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“Today, with the launch of Airtel digital TV interactive, we begin offering the Triple

Play Advantage offer to our customers – leading in with voice, then broadband and
now television and video on demand. We offer our customers a Single Knock on
The Door experience - a uniform Airtel Quality of Experience with a single
Customer Service interface and a single unified bill for voice, broadband and TV

and video entertainment. ”


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airtel ppt - Presentation Transcript

Bharti Airtel
Largest Private Integrated Telecom Company in India
3 rd Largest Wireless Operator in the World
Largest & Fastest Growing Wireless Operator in India
Largest Telecom Company listed on Indian Stock Exchange
GROUP 7
Integrated Telecom Company
Wireless Services
2G/3G
Rural Market
Telemedia Services
Fixed Line
Broadband
DTH
Enterprise Services
Carrier
Corporate
Passive Infrastructure
Bharti Infratel
Indus Tower
GROUP 7
Financials Snapshot GROUP 7
Financial Snapshot - Ratios GROUP 7 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 2007 2006 2005 2004 2003 Debt-Equity
Ratio 0.35 0.21 0.27 0.34 0.36 Long Term Debt-Equity Ratio 0.3 0.19 0.24 0.29 0.33 ROCE
(%) 9.72 10.28 8.25 8.43 3.07 RONW (%) 10.11 10.62 10.87 6.76 0.18
http://www.capitaline.com
Vision 2010
By 2010 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
Why Mad Rush for Telecom ?? Large number of additions in telecom subscribers Low
teledensity (depicting large untapped potential) Telecom Advantage GROUP 7 CAGR 40.4%
Go-ahead to the CDMA technology INDIA Private players were allowed in Value Added
Services National Telecom Policy (NTP) was formulated 1992 1994 1997 Independent
regulator, TRAI, was established NTP-99 led to migration from high-cost fixed license fee to
low-cost revenue sharing regime 1999 2000 2002 BSNL was established by DoT ILD services
was opened to competition Internet telephony initiated Reduction of licence fees 2003 Calling
Party Pays (CPP) was implemented Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued 2004 Intra-circle merger guidelines were established
Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010 2005 FDI
limit was increased from 49 to 74 percent Attempted to boost Rural telephony 2006 Number
portability was proposed (pending) Decision on 3G services (awaited) 2007 Department of
Telecommunication (DoT) is the main body formulating laws and various regulations for the
Indian telecom industry. ILD – International Long Distance Evolution of Telecom In India
GROUP 7
Telecom Ecosystem Indian Telecom Industry Framework Indian Government Bodies
Independent Bodies Wireless Planning and Coordination (WPC) Department of
Telecommunications Telecom Commission Group on Telecom and IT (GoT-IT) Telecom
Regulatory Authority of India (TRAI) Telecom Disputes Settlement and Appellate Tribunal
(TDSAT) Handles spectrum allocation and management DoT – Licensee and frequency
management for telecom Exclusive policy making body of DoT Handles ad hoc issues of the
telecom industry Independent regulatory body Telecom disputes settlement body They
formulate various policies and pass laws to regulate the telecom industry in India. 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. GROUP 7
Regulatory Framework
74% FDI Investment
Lack of Transparency in Spectrum & License Allocation
3G Policy & MNP still Pending
GROUP 7
Declinging Tariff – Rising Revenue GROUP 7 Source: TRAI Report

GDP growth rate - Averaged around 7.9 % from 2002-2008


Rising Tele-density – Target of 45% by 2010
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%
Economic Factors

Demand for VAS & Broadband services Among Youth


28 % Urban Population
Rapid Urbanization
Rising Income level
Changing Demographics Source: Mckinsey Report
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 Technology
Porter’s Generic Strategy GROUP 7
Porter’s 5 Forces GROUP 7
1. Threat from Competition Wireless Market – Top 4 garnering 75% market share GROUP 7
HIGH
Competitor Analysis GROUP 7 Best OP Margins & Net Profit Margins among Peers Source:
CMIE November 2008 OP Margin Net Margin Company Sep-07 Sep-08 Sep-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%
AMOU & ARPU Stats 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. GROUP 7
2. Customer Bargaining Power
Lack of differentiation among Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have –Ve Impact
Businesses & Consumers
GROUP 7 HIGH
Market Scenario GROUP 7 Postpaid Vs Prepaid Customers & Market Share
3. Suppliers Bargaining Power GROUP 7 LOW
4. Threat of Substitutes
Landline
CDMA
Video Conferencing
VOIP - Skype, Gtalk, Yahoo Messenger
e-Mail & Social Networking Websites
GROUP 7 BROADBAND SERVICES DIMINISHING MARKET HIGH
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
GROUP 7 LOW
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
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 Telephoney
Threats
India centric – Major revenues from India
Falling ARPU & AMOU
Intense Competition & Shortage of Bandwidth
GROUP 7
BCG Matrix for Bharti Airtel LOW HIGH HIGH LOW GROUP 7 Mobile Services DTH &
IPTV Broad Band
GE Matrix Classification Market Attractiveness Strong Medium Weak Low Medium High
Business Strength 5.00 1.00 2.33 3.67 5.00 3.67 2.33 GROUP 7

Current market share


Brand image
Brand equity
Production capacity
Corporate image
Profit margins relative to competitors
R & D performance
Managerial personal
Promotional effectiveness
Business Strength GROUP 7
Factors Underlying Market Attractiveness GROUP 7 Factors Weight Rating (1 –5) Value =
(Weight * Rating) Resource availability 0.20 3.5 0.7 Overall market size 0.15 4 0.6 Annual
Market growth rate 0.20 4 0.8 Profitability 0.15 4 0.6 Competitive intensity 0.10 4 0.4
Technological requirements 0.20 4.5 0.9 Total 1.0 4.0
Factors Underlying Market/Biz Strength GROUP 7 Factors Weight Rating (1 –5) Value =
(Weight * Rating) Market share 0.15 5 0.75 New product development 0.10 3.5 0.35 Brand
Image 0.10 4 0.40 Sales force 0.15 3 0.45 Pricing 0.15 3 0.45 Distribution capacity 0.10 4.5
0.45 Product quality 0.10 4.5 0.45 R&D Performance 0.15 3 0.45 Total 1.0 3.75
Airtel’s GE Matrix Business Strengths Market Attractiveness Low High Low High Attractive
Moderate Attractive Unattractive Mobile Airtel TeleMedia 5.00 1.00 2.33 3.67 5.00 3.67 2.33
Enterprise GROUP 7
Airtel – Strategy
MANTRA : Focus on Core Competencies and Outsource the rest!
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 GROUP 7
Road Map – Growth Path GROUP 7 VPN & VoIP WiMAX 3G 2G/2.5G
Airtel - Strategy
MANTRA : Focus on Core Competencies and Outsource the rest!
References
Bharti Airtel, Annual Report -2008
Investors presentation, Bharti Airtel Limited, November 2008
Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November 2008
Analyst Report – Bharti Airtel, Asit C. Mehta Invesment Intermediates Ltd.
Telecommunication Sector Report – March 2008, CRISIL
Capitaline Database http://capitaline.com
Indian Telecommunication Sector - August 2007, IBEF Report
“ Next Big Spenders – Indian Middle Class”, Businessweek
GROUP 7
THANK YOU !! GROUP 7

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