% over the standalone
sites.
Converted indoor sites to outdoor sites by installing FCU for switching off the Aircon,
making them feasible for alternative energy sources, like solar.
Deployed low-power consuming BTS (Base Transceiver Station) sites, which are able
to achieve a reduction in power consumption by a minimum of 30%, over the last 4-5
years.
Network planning and design is done by in-house experts. Through this, Airtel has
been successful in delivering the most advanced network to its customers.

Differentiation Strategy

They
differentiated
their products
across B2C and
B2B markets

IT peripherals and Innovative products (Beetel Teletech

Ltd)
Beetel is a leading global technology brand which offers a wide range of innovative
products in the mobile phones, IT peripherals and fixed line telephone segments.
Leveraging its consistent performance, distribution and marketing capabilities
Beetel as a brand has achieved a leading market share in thetelecom and allied
product segments.
With powerful distribution and marketing capabilities, Beetel distributes a host of
iconic brands like Blackberry, Apple, Avaya, Polycom, Samsung, Sanyo, Panasonic,
Transcend, Iomega, Aastra Telecom, RAD Data Comm, Actelis and Strontium.
Its products and solutions are present worldwide, spanning 35 countries in 5
continents.

Differentiation Strategy (Cont..)

This enabled Airtel
to out- perform its
competitors by
attracting customers
Unique Plans
across the age
Airtel maintains a differentiation in its services by providing unique
plans.and social
groups
classes
Like, My Plan, Night Plans, Data Sharing Plans.
Airtel launched an innovative product called One Touch Internet.
Received an award in Best Mobile Services category at the prestigious GSMA Global
Mobile Awards 2015 in Barcelona.

Services

The main differentiating service offered by airtel is that of the 4g service.

Currently Airtel is the only service provider to offer 4g services to its customers on a
large scale.
Unlike its competitors Airtel is providing good service even in the remote areas In 2013.
Airtel has regained its position as the largest operator in the rural sector in india and has
maintained the position since then.

Differentiation Strategy (Cont..)

Exclusive Applications

Provides its
customers with
exclusivity and
feel loyal to the
company

SmartDrive is navigation app exclusive to Airtel customers. The app features voicebasedturn by turn navigation, traffic updates, and approximate travel time based on
current conditions.
Airtel has also started a newmCommerceplatform called Airtel Money in 2012. Using
Airtel Money, users can transfer money, pay bills and perform other financial
transactions directly on the mobile phone. It has an all-India presence.

Pricing (Sample)
Company

4G (1 GB)

3G (1 GB)

2G (1 GB)

Call Rates

Airtel

255

255

175

30/min

Idea

253

175

35/min

Reliance

225

199

30/min

BSNL

198

198

40/min

Vodafone

297

175

40/min

Limitations
Non availability of key financial and statistical data and other information relating to
their strategic decision making.

Financial Analysis ( Data of FY 2013 and FY 2014)

Airtel

Idea

Reliance

BSNL

Vodafone

Industry Average

Price/Unit
(Call Rates)
Overall Cost

30 paise/minute

35 paise/minute

30 paise/minute

40 paise/minute

40 paise/minute

35 paise/minute

36065.30 crores

21606.06 crores

27973 crores

N/A

23697.34 Crores

Raw Material
Cost

4115.10 crores

2394.40 crores

9145.00 crores

1289 crores

N/A

N/A

2599.5 Crores

Labour Cost

1691.50 crores

1358.73 crores

269 crores

11008 crores

N/A

3581.81 Crores

Net Profits

65401.00 crores

16.893.10 Crores

-4470.00 Crores

-70197.60 Crores

-1149.00 Crores

1295.62 Crores

Who is the Cost Leader and Differentiator?

Company

Airtel

Idea

Reliance

BSNL

Vodafone

Industry Avg

Subscribers

249.31 mn

162.08 mn

109.90 mn

93.29 mn

183.8 mn

159.67 mn

ARPU (Avg
Revenue Per
User)

198

182

147

105.03

187

163.80

Note: 1. Prices of only call rates have been considered for the purpose of analysis.
2. Rest of the financial data is of whole of their operations.

Financial Analysis

References
http://
economictimes.indiatimes.com/bharti-airtel-ltd/infocompanyhistory/companyid-2718.cm
s

https://www.scribd.com/doc/37092403/Airtel-Strategic-Management
http
://www.airtel.in/airtel-annual-report-2014-15/pdf/Airtel%20DLX%20AR%202014-15.pdf
https://en.wikipedia.org/wiki/Airtel_India
https://prowess.cmie.com/
http://
trai.gov.in/Content/PerformanceIndicatorsReports/4_1_PerformanceIndicatorsReports.as
px