Presented By: -

Ambika Khanna
Arjun Trehan
Arpita Gupta
Chitra Chakrobarty
Divjot Singh
Mahendra Rathi
Nitesh Saboo
Nilanjan Maitra
Nishant Rana
Ramesh Ramanathan
Strategic Management Rahul Dwivedi
Ravish Tandon
Nishita Saxena
Shikha Gupta
Sumit Chandoke
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 23

Circles

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Why Mad Rush for
Telecom ??
Large number of Low teledensity Telecom
additions in telecom (depicting large Advantage
subscribers untapped potential)

40.4%
250
CAGR 24

Teledensity (in percent)

Subscribers (in million)

18.3 19.9 20
200
12.8 16
150
9.1 12
225.21
100 7.0
206 8
5.1 140.3
50 98.4 4
53 76
0 0
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (as
of June
2007)
Telecom Subscriber Base Teledensity

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Evolution of Telecom In India
Department of Telecommunication (DoT) is the main body
formulating laws and various regulations for the Indian telecom
industry.

ILD services was

BSNL was Number portability
Independent opened to Intra-circle
established was proposed
Private regulator, competition merger
by DoT Calling Party (pending)
players were TRAI, was guidelines were
Attempted
Pays (CPP) was
allowed in established Go-ahead to established to boost
implemented
Value Added the CDMA Rural
Services technology telephony
1994 1999 2007
INDIA

2002 2003 2004 2005

1992 2000 Internet Unified 2006

1997
telephony Access
initiated Licensing Broadband
(UASL) policy 2004
National Decision on 3G
NTP-99 led to Reduction regime was was
Telecom FDI limit was services
migration from of licence Reference
introduced formulated—
Policy (NTP) increased (awaited)
high-cost fixed fees Interconnec targeting 20
was from 49 to 74
license fee to low- t order was million
formulated percent
cost revenue issued subscribers
sharing regime by 2010

ILD – International Long Distance

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Telecom Ecosystem
Indian Telecom Industry Framework

Indian Government Independent Bodies

Bodies

They formulate various policies and

pass laws to regulate the telecom They undertake various research
industry in India. activities and monitor the quality of
service provided in the Indian telecom
Wireless
Planning and Handles spectrum industry. They also provide various
Coordination allocation and recommendations to improve the status
(WPC) management of telecom operations in India.
Telecom
Department of DoT – Licensee and Regulatory
Telecommunica Authority of India Independent regulatory
frequency
tions (TRAI) body
management for
telecom
Telecom Telecom Disputes
Commissi Exclusive policy making Settlement and Telecom disputes
on body of DoT Appellate Tribunal settlement body
(TDSAT)
Group on Handles ad hoc
Telecom and IT
(GoT-IT) issues of the
telecom industry
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Bharti Airtel
• Largest Private Integrated Telecom Company in India

• 3rd Largest Wireless Operator in the World

• Largest & Fastest Growing Wireless Operator in India

• Largest Telecom Company listed on Indian Stock

Exchange

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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

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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.”
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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”

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 Changing Demographics

Demand for VAS &

Broadband services Among
Youth

28 % Urban Population

Rapid Urbanization

Rising Income level

Source: Mckinsey Report

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Technology
CDMA – Already there are
big players in this
segment Reliance ,
Tata

3G – Value added services

potential still to be
tapped fully

2G/3G – GSM Currently

commands 70% of
mobile subscribers in
India

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Integrated Telecom
Company(Product Portfolio)
 Wireless Services  Enterprise Services
– 2G/3G – Carrier
– Rural Market – Corporate

Telemedia  Passive
Services Infrastructure
– Fixed Line – Bharti Infratel
– Broadband – Indus Tower
– DTH

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Bharti Airtel–Corporate
structure

13
Wireless Market Share -
India

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 SWOT ANALYSIS
Strengths
• Largest Telecom player in India – subscriber base
over 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 Bharti
Airtel include Sony-Ericsson, Nokia - and Sing Tel
• Experience of launching 3G services in SriLanka
• High cash balance of $1bn

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 SWOT ANALYSIS
Weakness
• 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 among
developing countries
• Low broadband penetration – company well
equipped to take business to next level
• Fast extending International Private Lease Circuit
market, 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 – impact
on margins
• Inability to obtain 3G spectrum in key circle
• Revision of spectrum usage charges

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BCG Matrix for Bharti Airtel
HIGH
LOW

HIGH LOW
Porter’s 5 Forces

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1. Threat from Competition
Wireless Market – Top 4 garnering 75%
market share

HIGH

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Competitor Analysis

  OP Margin Net Margin

Compan Sep-07 Sep-08 Sep- Sep-
Best OP Margins
y 072 083
& Net Profit Bharti 43.00% 38.00% 26.40% 19.30%
Margins among
Rcom 37.90% 31.60% 23.90% 13.20%
Peers
IDEA 32.80% 26.60% 14.10% 6.50%
MTNL 23.70% 22.90% 7.00% 6.80%

Source: CMIE November 2008

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 AMOU & ARPU Stats
Minutes of Usage per Month – Mobile
Services
USA 838
Despite a low teledensity of approximately
India 461 19 percent, India has the second highest
minutes of usage per month. This offers
China 303
huge growth opportunity to telecom
Rus sia 88 companies.

ARPU* in India – Mobile Services

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ARPU (USD per month)

6 The declining ARPU implies that India Inc. is

4 tapping a large market at the bottom of the
2 pyramid by reducing tariffs; thereby,
0
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
enhancing affordability.
GSM CDMA

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2. Customer Bargaining
Power
 Lack of differentiation among HIGH

Service Providers
 Cut throat Competition
 Low Switching Costs
 Number Portability will have –Ve
Impact
 Businesses & Consumers
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Market Scenario

Postpaid Vs Prepaid Customers & Market Share

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3. Suppliers Bargaining
Power
LOW

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4. Threat of Substitutes
 Landline DIMINISHING HIGH
 CDMA MARKET

 Video Conferencing
BROADBAND
SERVICES
 VOIP - Skype, Gtalk, Yahoo Messenger
 e-Mail & Social Networking Websites

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5. Threat of New Entrants
 Huge License Fees to be paid upfront & High
gestation period
LOW
 Entry of MVNOs & WiMAX operators

 Spectrum Availability & Regulatory Issues

 Infrastructure Setup Cost - High

 Rapidly changing technology

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Airtel – Strategy
MANTRA : Focus on Core Competencies
and Outsource the rest!

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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.

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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.

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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.

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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.

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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.
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• To Diversify into new businesses in
agriculture, financial services and
retail business with world-class
partners

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Growth Factors

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Road Map – Growth Path
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. Mehta
Invesment 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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