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1/16

Program: PGCSMM

Subject:Marketing

Topic: Bharti Enterprises & Airtel

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Situation Analysis & Market Environment

MOBILE TELEPHONY AND ITS CHANGING SCENERIO IN INDIA

Exactly ten years ago, Jyoti Basu in Calcutta called Sukh Ram in Delhi in what was the

first mobile phone call in India. Brick sized cell phones used to cost Rs. 45,000 and eachcall costed Rs. 16.5/minute. Back then, cell phone was a status symbol. Today, there are

over 60 million mobile connections in India (expected to double in number in next 12

months). A local call costs around Rs 1/min and a cell phone can be purchased for less

than Rs. 2000.Wireless technology has been a boon for India. In a country where setting up wired

infrastructure is very expensive and time consuming, wireless is the perfect solution to

connect remote villages. The timing was also just right as India escaped the burden oflegacy technology and reaped the benefits of latest GSM technology.

Cell phones have not been just about technology. They have brought about a cultural

change in the country. SMS is the favorite means of communication for everybody today.

The revolution in computing in countries like India will also come through mobilephones. What PC did to offices and then to masses in developed countries, mobile phones

will do in developing countries.Time was when it took several years to get a new telephone connection in India. Now,

there is less pressure than ever before for fixed landlines as mobile phone subscribers

appear poised to outnumber those with a fixed line.

By year's end, India may become one of the few countries where the mobile revolution iscomplete and the mobile reigns supreme, just ten years after it was first introduced.

Every month, India adds another 1.5 million mobile subscribers to the 28 million mobile

phone users registered last December.In January 2003, one year before, India had just 10 million mobile subscribers

When mobile telephony was introduced in India in 1994, there were just a few serviceproviders, such as AirTel.It was a heavily regulated sector with prohibitive license fees, high call charges of 30

cents per minute, and expensive handsets. Then, only the privileged could use a mobile in

India. But in the last four years, call charges have fallen and license fees have become

more manageable.

The distribution of different Mobile services operating in India with the exact nos. of

mobile users is as mentioned in the Map shown here. We can arrive at the conclusion thatAirTel is PAN INDIA SERVICE PROVIDER with largest user network.

In the next few pages I am going to present the a report about Bharti Business Group andAirTel in particular about there Vision, Business structure, present situation, future plans,

hierarchy, their working, their Ad campaigns, competitions.




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GEOGRAPHICAL DISTRBUTION OF SERVICE PROVIDERS




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BHARTI ENTERPRISES

Company ProfileBharti Airtel is one of India's leading private sector providers of telecommunications

services based on an aggregate of 25,885,709 customers as on July 31, 2006, consisting

of 24,337,837 GSM mobile and 1,547,872 broadband & telephone customers.

The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - mobile services, broadband & telephone services (B&T) &

enterprise services. The mobile services group provides GSM mobile services across

India in 23 telecom circles, while the B&T business group provides broadband &telephone services in 90 cities. The Enterprise services group has two sub-units - carriers

(long distance services) and services to corporate. All these services are provided under

the Airtel brand.Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National

Stock Exchange of India Limited (NSE).

PartnersThe company has a strategic alliance with SingTel. The investment made by SingTel is

one of the largest investments made in the world outside Singapore, in the company.

The company also has a strategic alliance with Vodafone. The investment made byVodafone in Bharti is one of the largest single foreign investments made in the Indian

telecom sector.

The companys mobile network equipment partners include Ericsson and Nokia. In the

case of the broadband and telephone services and enterprise services (carriers),equipment suppliers include Siemens, Nortel, Corning, among others. The Company also

has an information technology alliance with IBM for its group-wide informationtechnology requirements and with Nortel for call center technology requirements. The

call center operations for the mobile services have been outsourced to IBM Daksh,

Hinduja TMT, Teletech & Mphasis.

Bharti Enterprises has successfully focused its strategy on telecom while straddlingdiverse fields of business. From the creation of'Airtel', one of India's finest brands, to

becoming the largest manufacturer and exporter of world class telecom terminals under

its 'Beetel' brand, Bharti has created a significant position for itself in the globaltelecommunications sector. Bharti Airtel Limited is today acknowledged as one of India's

finest companies, and its flagship brand 'Airtel', has over 25 million customers across thelength and breadth of India.While a joint venture with Teletech Inc., USA marked Bhartis successful foray into the

Customer Management Services business, Bharti Enterprises dynamic diversification

has continued with the company venturing into telecom software development. Recently,

Bharti has successfully launched an international venture with EL Rothschild Groupowned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets

in Europe and USA.




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LIST OF SEPARATE ENTITITES OF BHARTI GROUP

Bharti Airtel Ltd

Bharti Airtel Ltd is India's leading provider of telecommunications services. The

company has 4 distinct Business divisions - Mobile & telephone services, broadbandservices, long distance services and enterprise services.

Bharti TeleTech Ltd

Bharti Teletech Ltd manufactures and exports world-class telecom equipment under the

brand 'Beetel'.

Telecom Seychelles Ltd

Telecom Seychelles Ltd provides telecom services in Seychelles, under the brand 'Airtel'.

Bharti Telesoft Ltd

Bharti Telesoft Ltd delivers best-in-class, revenue-critical VAS products and services to

telecom carriers.

TeleTech Services (India) Ltd

Teletech Services (India) Ltd is joint venture with Teletech Inc., USA. It offers a range of

Customer Management Services.

FieldFresh Foods Pvt Ltd

FieldFresh Foods Pvt. Ltd. is Bharti's venture with EL Rothschild Group owned ELRO

Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and

USA.




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BHARTI AIRTEL : A FACT FILE

Name: Bharti Airtel Limited

Business Description

Provides mobile, broadband & telephone (fixed line) and enterprise services (carriers &services to corporate)

Established July 07, 1995, as a Public Limited Company

Highlights for Second Quarter and Half Year Ended September 30, 2006

Market leader with a market share of all India mobile subscribers at 21.4%

Highest ever-net addition of 41.1 lakh customers in a single quarter.

Q2 Total Revenues of Rs.4,357 crore (up 61% Y-o-Y)

Q2 EBITDA of Rs. 1,702 crore (up 67% Y-o-Y)

Q2 Cash Profit of Rs. 1,644 crore (up 75% Y-o-Y)Q2 Net Profit of Rs. 934 crore (up 79% Y-o-Y) and Net Profit crosses 1,600 crores

Market Capitalization

Customer Base 24,337,837 GSM mobile and 1,547,872 broadband & telephone (fixed

line) customers (Status as at month ended July 31, 2006)

Operational NetworkProvides GSM mobile services in all the 23-telecom circles in India, and was the first

private operator to have an all India presence.Provides broadband (DSL) and telephone services (fixed line) in 90 cities in India.

OrganisationStructure

As an outcome of a restructuring exercise conducted within the company; a new

integrated organizational structure has emerged; with realigned roles, responsibilities and

reporting relationships of Bhartis key team players. With effect from March 01, 2006,

this unified management structure of 'One Airtel' will enable continued improvement in

the delivery of the Groups strategic vision.




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MARKET SHARE OF AIRTEL

Group Company Total Subscribers

Airtel(GSM) 52961289

Reliance (CDMA + GSM) 39069417

Vodafone Essar(GSM) 38562804

BSNL(GSM) 31945006

Tata (CDMA) 21035918

IDEA(GSM) 20222263

Aircel(GSM) 9025593

Spice(GSM) 3661423

MTNL(GSM) 2889726

BPL(GSM) 1220611

HFCL (CDMA) 218947

Shyam (CDMA) 101191

* CDMA figures include WLL services




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Buying behavior

IT research firm In-Stat predicts that the global market for wireless handsetswill grow 23 percent to USD 136 billion in 2006, and may exceed USD 250billion in 2011. In Stat said the wireless market has reached USD 110 billionin 2005. The firms pointed out that after 2006 the growth rate would beslower. So depending upon the Market behavior for Handsets the buyingbehavior for Service Provider will also be bit slow in the year 2007.3G is the latest innovation India is goin through. Airtel is goin tostart its operation soon on 3-G network system where the user willhave the facility of online TV shows etc. on the mobile Phone itself.

In Stat said that the prediction is not preordained. According to the study itdepends upon phone manufacturers continuing to add features thatconsumers value and the rest of the industry can support. The greatestchallenge is to just add the features different customers want without addingunneeded cost or complexity from unneeded or unwanted features from theservice provider. The report includes end-user survey results that explorecurrent customer attitudes as well as how it corresponds to there past buyingbehavior.In Stat said the goal for wireless phone manufacturers and service provider isto make customers forget they ever tolerated a phone or service without thenew innovations. This has happened as the mobile phone has advanceddramatically in the past several years.

According to the survey, very few U.S. users, less than 5 percent, do not useat least one of the technological innovations introduced over this period.Consumers seem ready to embrace other new features, including location-based services and Bluetooth connectivity, but only a narrow segment haveinterest in multimedia features and camera phones use will see a decline,predicts In-Stat.

"Big trends over the next five years include adoption of wireless phones as amobile wallet that and more users will carry multiple devices," says BillHughes, In-Stat analyst. "The primary changes in phones over the next five

years are that they will become more capable, incorporate beefier security,and be more targeted as organizations have greater involvement in thewireless service decisions of their employees. Perhaps more importantly,they will help us be safer."The key findings of the research, "The Big Trends for Cell Phones, 2006-2011 are:




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Worldwide sales of mobile phones will rise from 935 million units in2006 to more than double that 2011 and with this service providerswill also have a rise.

Smart Phone sales will surpass 480 million units by 2011and to cash iton all the service Providers are launching different useful facilities tocash it on the rising trend of Smart Phone Usage.

Nokia is by far the most popular phone brand among surveyrespondents who obtained their phone through work or for privateuses and Airtel is the most trusted network in which companies like tooperate.

The research covers the worldwide mobile phone market and their serviceprovider and predicts future developments for wireless phones over the nextfive years. The research takes into consideration the entire wireless phonevalue chain, which consists of phone manufacturers, supplier ecosystem,distributors, carriers, and in many cases, the organization to which manycustomers belong.

Product promotion strategy and Ad campaignTo understand the product promotion strategy and Ad campaign we have tolook into the vision statement of Airtel

AIRTEL VISION STATEMENT & BRAND POSITIONINGBy 2010 Airtel will be the most admired brand in India: Loved by more customers Targeted by top talent Benchmarked by more business

"In a service industry like telecom, people live a brand 24X7. It's all aboutexperience; and for Airtel 'brand=customer experience," says Rajan Mittal,

joint managing director, Bharti Tele-Ventures Ltd.

That's now, but when mobile telephony began in India a decade ago, thebrand was all about aspiration. That's understandable: a handset cost aboutRs 45,000 - the price of a second-hand Fiat - and call charges hoveredaround Rs 16 a minute.

Naturally, the target customer was clearly defined: elite, upmarketprofessionals and entrepreneurs. "We positioned Airtel as an aspirational and

lifestyle brand, in a way that trivialised the price in the mind of theconsumer. It was pitched not merely as a mobile service, but as somethingthat gave him a badge value," recalls Hemant Sachdev, chief marketingofficer (mobility) and director, Bharti Tele-Ventures.

Airtel was on a power trip: the logo was black, uppercase bold lettering; andthe baseline was "the power to keep in touch". "From day one, it was decidedthat the brand should always connote leadership - be it in network,innovations, offerings or services," says Diwan Arun Nanda, CMD,




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Rediffusion-DY&R, the agency that has created all Airtel ads over the past

decade. The taglines emphasised that stance: "Airtel celebrates the spirit ofleadership" and "The first choice of the corporate leaders".

This was also a time when customers needed to be educated; interest levelswere high, but customers' exposure to the cellular world was limited. Airteltook out full and half-page ads in newspapers, answering queries like "whatis roaming?", "what is coverage area?" and "how to make international calls".

In 1999, the rules of the game changed. The New Telecom Policy came intoeffect, replacing license fees with a revenue-sharing scheme and extendingthe license period from 10 to 20 years. Now, cellular service operators coulddrop their prices and target new customer segments. As SEC B became part

of the catchment area, Airtel's communication changed from "power" to"touch tomorrow".

The focus now was on the endless possibilities of technology to make lifegood and advertising became two-pronged: a product-driven communicationthat showcased new offerings like the Magic prepaid card, and an emotionalcommunication that showed younger people.

In 2002, Airtel signed on music composer A R Rahman and changed its tuneto "Live every moment": Rahman's signature tune for Airtel is, perhaps, themost downloaded ringtone in India. But that was just part of the ongoingcommunication.

The following year Airtel adopted the "Express yourself" positioning, which isalso its current tagline. Now, the emotional angle was predominant - andstark, black and white imagery to stand out in what was becoming a highlycommoditised, crowded market.

The latest campaign continues that thought. Only, mobile telephony is nowextending to even low-income mass categories. So the first TVCs in Hindi andregional languages are now on air, as are low-priced products, like the Rs200-recharge coupon.

Communication was just part of the battle: customer service would prove

more critical. "We were very clear that Airtel will be a service-led brand,"says Mittal.




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BRAND AMBASSADOR TWO OF INDIAs BIGGEST CELEBRITIESSACHIN TENDULKAR & SHAHRUKH KHAN

AIRTEL EXPRESS YOURSELF

Brands often lose their way when their communication deviates from a tried and tested

property just to be different. This is not a situation that cannot be salvaged, though.Brands stray when they try to be different for the sake of being different. The desire to be

different is pretty common in advertising. And this desire to be different usually means a

break from the past.

AIRTELs Ads are a trend setting Ads and considered a landmark Product promotion,which they are doing for their Broad Band and telephone services are also a landmark promotion campaign.

Promotions, whose need is increasingly being felt by the surging services sector, will

click if they realize marketing objectives and reinforce brand values.

Other precautions too need to be taken in the case of promotions. For

instance, too many promotions can be detrimental to the health of a brand. Abrand, which is perpetually on price-off, would not only lose key brandattributes but also consumer interest. The consumer's reasoning being `if aproduct is cheaper now, does it mean I was being overcharged earlier'?Similarly, if a brand is always doling out freebies, sales would be affectedwhen there are no freebies on offer.




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Marketers agree that no matter the market segment, for any promotion to besuccessful it has to be a part of an overall marketing strategy and not a one-off sales-driving initiative.

COMPERATIVE PRICING OF DIFFERENT MOBILE SERVICE PROVIDERS

THOUGH THE rollout of mobile cellular networks (GSM) in India began onlyseven years ago, the industry has already passed through three growthphases. The initial phase (1995-98), period with the bare minimum networkcoverage, catered only to the high-end segment with call charges aroundRs.14 a minute. With the explosion in subscriber volume during 1998-2000(Phase 2), the rollout spread to metropolitan cities, major highways andrelatively dynamic small cities bringing down call charges to Rs. 9 a minute.The third phase (2001 and 2005) was a watershed for the Indian mobileindustry; the growth in these two years exceeded all the achievement of theearlier five years. This pushed the operators to add capacity to theirnetworks furiouslyThe low call charges or upfront costs of mobile are only bait to lure

customers and only the QoS can ensure retention capability for a serviceprovider. An attempt is made here to highlight the current QoS lag of Indiannetworks vis-a-vis the international mobile market and the minimum thatcompanies should do to sustain their subscriber base. There is also a peepinto the billing aspect, which indicates that Indian subscribers are payingmuch more than they need to.The mobile operators have put up the required infrastructure to carry calls ontheir networks with capacities determined by the demographic profile of theirrespective areas buttressed by market research. However, no guidelines existfrom the regulatory authority (TRAI) for QoS of the networks. Traditionally,wireless operators have used a number of metrics that collectively provide ameasurement of `network service quality' from the users' perspective. Acombination of the following 4-key performance indicators (KPIs) largelydetermines the overall service quality: system coverage; call blockage; voicequality; and dropped call rate.Following four is the main area of attention kept in mind by the companieswhile providing and deciding pricing System coverage Call blockage Voice quality Dropped call rate

Comparison chart between Current Pricing for different cellular service

provider in all the four zones are provided in the link www.india-cellular.com.




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COMPETITION AND CHALLENGES AHEAD FOR AIRTEL

The year 2002 was the defining year for the growth of telecom services inthe country. By the end of the year, the country was having eight basic and12 cellular operators, including state-owned Bharat Sanchar Nigam Ltd.(BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), offering services

across the country.The mobile phone market is a rapidly growing anddynamic one. The strategy for all the companies is to consistently build onthe three pillars of innovative products/services, technology and customerservice and offer relevant value .

With BSNL's launch, are the private players worried All the service providersare also getting more and more technology savvy to keep a pace with thechanging scenario.

Following is the List of major GSM service provider in the Country.

MAJOR MARKET PLAYERS

The major competitor of AIRTEL is Hutch & BSNL on GSM network.

Telecom are rolling out like never before. And that 100-million mark doesn'tlook too far away. The mobile subscriber base crossed 65 million inSeptember 2005, an over-30 percent increase over the previous year.

AIRTEL

Last quarter, market leader Airtel (22 per cent market share, over 15 millionmobile subscribers, source: Cellular Operators Association of India)

witnessed its highest-ever net addition of 1.8 million mobile customers in asingle quarter. And it's not slowing down; the company's busy rolling outnetworks, targeting its presence in over 4,500 towns and locations (from3,200 in September) in the next three-four months.

HUTCH




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Hutch, with over 10 million subscribers (15 per cent market share) may beNo. 4 (behind Reliance and BSNL) at present, but it has the highest averagerevenue per user.

With the acquisition of BPL Mobile, its subscriber base is increased to about13.5 million later this month when the merger is formalized - pushing it up to

the No. 2 slot. Of course, right now, the focus is more on its orange-pinktransformation.

FEW POSITIVE STEPS TAKEN BY BHARTI Groups AIRTEL TO STAY AHEAD OFTHE CONDITION ARE AS FOLLOWS:

USPsAccording to Sanjay Kapoor, Joint President, Mobility at Bharti the number ofcellular subscribers in India will treble to 300 million in the next three to fiveyears. In the year ended March 2005, Bharti increased its net adds by 67 per

cent, compared with the markets growth of 55 per cent.

In the year to March 2006, Bhartis new subscriber growth was 78percent, versus 73 per cent in the broader market. Instead of funneling huge CAPEX on infrastructure, processes and people,

he tested what he considered a true utility computing model byoutsourcing the companys call center and business IT systems,

They have plans to outsource content and service delivery systems in thenear term. To carry it out, they partnered with the likes of IBM, Norteland Oracle and utilized different payment models from revenue per shareto cost per all, depending on what works for the parties involved.

AIRTEL has on-demand model, which has effectively supported thecompanys rapid growth curve. Bharti now serves 18 million subscribersand targets to reach 100 million marks in four to five years time.

The company has also unified its fixed line, ISP, IDD and mobile businessunder one brand, Bharti Airtel.

Now operators could test blended formula that puts into account revenue,churn rate, customer statistics as part of the equation and decide onwhich agreement with work best.

They have ventured into Broadband for Internet Telephony as well aslandline.

3G Network is to be started in two months time to make it more user-friendly and give users more value for their Money by showing Livestreaming on Mobile itself.

AIRTEL IS A PAN INDIA MOBILE SERVISE PROVIDER WITH BESTINFRASTRUCTURE AND FACILITY AND A WIDE VISION FOR GROWTH.




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Bibliography:

Source 1: www.bharti.com

Source 2: www.bhartiairtel.inSource 3: www.india-cellular.com

Source 4: www.airtel.in

Source 5: News websites (including Indiainfoline, ndtv, economic times, etc.)

Source 6: Advertisements & Write-ups from Magazines and Articles

