1. CASE STUDY
ON THE GROWTH OF BHARTI
AIRTEL

2. ABOUT BHARTI AIRTEL
•In the 2000s, telecommunications (telecom) company Bharti Airtel
Limited (BAL) was the market leader in the Indian telecom market.
•It had established itself as the leader in the market by
differentiating itself with its focus on building a strong brand
through innovation in sales, marketing, and customer service, and an
innovative cost effective business model.
•Analysts also credited BAL with negotiating the regulatory hurdles
in this emerging market and competition very effectively.
•This enabled it to become profitable despite the Indian telecom
market having the lowest tariffs in the world.

3. • Some analysts opined that BAL's unique business model had become
the benchmark for emerging markets.
• Mobile telephony in India was experiencing the fastest growth in the
world and India was already one of the leading markets in terms of
mobile subscriber base.
• Despite Average Revenue per User (ARPU) figures in the country
being quite low compared to many other markets, it was viewed as an
attractive market as mobile penetration of the market, particularly in
the huge rural areas in India, was still low.
• With the developing market in the West reaching high levels of
saturation (70% in US and 100% in some European markets), many
global telecom operators were looking at emerging markets for their
growth and this made India a prime target market for these firms.
• The market in India was also expected to witness many changes with
the introduction of new technologies and mobile number portability.

4. • Since 2007, BAL had been facing serious threats to its leadership
position.
• On the one hand, there was the onslaught from global players such as
Vodafone and Virgin Mobile, and on the other, the threat from
established Indian companies such as Reliance Communications
Ltd., Tata Teleservices Ltd., and the state-owned Bharat Sanchar
Nigam Ltd (BSNL).
• Moreover, the market was expected to witness the entry of some
more Indian and foreign companies.
• BAL had responded to investing heavily in expanding its
network, technology, and marketing.
• It was trying to cover all segments of the population -from the tech-
savvy youth population who coveted the latest value-added services
(VAS) to the Bottom of the Pyramid (BoP) segment who would be
satisfied with a low-cost offering.

5. • In early 2008, BAL, which still dominated the Indian telecom market
and was the world's tenth largest telecom company, was also readying
itself to replicate its success story in some other emerging markets.
Issues:
» Understand how Bharti Airtel Ltd. tapped the opportunities in the
Indian telecom sector and established itself as the market leader.
» Analyze the booming telecom sector in India that was experiencing
high growth rates, with special emphasis on the competitive landscape
in the sector.
» Understand the opportunities that emerging markets such as India
offer to global business enterprises.
» Understand the issues and challenges faced by organizations
operating in emerging markets.

6. • On February 13, 2008, Bharti Airtel Limited (BAL), the leading
telecommunications (telecom) company in India, crossed the 60-million
customer mark.
BAL had crossed the crucial 50 million subscriber mark in the fourth
quarter of 2007 and had become the tenth largest telecom company in the
world in terms of subscriber base. The wireless segment constituted 96%
of BAL's total customer base.
• BAL retained its leadership position in the Indian telecom market with a
market share of 31.88% in 2007. The valuation of BAL stood at US$ 40
billion as of February 2008. BAL's spectacular growth matched the growth
in the Indian telecom sector, which was the fastest in the world. The Indian
telecom sector was adding 8 million customers per month as of early 2008.
On becoming the tenth largest telecom company in the world, the CEO of
BAL Manoj Kohli (Kohli), said, "The last journey for first 50 million
(customers) was completed within 12 years of starting operations in
November 1995.

7. • This puts Bharti Airtel among the top telecom companies in the world.
Our next target is to reach 100 million mark by 2010.
BAL was the only small initial entrant in the Indian telecom market which
managed to survive consolidation in the sector. Despite tough competition
from other private companies such as Hutchison Essar Ltd
(Hutch), Reliance Communications Ltd (Reliance), Tata Teleservices Ltd
(Tata), and the state-owned Bharat Sanchar Nigam Ltd (BSNL), it emerged
as the undisputed leader in the Indian mobile telecom market.
• Mobile Telephony in India
The mobile telephony revolution started in India when the government
decided to allow private sector participation in the Indian telecom sector. In
1994, the Department of Telecommunications (DoT), Government of
India (GoI), issued licenses to private operators to start mobile services in
the four Metropolitan cities of Delhi, Mumbai, Chennai, and Calcutta
(now Kolkata).

8. The Czar of Indian Telecom
• BAL had focused on differentiating itself in the Indian telecom market by
ensuring customer delight and a cost-effective business model -a business
model of being profitable despite having the lowest tariff in the world.
• BAL's various initiatives helped it attain a dominant position in the market
(Refer to Table II for the top mobile telecom operators in India) As of
March 2008, its ARPU was US$ 10, higher than that of other operators in
India.
New Challenges and Competitors
• When Vodafone acquired Hutch, BAL faced the first major threat to its
supremacy in the Indian mobile market since the entry of Reliance into this
market. Reliance was not able to overtake BAL as the CDMA technology it
had adopted did not do too well in the Indian telecom market.

9. • Countering the Threats
• Network Expansion
BAL focused on expanding its network coverage all over the
country before other players could expand on a big scale. In
February 2008, it announced an annual investment plan of
US $ 2 billion to expand its network over the next 3 years.
This was substantially higher than its average annual
investment plans of US$ 1.5 billion. BAL planned to add an
additional 30,000 base stations to its existing 40,000 base
stations for the fiscal year 2007 and thereby cover 70% of
the country. Nearly 50 to 60% of the future expansion was
to be in the rural areas.

10. • Ready to Tap Other Emerging Markets?
• By early 2008, BAL was not only the dominant player in the Indian market
but also had an international presence in Seychelles through its subsidiary
Telecom Seychelles Ltd., and Europe (Channel Islands) through its
subsidiaries Jersey Airtel Limited (JAL) and Guernsey Airtel Limited
(GAL).
• Analysts felt that its success notwithstanding, BAL faced some challenges to
its leadership position in the Indian telecom market. It had to focus on
devising aggressive strategies to continue its dominance and grow at the
same rate at which it had been growing.

11. OUTSOURCE TO IBM
• Bharti Airtel Limited, India’s leading provider of
Telecommunications services, was awarded the coveted
Nasscom IT Innovation Award for the Business Model
Innovation for the year 2006.This award is testimony to
the pioneering strategy of Bharti Airtel that outsourced
its IT function to another leader in its domain, IBM.
• Bharti Airtel Ltd has received this award for the
Innovative S1 ITO agreement that it has entered into
with IBM during the year. This initiative, which is a first
in the telecom industry, is in line with Bharti Airtel’s
strategy to achieve business leadership through
technology and innovation by achieving operational
efficiencies and driving new revenue streams.

12. • Bharti Airtel’s collaboration with IBM has drawn an IT
roadmap with a state-of-the-art infrastructure to support
its existing and new business operations. The result is a
strategic, on demand, scalable business transformation
agreement capable of diligently servicing the needs of
millions of customers.
• This business transformation involves outsourcing Bharti
Airtel’s hardware, software and IT services requirements to
IBM including all customer-facing IT applications as well
as all internal-facing applications.

13. • Bharti Airtel is structured into three strategic business units –
Mobile services,
Broadband & Telephone (B&T) services
Enterprise services.
•
• The mobile business provides mobile & fixed wireless services using GSM
technology across 23 telecom circles.
• The B&T business provides broadband & telephone services in 94 cities.
• The Enterprise services provide end-to-end telecom solutions to corporate
customers and national & international long distance services to carriers.
All these services are provided under the Airtel brand. Airtel’s high-speed optic fibre
network currently spans over 36,000 kms covering all the major cities in the
country.

14. • Bharti Airtel Winning 3G spectrum in 13
licences, Bharti Airtel is set to offer the widest 3G
coverage in the country.
• Airtel commands a 2G revenue market share of 35
per cent in the circles where it has won 3G spectrum.
• After its recent acquisition of Zain's African
operations, a panIndian 3G licence would have been
a financial drag for the company.

15. OTHERS’ STRATEGIES
• Vodafone Essar
• Vodafone has won only nine circles but these account for 68 per cent of its
current 2G revenues and 57 per cent of its subscriber base. Vodafone's strategy
has been to maintain its strong position in Category A and B circles. It has stayed
away from the Category C circles, believing that these have a lower revenue
potential.
• Idea Cellular
Idea Cellular has failed to win the coveted Delhi and Mumbai circles. It bid Rs
57.69 billion for the relatively less expensive 11 circles it won.
While these circles account for only 49 per cent of the country's
telecommunications market, they account for 77 per cent of Idea's subscriber
base and 81 per cent of its revenues.
• Idea has been emphasising that the demand for value-added services and
telephony is the highest in rural India, and, therefore, it makes sense for the
company to bet on these circles.

16. • Reliance Communications
Reliance Communications (RCOM) has played its cards very strategically.
It has won 3G licences in 13 circles for Rs 85.85 billion. The company has
spent 76 per cent of its total investment on the Delhi and Mumbai circles.
3G operations in Delhi and Mumbai would give RCOM the opportunity to
catch up with its peers. The company's image, which is identified with low-
cost offerings rather than high-end services, may change with its 3G
operations.
• RCOM's ARPU in these 13 circles is Rs 119.90 compared to Rs 95.80 in
the circles where it has lost.
• Tata Teleservices Limited
Tata Teleservices Limited (TTSL) was one of the most aggressive operators
when the 3G spectrum auctions started. But once the bid price started
escalating, the company stepped back.
• TTSL winning in only nine circles, however, has been surprising, especially
because 3G is the strong point of its JV partner NTT DOCOMO.

17. • Aircel
Aircel has surprised everyone by winning spectrum for 13 circles, which
account for 90 per cent and 91 per cent of its subscribers and revenues
respectively.
• It concentrated on circles like Tamil Nadu and the Northeast. It has also
won 3G licences in the Jammu & Kashmir.
• . Its bidding strategy was centred on the value added services potential of
the circles, apart from maintaining the high ARPU subscriber base.

18. BUSINESS CHALLENGES AND SOLUTION
• CHALLENGE 1
Bharti Airtel needed to maximize its future flexibility and growth
potential by adopting a business- driven framework for
integration, allowing it to implement and deliver new services rapidly.
With competition intensifying in the Indian telecom services
market, Bharti Airtel needed to find a way to focus on developing
new services that could set it apart from the competition and
strengthen its customer relationships.
• CHALLENGE 2
Bharti Airtel’s other big challenge was the need to make the major investments
in IT infrastructure required to service its rapidly growing base of
subscribers.
Bharti Airtel faced an added financial risk from a steady
decline in India's average revenue per user (ARPU) for mobile telecom
services, the result of government-mandated pricing changes that created –
at roughly eight dollars a month – one of the lowest ARPUs of the region.

19. • SOLUTION
• Thus, while Bharti Airtel realized that it was absolutely essential to invest
in its future growth, factors unique to the Indian market substantially
increased the risks of making these capital investments.
• To address these unique opportunities and challenges, Bharti Airtel
established a far-reaching 10 year outsourcing relationship with IBM that
substantially mitigates its IT investment risks by giving IBM full control
and ownership of Bharti Airtel’s IT infrastructure and associated
processes. Its new platform provides a standardized framework for Bharti
Airtel to integrate its channels and customer-facing processes – enabling a
more seamless customer experience, higher customer satisfaction and more
profitable growth.

20. Key Benefits found
• Ability to process 1.5 million new customers per
month.
• Outsourcing of technology enables Bharti Airtel
to focus resources on growing the business.
• Efficient total customer experience through end-
to-end integration of customer-facing processes.
• Optimization of business through flexible,
standardized integration framework.

21. Thank you