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Bharti Airtel in Africa

STMT case analysis on

BHARTI AIRTEL IN AFRICA

Top Facts

In 2009, Africas Mobile penetration was 30% hence it had a large potential for rise in
user base.
In 2009, Bharti Airtel had 33% of the market share in India.
By 2012, the company had 246 million subscribers and produced 2.8 millions a day.
Africa was the worlds poorest and most underdeveloped continent yet six of the top 10
fastest growing economies in the world were from Africa.
Middle class in Africa was expected to reach 100 Million in Africa mirroring that of India.

The internal analysis of the Bharati Airtel and the differences it faces regarding the business
model, population, operations and its alignment and compatibility with both the regions is

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Bharti Airtel in Africa
shown below.

Strength

High Market share


Good Partner relations

Weakness

CRM
Financials

Opportunit
y

Emerging Markets
Room for tarrif cuts
Rural markets
Area expansion for telecom
Cut throat competition
Poor infrastructure

Threats

MODEL

DIFFERE
POPULATION
NCE

High volume
low cost

Medium cost
medium
volume

Homogenous

India

Heterogenous

Africa

OPERATIONS

Operational
Efficiency

Operational
inefficiency

MODEL
ALIGNMENT

Compatibility

Incompatibility

The emerging economies serve as a path for expansion of the companys


services. In this case the emerging economy of Africa was chosen by Bharti airtel
because of various reforms taking place in Africa. The growth rate for African
countries was expected to be around 5.75 to 10 % .The Countries had moved
towards democratic elections and had begun the process of trade and economic
integration.
However the emerging economies face the problem of poverty. In Africa there
were problems like malnutrition, illiteracy, inadequate water and sanitation and
diseases like malaria, HIV, ebola etc.

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Bharti Airtel in Africa
Bharti-Airtel enjoyed first movers advantage in India. However in Africa there
were existing players like MTN, Vodacom, Orange, safaricom. The working model
for the African telecom sector was based on European players. Therefore when
Indian player moved in Africa it had to face lots of challenges in terms of
operational efficiency due to misalignment.
Why Acquire Zain?

Increase the
market share.
Smart pricing
strategy
Flexible pricing .
Region based
strategy for
bringing in high
volume -low cost
models.

Paathway to
success

Talent shortage
Rising Costs
Outsourcing
Obstacles
Multiple
countries
Cultural
Diferences

Key Risks and


challenges

Why Acquire Zain?


1. Africa was new
market for Bharti
Airtel.
2. Access to the 36
million revenue
earning customers.
3. Access to Markets
in 15 African Countries

The competition faced by Bharti Airtel in Africa was from brands like MTN,
Vodacom, Orange, Safaricom.
Competitor
Revenue
Subscribers
2011 figures.

MTN
$12.5 billion
115 million

VodaCom
$8.5 billion
53 million

Orange
$4.8 billion
64.9 million

Safaricom
$1.4 billion
18.6 million

Prior to the acquisition, Zain had registered revenue of $3.7 billion and in 2011
4.2bn. The subscriber base in 2011 was 51.2 mn.
Thus Bharti Airtel faced a stiff competition from MTN which was the leader in
African Markets.
MTN focused on acquiring, retaining and upselling customers. It enhanced its
distribution channels, segmented customer service and was implementing its
mobile payments offering and defining its mobile health strategy.
Thus Bharti Airtel has to take into account all the competitor strategies while
making one to generate a sustained competitive advantage in the African region
where it was expanding its subscriber base.

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