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Airtel -Bangladesh and Africa
1.
2. INTRODUCTION
Type Public company
Traded as Bhrati Airtel
Industry Telecommunications
Founded 7 July 1995
Founders Sunil Bharti Mittal
Headquarters Bharti Crescent, 1, nelson
nilson mandela road, newDelhi
Area served India & South Asia, Africa, and
the channel islands
Key people Sunil Bharti Mittal
(Chairman and MD)
3. Airtel
• Bharti Airtel formely known as Bharti tele venture( BTVL)
• It the largest mobile operator in south Asia & 3rd largest in the
world
• It was foundedd on 7th july 1995 by Sunil Bharti Mittal
• It is the largest service provider in india, with more than 261
million subscriber across 20 countries as of august 2012
• Airtel has been voted as 2nd most trusted service provider of the
year 2008
4. AIRTEL IN
BANGLADESH
Airtel formely known as a warid telecom.
It was founded on 2nd December 2010
Airtel Bangladesh has 7.97 million subscribers with 7.3% of market share.
On December 21, 2011, Airtel Bangladesh launched "Airtel Circle of
Friends"
5. Subscriber base
Bharti Airtel has about 230.8 million subscriber Worldwide.
169.18 million in India
46 million in Africa
4million in Bangladesh
1.8 million in Srilanka.
10. •Size and concentration of suppliers relative to products(low)
• Buyer’s switching cost (low)
•Buyer’s information (high)
“Ireallydon’tthinktheyareadverselyaffectingtheoperators’
performance…..doesn’thaveanysignificantimpactonthemarket.”
- RaihanIslam,FormerHeadofCustomerAcquisition,
AirtelBangladeshLimited
High
Low
LEVEL
Bargaining power of suppliers
11. Bargaining power of the buyers
LEVEL:
High
Low
•Similar products and services (High)
•Lower switching cost (low)
•Buyers information( High)
12. Rivalry among competitors
• Concentration market share
• Better value added services
• Intensity of competitors-High
13. Threat of New Entrants
•High Sim card Tax
•High License renewal fees
•Limited spectrum availability
• New entrants – by merging
with existing operators
15. WhyAfrica?
• Telecom Industry in developed markets has been saturated
• Africa market:
- Cellular and fixed-line telephone penetration rates are low, offering significant
customer and revenue growth potential.
- Wages are low; many workers speak English, French along with the enormous
number of the available workforce.
- Government policies attract FDI: improved environment, economic reform, private
sector encouragement and better FDI regulatory framework (allow profits to be
repatriated freely or offer tax incentives etc…)
16. Country Site Market status
Burkina
Faso
Airtel Burkina Faso 50% market share and dominant player with 1,433,000
customers .
Chad Airtel Chad No.1 operator with 69% share .
DR Congo Airtel DRC Market leader with 7million customers .
Gabon Airtel Gabon Market share 61%
Kenya Airtel Kenya 2nd largest operator with 7 million customers .
Niger Airtel Niger Market leader with 68% share .
Seychelles
Airtel Seychelles
Airtel is the leading comprehensive telecommunications
services providers with over 55% market share of mobile
market in Seychelles
19. STRATEGIES
Operates in 16 African Countries.
Mode of entry: Acquisition
Focus: Rebranding, improved network coverage, excellent
customer care and range of products to chose from.
CAPEX: Expand with lower capex and discussion with the
government for utilizing USO fund for network.
Partners: Looking for strategic partners and setting up of base
in Nairobi.
Telecom Population: Increase minutes of usage from 50-60
minutes to 250 minutes and increase the net density.
20. MACRO
ENVIRONMENT
OF AFRICA
Political factors:
Many African countries are just out of the civil war.
Corrupt previous governments have left behind
them disorderly regulatory regimes.
Governments tend to intervene in the industry.
Technological factors:
3G mobile services
Expansion of GSM networks
Upgrades in data transmissions due to rapid
growth of ADSL and wireless broadband services.
Socio-cultural factors:
Women in sub-Saharan African
countries contribute over 40% of the
economic activity of most nations.
The literacy of women is low.
Increase in the use of mobile phones.
Environmental factors:
Stress on saving energy due to high energy
consumption in the industry.
New technologies for energy saving network
towers and grids.
Economic: factors:
6% growth rate predicted in the sector for the year 2015-
2018 in Africa.
Very fertile market, with a significant increase in
consumption of new technologies.
Sensitive economical disparity depending on the regions
of the continent
Tremendous investment in the sector since 2007.
Legal factors:
Unified licensing introduced in 2006.
Continuing liberalization of VOIP (Voice
Over Internet Protocol).
Privatization of national
telecommunications services in the region is
continuing with significant premiums over
reserve prices being paid.
22. is the telecommunications
industry attractive in Africa? Yes
Threat of new
entrants:
LOW
Can new entrants
get subsidies by the
Government? Yes.
Brand loyalty? Yes.
Facilities to access
to distribution
channels? No.
Capital
requirements?
Huge.
Bargaining power of
suppliers:
HIGH
Is the Industry a key
consumer group to
the suppliers? Yes.
Is strong their role
in the quality of the
service? Yes.
Are brand of the
suppliers strong?
Yes.
Few dominant
suppliers? Yes.
Threat of substitute
products or services:
LOW / MODERATE
Are buyers willing to
switch to them? No, at
the moment.
Are they cheaper? Yes.
Are they more
convenient? No.
Are the substitutes
better (quality)? No.
Bargaining power of
consumers:
LOW
Threat of backward
integration into the
industry? Absolutely
not.
Are buyers usually
tough? No.
Are products very
differentiated? No.
Market size? Huge
and increasing.
Competitive rivalry
within an Industry:
HIGH
Are high the
barriers to leaving
the Industry? Yes.
Can buyers switch
company easily?
Yes.
Has the Industry
high fixed cost?
Yes.
Equality size
competitors? No.
23.
24.
25.
26. SummaryAfrica strategies
in telecom industry
• Target new emerging market
• Takeovers
• Direct marketing
• Nation wide network coverage
• Cheap pricing
• Limited services
• Colonial entry barriers
• Rural area vs major cities
27. Possible benefits and problems
of current strategy
• Integrate into an existing business that already knows the culture and how the country does business
• Able to use partners’ network to offer its customers a range of service, which utilize ‘home’ network
capabilities as well as extended coverage within Africa
• Enable to meet their needs for unified communications, centralized customer care and services using local
network.
• Lower cost of operation
• Benefiting from lower roaming charges
• Powerful brand association
BENEFITS
PROBLEMS
• Cultural, administrative, geographical and economical distances (CAGE framework)
• Increase in cost of integrating and management • Decreased corporate performance and services •
Potentially lowered industry innovation • Suppression of competing businesses • Decline in equity pricing
and investment value
• Conflict for control and decision-making between Parent company & subsidiary
• Governments’ support could decline (E.g: Vivendi and Morocan government)
Notes de l'éditeur
We use income per capita by countries and investment capital to figure out if there is any link between them in the expansion strategy of 6 telecom companies. We assume that Joint-venture will require less amount of investment than buying license to operate, whereas acquisition will require highest investment.
From the graph, we can see that Airtel and Vivendi have built its presence in Africa through acquisition in all destinations, whereas, Vodafone, Orange and Etisalat have a range of different strategies to enter different markets. Virgin has operated in only 1 African country through Joint-venture.
VIVENDI: Maroc Telecom has launched recently mobile contracts under the name of universal music “forfaits universal music” to encourage young Moroccan vivid with music to download music tunes and videos directly from Universal Music Productions to their mobiles. However, all Moroccans are accustomed to get music illegally , and such methods of encouragement will not lead to success since many Moroccans come from the middle class society.
=> ISSUES:
Intense use of piracy in Africa , and especially with its subsidiary Maroc Telecom impacts on the profitability of mobile internet services.
Tough regulatory constraints from the Moroccan government regarding promotional offers since they are partly associated to events like religious aids and the new years celebration, and also costly tarriffs from all operators in Morocco (Maroc Telecom, Meditel, Wana )