INTRODUCTION

THE INDIAN CELLULAR MARKET AND ITS CHANGING SCENERIO IN

INDIA

Some 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
each call 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 of legacy 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 mobile
phones. 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 is
complete 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. When mobile telephony was introduced in India in 1994, there were
just a few service providers, such as Airtel. It was a heavily regulated sector with
prohibitive license fees, high call charges of 30 cents per minute, and expensive handsets.

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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.

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PRICING STAGES OF DIFFERENT MOBILE SERVICE PROVIDERS

Through the rollout of mobile cellular networks (GSM) in India began only seven
years ago, the industry has already passed through three growth phases. The initial phase
(1995-98), period with the bare minimum network coverage, catered only to the high-end
segment with call charges around Rs.14 a minute. With the explosion in subscriber
volume during 1998-2000 (Phase 2), the rollout spread to metropolitan cities, major
highways and relatively dynamic small cities bringing down call charges to Rs. 9 a
minute. The third phase (2001 and 2005) was a watershed for the Indian mobile industry;
the growth in these two years exceeded all the achievement of the earlier five years. The
Call charges came down to Rs 1 a minute directly attacking the fixed landline services
particularly the PCO. This pushed the operators to add capacity to their networks
furiously

Traditionally, wireless operators have used a number of metrics that collectively

provide a measurement of `network service quality' from the users' perspective. A
combination of the following 4-key performance indicators (KPIs) largely determines the
overall service quality: system coverage; call blockage; voice quality; and dropped call
rate.
Following four is the main area of attention kept in mind by the companies while
providing and deciding pricing
• System coverage
• Call blockage
• Voice quality
• Dropped call rate

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 MAJOR TELECOM OPERATORS IN INDIA

RELIANCE

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani

Group (ADAG) of companies. Listed on the National Stock Exchange and the Bombay
Stock Exchange, it is India’s leading integrated telecommunication company with over
55 million customers.

It has a complete range of telecom services covering mobile and fixed line
telephony. It includes broadband, national and international long distance services and
data services along with an exhaustive range of value-added services and applications.
Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002,

TATA INDICOM

Tata Teleservices is part of the INR Rs. 1,20,000 Crore (USD $29 billion) Tata
Group, that has over 87 companies, over 3,30,000 employees and more than 2.8 million
shareholders. Incorporated in 1996, Tata Teleservices was the first to launch CDMA
mobile services in India with the Andhra Pradesh circle. Starting with the major
acquisition of Hughes Telecom (India) Limited [now renamed Tata Teleservices
(Maharashtra) Limited] in December 2002, the company swung into an expansion mode.
Having pioneered the CDMA 3G1x technology platform in India, It has partnered with
Motorola, Ericsson, Lucent and ECI Telecom for the deployment of a reliable,
technologically advanced network.

The company, which heralded convergence technologies in the Indian telecom

sector, is today the market leader in the fixed wireless telephony market with a total
customer base of over 3.1 million. Tata Teleservices’ bouquet of telephony services
includes Mobile services, Wireless Desktop Phones, Public Booth Telephony and Wire
line services. Other services include value added services like voice portal, roaming,

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post-paid Internet services, 3-way conferencing, group calling, Wi-Fi Internet, USB
Modem, data cards, calling card services and enterprise services.

Tata Indicom redefined the existing prepaid mobile market in India, by unveiling
their offering – Tata Indicom "Non Stop Mobile" which allows customers to receive free
incoming calls. With a total Investment of Rs 19,924 Crore, Today, Tata Teleservices
Limited along with Tata Teleservices (Maharashtra) Limited in over 5,000 towns. With
an ambitious rollout plan both within existing circles and across new circles, Tata
Teleservices offers world-class technology and user-friendly services in 20 circles.

Tata Teleservices (TTSL), along with Tata Teleservices (Maharashtra) Limited

(TTML) operates in Andhra Pradesh, Gujarat, Karnataka, New Delhi, Maharashtra,
Mumbai, Tamil Nadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal Pradesh,
Uttar Pradesh (E), Uttar Pradesh (W), Kolkata, Kerala, MP, CG and Rest of WB. It will
also be launching its services in J & K and North East circles soon. Tata Teleservices has
also acquired GSM licenses for specific circles in India.

MARKET DATA

Tata Indicom in March 2008, crossed the 24 million subscribers mark in the
wireless category with a overall subscriber base of over 25 million.It has a current
subscriber base of 24.3 million and a 9.33% cumulative market share. Tata Indicom
continues to register the highest CAGR at 113% in the wireless segment with a net base
of 12.8 million against a starting base of 11.8 million. Tata Teleservices also gained the
No. 2 slot in terms of Market Share in Delhi NCR region with a subscriber base of 3
million. It beat Vodafone to the No. 2 spot and positioned itself just behind Airtel in the
circle.

MTNL

Mahanagar Telephone Nigam Limited (NYSE: MTE) is an Indian Government-

owned telephone service provider in the cities of Mumbai, Thane, New Delhi, and Navi

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Mumbai in India. The company was a monopoly until 2000, when the telecom sector was
thrown open to other service providers.

'Maha' = big or great, 'Nagar' = city or town, 'Mahanagar' = metropolis or

megacity, 'Nigam' = venture or enterprise.

PRODUCTS

MTNL provides fixed line telephones, cellular connection of both GSM —

Dolphin(Postpaid) and Trump (prepaid) and WLL (CDMA) — Garuda-FW And Garuda-
Mobile and internet services through dialup and DSL — Broadband internet TriBand.
MTNL has also unveiled very cost-effective Broadband Internet access plans (TriBand)
targeted at homes and small businesses.

At present MTNL enjoy's the largest of the market share of ISP services in
Mumbai and Delhi.MTNL has upgraded existing TriBand (Broadband) connections for a
speed of up to 2 MB/s without any extra cost. This 2 MB/s broadband service is being
provided by MTNL at a cost of just US$5.00 per month.

BSNL

Bharat Sanchar Nigam Limited (known as BSNL, India Communications

Corporation Limited) is a public sector communications company in India. It is the
India's largest telecommunication company with 12.44% market share as on October 31,
2008 It has the status of Mini-ratna - a status assigned to reputed Public Sector companies
in India.

BSNL is India's oldest and largest Communication Service Provider (CSP).

Currently has a customer base over 30 million as of June 2008.[1] It has footprints
throughout India except for the metropolitan cities of Mumbai and New Delhi which are
managed by MTNL. BSNL is India's largest Telco and is one of the largest Public Sector
Undertaking with estimated market value of $ 100 Billion.

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IDEA

Idea Cellular is a wireless telephony company operating in various states in India.

It initially started in 1995 as a join venture between the Tatas, Aditya Birla Group and
AT&T by merging "'Wings Cellular'" operating in Madhya Pradesh,UP West,Rajasthan
and Tata Cellular as well as Birla AT&T Communications.

Initially having a very limited footprint in the GSM arena, the acquisition of
Escotel in 2004 gave Idea a truly pan-India presence covering Maharashtra, Goa, Gujarat,
Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttar Pradesh (East and West), Haryana,
Kerala, Rajasthan and Delhi (inclusive of NCR). Idea launched services in Mumbai on
20th August, 2008.

The company has its retail outlets under the "Idea n' U" banner. The company has
also been the first to offer flexible tariff plans for prepaid customers. It also offers GPRS
services in urban areas. The Subscriber Base of Idea as on 31st October 2008 is
3,15,82,937

SPICE

Spice Telecom is the brand name of Spice Communications Limited, a mobile

phone service provider in India. Considered as one of the best service providers of mobile
telephony in India, Spice Telecom is currently operating in the states of Punjab (India)
and Karnataka i.e., in 2 circles of 23 Telecom Circles of India. Spice Communications
Limited was promoted by Dilip Modi of Modi Wellvest Private Limited, which owns
40.80% of the company.

Spice Telecom is a flagship company of MCorp Global (www.mcorpglobal.com)

a cellular mobile telephone services provider in India.Launched over ten years ago,
Spice’s cellular services have a customer base of 36,37,129 as at October 2008 in Punjab
and Karnataka.

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BPL

Having started its services in 1995, BPL Mobile currently operates in Mumbai
city with more than 1 million happy and satisfied subscribers. It is the no. 1 service
provider in Mumbai in terms of no. of subscribers. In the latest The VOICE&DATA
Mobile User Satisfaction Survey 2007 revealed that in overall satisfaction BPL Mobile
has surpassed the TRAI benchmark of 90%.

In MUMBAI, BPL Mobile is the only mobile service provider to have surpassed
this benchmark. Being in the service industry and customer centricity being at the core,
BPL Mobile has once again proved that we are “Best in the Business” having ranked first
in Customer Care and Sales/Presales.BPL presently has the best schemes presently as
compared to all the other service providers in Mumbai.

AIRCEL

Aircel is a joint venture between Maxis Communications Berhad of Malaysia and

Apollo Hospital Enterprise Ltd of India. It is India’s seventh largest GSM mobile service
provider with a subscriber base of over 10 million (over 4 million in Chennai & Tamil
Nadu alone) and the fastest growing mobile operator in the country. It has a market share
of 5.48% among the GSM operators in the country. As on date, Aircel is present in 9
telecom circles (Assam, Bihar, Chennai, Himachal Pradesh, Jammu & Kashmir, North
East, Orissa, Tamil Nadu and West Bengal) and with licences secured for the remaining
14 of the 23 telecom circles, the company is on track to become a pan-India operator by
2009.

Aircel has won many awards for its services. Aircel got the highest rating for
overall customer satisfaction and network quality in 2006 by Voice and Data. Aircel was
rated as the top mid-size utility company in Business World’s ‘List of Best Mid-Size
Companies’ in 2007. Moreover, Aircel has been selected as the best regional operator in
2008 by Tele.net. Aircel are one of the sponsors of the Indian Premier League Cricket
Team Chennai Super Kings captained by Mahendra Singh Dhoni.

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HFCL

HFCL Infotel Ltd., the first basic telephony services provider for Punjab launched
it’s operations on 16th October, 2000. Today CONNECT has added a milestone to the
rich economy of Punjab by providing world-class telephony and data services in the state.
CONNECT is a business venture of Himachal Futuristic Communications Ltd.,
India's leading telecommunications giant. CONNECT is further supported by the
expertise of Lucent Technologies USA, IIT Chennai, Compaq, Cisco, CGI, Bell Nexxia
and Cincom.

With an investment of over Rs.1200 Crores HFCL Infotel, has set up a state-of-
the-art network in over 66 towns and cities in Punjab. The average revenue per line
(ARPL) for CONNECT subscribers is already amongst the highest in the country.

The service encompasses voice, data and video, via single connectivity, as also
mobile telephony based on CDMA technology, to customers. CONNECT was the first
operator in the country to provide a CDMA based pre-paid mobile service. Besides
telephony and Internet access CONNECT services include an array of broadband,
enhanced and data services like Internet Leased Lines, ISDN, VPN, Centrex, Web
Hosting, DSL and server Co-location.

Shyam

Shyam already has the spectrum for the following 12 circles : Tamil Nadu, West
Bengal, Andhra Pradesh, Uttar Pradesh (East) Uttar Pradesh (West), Himachal Pradesh,
Madhya Pradesh, Bihar and Haryana, North-East, Assam and Jammu and Kashmir.

Shyam Telecom enables reliable mobile communication for GSM, CDMA,

iDEN®, UMTS, TETRA™, and Public Safety. “Shyam telecom service provider is an
innovative wireless communication solutions provider globally.”

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Today, Shyam Telecom focuses on providing wireless coverage solutions for various
entrenched and evolving technologies globally. At Shyam Telecom, it provide
infrastructure that enables reliable and affordable wireless communication.

Recognized by the Government Of India, the Department of Science &

Technology awarded Shyam Telecom the 1997 award of excellence in Research &
Development. Today, leveraging their experience in Cable TV, Radio, and Mobile
Communications, they continue to develop new and innovative solutions for the
customers; solutions that assist the customers in realizing seamless mobility.

According to this article in The Hindu Business Line Shyam Telelink has been
allocated the spectrum to start CDMA service in Maharashtra. Shyam Telelink is partly
owned by Russian conglomerate Sistema

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GEOGRAPHICAL DISTRBUTION OF SERVICE PROVIDERS

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Group Company Total Subscribers
Airtel(GSM) 80199747
Reliance (CDMA + GSM) 57427888
Vodafone Essar(GSM) 56703506
BSNL(GSM) 39836494
IDEA(GSM) 31582937
Tata (CDMA) 30162845
Aircel(GSM) 14659298
MTNL(GSM) 3743879
Spice(GSM) 3637129
BPL(GSM) 1807902
HFCL (CDMA) 374334
Shyam (CDMA) 194434
Total (All India) 32,03,30,393

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AIRTEL

Established in 1985, Airtel is a pioneering brand of telecommunication services

in India operated by Bharti Airtel. Bharti Airtel, formerly known as Bharti Tele-Ventures
Limited (BTVL) is India's largest GSM mobile operator with more than 80 million
mobile subscribers as of October 2008. It offers its mobile services under the Airtel brand
and is headed by Sunil Mittal. Bharti gave Delhi its first Mobile Services - Airtel. Bharti
Airtel provides the following services under the brand name Airtel: Mobile Services
(using GSM Technology), Broadband & Telephone Services (Fixed line, Internet
Connectivity (DSL) and Leased Line), Long Distance Services and Enterprise Services
(Telecommunications Consulting for corporates). Bharti Airtel mobile services group
footprints GSM mobile services across India in 23 telecom circles, while the B&T
business group provides broadband & telephone services in 90 cities. The company also
has a submarine cable landing station at Chennai, which connects the submarine cable
connecting Chennai and Singapore.

Company shares are listed on The Stock Exchange, Mumbai (BSE) and The
National Stock Exchange of India Limited (NSE). Its service standards compare with the
very best in the world. In fact, that’s how Bharti has managed to win the trust of millions
of customers and makes it one of the top 5 operators in the world, in terms of service and
subscriber base.Although Bharti Airtel is the largest mobile service provider, BSNL, the
state run mobile and wireline service provider is the market leader as of 30 June 2008
customer's base.

The company has several Firsts to its credit:

♣ The First to launch full roaming service on pre-paid in the country.
♣ The First to launch 32K SIM cards.

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 ♣ The First in Asia to deploy the multi band feature in a wireless network for
efficient usage of spectrum.
♣ The First to deploy Voice Quality Enhancers to improve voice quality and
acoustics.
♣ The First telecom company in the world to receive the ISO 9001:2000
certification from British Standards Institute.

Partners

The 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 by Vodafone in Bharti is one of the largest single foreign investments made in the
Indian telecom sector. The company’s 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 information technology 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 straddling
diverse 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 global
telecommunications 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 the
length and breadth of India.

While a joint venture with Teletech Inc., USA marked Bharti’s successful foray
into the Customer Management Services business, Bharti Enterprises’ dynamic
diversification has continued with the company venturing into telecom software

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development. Recently, Bharti has successfully launched an international venture with
EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products
exclusively to markets in Europe and USA.

In July 2007, Bharti Airtel signed an MoU with Nokia-Siemens for a 900 million
dollar expansion of its mobile and fixed network. In August 2007, the company
announced it will be launching a customized version of Google search engine that will
provide an 'array of services' to its broadband customers.

Touchtel
Until September 18, 2004, Bharti provided fixed-line telephony and broadband
services under the Touchtel brand. Bharti now provides all telecom services including
fixed-line services under a common brand "Airtel"

BlackBerry
On 19th October 2004 Airtel announced the launch of a BlackBerry Wireless
Solution in India. The launch is a result of a tie-up between Bharti Tele-Ventures Limited
and Research In Motion (RIM).

Digital TV
On 9th October 2008, Airtel joined the DTH bandwagon in India with Airtel
Digital TV, a Direct-to-Home Televison service. Airtel Digital TV, was rated as the best
by several people.

Awards and recognition. (In 2006)

Wireless service provider of the year 2005 at the Frost and Sulivan Asia-Pacific ICT
awards. Competitive service provider of the year 2005 at the Frost and Sulivan Asia-
Pacific ICT awards

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Subscriber Base

The Airtel subscriber base according to COAI - Cellular Operator Association of India as
of October 2008 was:

Delhi – 40,85,823
Mumbai – 25,04,607
Chennai - 1868971
Kolkata - 1869376
Maharashtra & Goa - 4446823
Gujarat - 3172894
Andhra Pradesh - 6768181
Karnataka - 7621369
Tamil Nadu - 4418910
Kerala - 1731866
Punjab - 3259765
Haryana - 1074643
Uttar Pradesh (West) - 1684173
Uttar Pradesh (East) - 4157467
Rajasthan - 4485126
Madhya Pradesh - 3270948
West Bengal & Andaman and Nicobar – 2276586
Himachal Pradesh - 811968
Bihar - 5127695
Orissa - 2005885
Assam - 968708
North Eastern States - 606982
Jammu & Kashmir - 1164949

The total is 8,01,99,747 or 25.04 % of the total 24,13,77,019 GSM mobile connections in
India till October 2008.

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AIRTEL PRODUCT RANGE

Airtel Pre-paid: Airtel prepaid, the ready cellular card from Airtel, includes everything
that customer dreamt and believed,possible.Its simple to use and comes with a host of
great features like total cost control , instant balance enquiry, easy recharge .
Airtel Post-paid: Airtel post-paid gives subscribers unlimited freedom to reach out to
their special ones, in their special way. It offers services like National & International
Roaming, easy billing.
Blackberry Wireless Handheld: Airtel Enterprise Services offer the most secure and
technologically advanced wireless data experience for people on the move, who are in
constant need of staying in touch with emails and other office applications.
Value Added Services (VAS): The different value added services provided by Airtel are-
♣ Instant Balance Enquiry
♣ 24Hr recharge Facility
♣ Caller line identification
♣ Call divert, Call wait & Call Hold
♣ Multimedia messaging service (MMS)
♣ Hello Tunes & Ring Tones
♣ Airtel Live Portal
♣ SMS based Information Service
♣ Voice Mail Service
♣ Easy Post-paid bill collection
♣ Gifting of Ring Tones & Hello Tunes
♣ GPRS

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BRAND EQUITY BUILDING:

In 2002, the leading Indian telecommunications company, Bharti Cellular Limited

(Bharti) signed the famous cricket player Saurav Ganguly and leading movie stars,
Madhavan and Kareena Kapoor as endorsers for its brand, Airtel Magic (pre-paid cellular
card). Its objective was to create the highest recall for Magic in the pre-paid cellular
telephony segment by cashing in on the two biggest passions of India - movies and
cricket. Bharti also changed the tagline for Magic from 'You Can Do Magic' to 'Magic
Hai To Mumkin Hai' (If there is Magic, it's possible). The move attracted considerable
media attention, as it was unusual for a company to spend so lavishly to promote a single
brand.

In October 2002, Bharti launched a television commercial (TVC), featuring Shah

Rukh Khan (leading actor, already endorsing Magic since a couple of years) and Kareena
Kapoor. The TVC, developed by one of India's leading advertising agencies, Percept
Advertising, was the first of the series of four TVCs for Magic's new campaign.
According to Bharti, the TVCs aimed at attracting young adults in SEC B and C
categories of the Indian market1.

Commenting on the new developments, Hemant Sachdev (Hemant), Director,

Marketing and Corporate Communications, Bharti Enterprises, said, "The aim is to be
relevant to the masses and make all their dreams, hopes and desires come true instantly,
at Rs 3002 per month."

However, industry observers felt that these actions were necessiated by the
intensifying competition in the pre-paid cellular card segment in India in the early 21st
century. Many new players (national as well as international) had entered the segment
and the competition had become quite severe. Besides Magic, the major players in the
pre-paid card segment in 2002 included Idea (Tata, AT&T and Birla Group), Speed
(Essar), Hutch (Hutchison), Wings (RPG), Cellsuvidha (Fascel) and Yes (Usha Martin).

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In October 2002, Magic led the market, with 30% of the market share. Bharti claimed
that its strategies were one of the most ambitious experiments ever in the Indian pre-paid
cellular telephony market. However, given the increasing competitive pressure, doubts
were being expressed regarding the ability of Bharti's marketing initiatives to help Magic
retain its 'Magic' in the future.

Accordingly, Airtel was the first cellular service provider to start customer centers
(called Airtel connects), where customers could pay their bills, apply for new connections
and touch and feel new handset models. Airtel perceives its future in product innovations
such as easy charge (recharging prepaid connection through SMS), hello tunes, the
Blackberry option, stock tickers and M-cheques (mobile credit cards). The customer care
centers, too, are metamorphosing into "relationship centers", one-stop shops where
subscribers can not only pay their bills an have their queries answered, they can shop for
new phones, surf the net and enjoy a cup f coffee. According to Airtel "What matters is
what the customers want,"

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PRODUCT PROMOTION STRATEGY AND AD CAMPAIGN

AIRTEL VISION STATEMENT & BRAND POSITIONING

By 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 about
experience; 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, the brand was all
about aspiration. That's understandable: a handset cost about Rs 45,000 - the price of a
second-hand Fiat - and call charges hovered around Rs 16 a minute.

Naturally, the target customer was clearly defined: elite, upmarket professionals and
entrepreneurs. "We positioned Airtel as an aspirational and lifestyle brand, in a way that
trivialised the price in the mind of the consumer. It was pitched not merely as a mobile
service, but as something that gave him a badge value," recalls Hemant Sachdev, chief
marketing officer (mobility) and director, Bharti Tele-Ventures.

Airtel was on a power trip: the logo was black, uppercase bold lettering; and the
baseline was "the power to keep in touch". "From day one, it was decided that the brand
should always connote leadership - be it in network, innovations, offerings or services,"
says Diwan Arun Nanda, CMD, Rediffusion-DY&R, the agency that has created all
Airtel ads over the past decade. The taglines emphasised that stance: "Airtel celebrates
the spirit of leadership" and "The first choice of the corporate leaders".

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

In 1999, the rules of the game changed. The New Telecom Policy came into effect,
replacing license fees with a revenue-sharing scheme and extending the license period

20
from 10 to 20 years. Now, cellular service operators could drop 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 life good and
advertising became two-pronged: a product-driven communication that showcased new
offerings like the Magic prepaid card, and an emotional communication that showed
younger people.

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

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

The latest campaign continues that thought. Only, mobile telephony is now extending
to even low-income mass categories. So the first TVCs in Hindi and regional languages
are now on air, as are low-priced products, like the Rs 200-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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RELATIONSHIP MANAGEMENT
Accordingly, Airtel was the first cellular service provider to start customer centres
(called Airtel connects), where customers could pay their bills, apply for new connections
and touch and feel new handset models.

The way to the future, though, seems to be through product innovations such as
easy charge (recharging prepaid connection through SMS), hello tunes, the Blackberry
option, stock tickers and M-cheques (mobile credit cards).

The customer care centres, too, are metamorphosing into "relationship centres",
one-stop shops where subscribers can not only pay their bills and have their queries
answered, they can shop for new phones, surf the net and enjoy a cup of coffee. "What
matters is what the customers want," points out Mittal.

Based on their vision statement their product Promotion strategy and Ad

Campaign is based. Airtel is an amazingly successful brand. It has very visible
advertising, with a fairly high share of voice.
As mobile services are an extremely competitive (cutthroat?) category, there are a
number of advertising renditions that happen. One of the most interesting ones for me as
a consumer was the one with A. R. Rahman in Hyde Park, was it, playing with an
assortment of musicians even as an adoring recording artist listens to the music that is
carried through Airtel mobile's service. it was a brilliant track. Airtel had integrated this
piece of communication, making it a fairly popular ring tone. Every second Airtel user
had this ring tone and enthusiastic guys even used it in their cars as they reversed.

• AR Rahman’s SIGNATURE TUNE

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• BRAND AMBASSADOR TWO OF INDIA’s BIGGEST CELEBRITIES
SACHIN 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.

AIRTEL’s 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
land mark promotion campaign.

23
MATCH-BOX APPROACH

Bharti Airtel, for instance, has adopted the `match-box approach' which
essentially will ensure Airtel's availability wherever a match-box is available, even in the
smallest and remotest corners of the country. "The other key initiative is our `Chapa
Chapa' approach which supports our objective of reaching out to all towns with a
population of less than 5,000. We believe that the next level of growth will happen from
these geographies," says a Bharti Airtel spokesperson.

24
AIRTEL : POSITIONING (AND REPOSITIONING )

(With these launches, we will create an Airtel users community that will have a better
depth of service availability than all competition.)

- Sunil Mittal, Bhartis CMD, commenting on the launch of Airtels New Logo.

FROM TOUCH TOMMOROW TO LIVE EVERY MOMENT

In late-2002, Bharti Cellular Ltd. (Bharti), India largest cellular telephone

company released a television commercial (TVC), which despite using the oft-repeated
celebrity endorsement route was unusual in terms of its celebrity selection. Instead of
using the usual movie stars/sports celebrities, it chose one of country’s most successful
music composers, A.R. Rahman to promote its brand.

The campaign attracted considerable media attention because this was the first
time Rahman had agreed to do a television commercial and also because, Rahman had
been paid Rs 10 million for the campaign, a sum usually unheard of, for celebrity
endorsers in India. The campaign received brickbats as well as bouquets in the media,
both for the selection of Rahman and TVCS execution. However, Bharti claimed to have
scored an ace in terms of getting Rahman to compose five exclusive symphonies
downloadable as ring tones for Airtel users.

The TVC was a part of the brand repositioning and restructuring efforts for Airtel,
as part of which, Bharti changed the brands tagline in early-2002 from Touch tomorrow
to Live Every Moment. The company also decided to undertake a comprehensive brand-
building program, for the company and chose the slogan Unlimited Freedom for the
same. Commenting on these changes, company sources said Airtel brand identity and
campaign will now have a new younger and international look and feel that builds on the
earlier positioning.

25
 Bhartis massive media expenditure plans were no surprise, considering the fact
that it was the largest cellular telecom company in the country- reaching over 600 million
people in 16 (out of 29) states of India. The Airtel brand (and the prepaid card service
brand, Magic) had top-of-the-mind recall amongst cellular phone users and enjoyed a
leadership position in most markets. Industry observers primarily attributed it to Bhartis
strong brand building and positioning strategies.

BACKGROUND NOTE

Sunil Bharti Mittal (S.B.Mittal) laid the foundations of the New Delhi based
Bharti Group in the 1970s with a small bicycle-parts business. IN 1985, he entered the
telecom business by establishing Bharti Telecom Limited (BTL) entered into technical
collaboration with Siemens AG (Germany) for manufacturing electronic push button
telephones. BTL also signed an agreement with Takacom Corporation (Japan) for
manufacturing telephone answering machines. Over the years, BTL tied up with leading
telephone equipment manufacturers from countries such as South Korea and US.

The Group entered the telecommunication (telecom) industry during the early-
1990s. Bharti Tele-ventures, a part of Bharti group, offered various telecom services such
as fixed line, cellular, V-SAT and Internet services. The operation of Bharti Tele-
Ventures was run by four wholly owned subsidiaries. These were Bharti Cellular Lts.
(Cellular), Bharti Telenet Ltd. (Access), Bharti Telesonic Ltd. (Long Distance) and
Bharti Broadband Networks Ltd. (Broadband solutions). The flagship services of the
Bharti group included Airtel (cellular), Mantra (Internet services) and Beetel (telephone
instruments).

In 1992, Bharti entered the cellular market by launching services in Delhi. Over
the next few years, it also entered other telecom circles. (At that time The Indian telecom
market was divided into 21 telecom circles, which in turn, was divided into three
categories A, B and C based on their size, density (population) and importance. Category
A comprised Maharashtra, Gujarat, Andhra pradesh, Karnataka and Tamil nadu; B
comprised Kerala, Punjab, Harayana, Utter pradesh, Rajasthan, Madhya pradesh and

26
West Bengal; C comprised Himachal pradesh, Bihar, Orrisa, Assam, and North East.
Cellular licenses were separately issued for in the metros of Delhi, Chennai, Mumbai and
Kolkata.)

In the early 2000s, Bharti invested heavily in the acquisitions and alliances to
expand its cellular market in India. As a part of this, Bharti acquired JT Mobile (Andhra
Pradesh and Karnataka), SkyCell (Chennai) and Spice Cell (Kolkata). It even announced
plans to acquire Usha Martin, the leading cellular service in Kolkata. It also entered into
collaborative agreements with BPL to gain seamless access in Mumbai, Maharashtra,
Chennai, Delhi, Kerala, Tamil Nadu, Andhra Pradesh and Karnataka.

Bharti launched Airtel as a post paid cellular service in Delhi in November 1995.
Over the next few years, the company redefined the way cellular services were being
marketed in the country. This was made possible due to its innovative marketing
strategies, continuous technological up gradations, new value added service offerings and
efficient customer service. Initially confined only to the Delhi circle, Airtel's services
were soon extended to many other places.

Through the Airtel brand, Bharti set many benchmarks for the Indian cellular
industry. It was the first cellular operator to set up cellular showrooms. The company
opened its first showroom 'Airtel Connect' in Delhi, in late-1995. Airtel Connect was a
one stop cellular shop where customers could purchase handsets, get new connections,
subscribe to various value-added services and pay their mobile bills.

Bharti was also the first cellular company to install a second mobile switching
center. (The central switch that controls the entire operation of a cellular system. It is a
sophisticated computer that monitors all cellular calls, keeps track of the location of all
cellular-equipped vehicles traveling in the system, arranges hand-offs and keeps track of
billing information. By operating multiple switching centers, cellular service providers
can increase the efficiency of their operations significantly.) In April 1997, The company
was the first to provide roaming cellular services and other value-added services such as
Smart mail, Fax, Call hold, Call waiting and Information services.

27
 Bharti was the first company to launch an online e-commerce portal that enabled
customers to make online payments. It also provided them with information regarding
cellular services and the features of handsets manufactured by various companies, along
with their price. On account of such initiatives, during the late-1990s, Airtel was named
the 'Best Cellular Service' in the country, and won the 'Techies' award (Techies awards
are given to the best companies, technologies and products in the IT and Communication
industry in India. These awards were instituted in 1996, by the group that publishes three
IT magazines – Computer world, PC world and Information Communication World.) for
four consecutive years (1997-2000).

However, it was not very easy for the company to build Airtel brand. The tariff
rates charged by the government were quite high. Cellular players have little choice but
to impose high call charges on their customers. Airtime rates were as high as Rs 16 per
minute as against Rs 1.20 for landline communication.

Thus, all players targeted the premium sector, which could afford the rates. Airtel
was also positioned in the premium category, aimed at the elite class of the society.
Though industry observers felt that this limited its market and that Bharti could have
focused on increasing customer awareness (by explaining to them the various advantages
of cellular phones), Bharti thought otherwise. As per a company source, the strategy
might not have worked, as the value delivered by cellular phones during that phase did
not match the cost.

During the late-1990s, many international players such as 'Orange' announced

plans to enter the Indian market. The global telecom market was getting saturated and
these companies were searching for countries with untapped potentials to increase their
markets. India being one of the fast developing nations with a vast population base was
being seen as a high potential market.

Apart from international players, many domestic players also entered the segment.
This increased the competition in the sector. In the light of these changes, Bharti realized
the need for repositioning Airtel to increase its market share. Rather than focusing on the

28
value (delivered by the services), the company chose to address the visual benefits
delivered to the customers. In the words of Hemant Sachdev (Sachdev), Director
(Marketing), Bharti Group, "Instead of the value-proposition model, we decided to
address the sensory benefit it gave to the customer as the main selling tack. The idea was
to become a badge value brand."

Repositioning Airtel

The above realization led to the launch of the 'Leadership Series' campaign, which
featured successful men and women with their deluxe cars, carrying laptops and using
cell phones. A company source said that the campaign was aimed at positioning Airtel as
an aspirational brand, which was meant for leaders and celebrities. The surveys
conducted after the launch revealed that people began associating three core benefits with
the Airtel brand – Leadership, Performance and Dynamism. Other supportive values
associated with the brand-included courtesy, politeness and efficiency.

The campaign was reportedly successful and resulted in a marginal improvement

in Airtel's performance. By 1999, Bharti had become the leading cellular player in Delhi
(its major market) with a subscriber base of over 0.38 million. However, the growth was
still much below the company's expectations.

Meanwhile, as the competition in the sector intensified, the government also

decided to reduce tariff rates. As a result, the players made all efforts to extend their
horizons to reach customers across all sections. Essar, the nearest competitor of Airtel,
began offering tariff plans, schemes and services that were identical to that of Airtel.
Much to Airtel's chagrin, Essar's subscriber base began nearing that of Airtel.

In early-2000, in its attempt to understand the customer's psyche, Airtel conducted

many brand tracking exercises. These exercises revealed that though the Leadership
campaign had been effective, it failed to attract more customers, as it had failed to add an
emotional dimension to the brand Analysts perceived the brand to be distant, efficient and
cold. In words of Preet Bedi, Director, Lowe India, "The brand had become something

29
like Lufthansa — cold and efficient. What they needed was to become Singapore
Airlines, efficient but also human."

The surveys also revealed that the concept of leadership was itself undergoing a
transformation. The public increasingly perceived leaders as people who worked with a
team to achieve common objectives rather than those who dictated terms to their
subordinates. The surveys indicated that 50% of the new subscribers bought a cellular
phone service brand on the basis of suggestions made by their friends, colleagues or
family members. On account of this information, Bharti realized that its existing
customer base could be used to promote the brand and expand its market (as these
customers could endorse the brand) and thus focused on building a close relationship
with them.

According to company sources, these brand-tracking exercises helped it realize

the fact that in a business where customer relationships were of paramount importance,
lacking an emotional or humanized touch was a major weakness. Hence, to gain a
competitive advantage, Bharti decided to humanize the Airtel brand. Commenting on the
decision, a senior executive of Essar said, "The leadership series was okay when you
were wooing the crème de la crème of society. Once you reached them you had to expand
the market so there was need to address to new customers."

In August 2000, Bharti launched its new 'Touch Tomorrow', which aimed at
strengthening its relationship with its customers. Bharti's advertisement expenditure for
the year amounted to Rs 450 million. The advertisements spanning the print, electronic
and outdoor media (for these campaign) featured cellular users surrounded by caring
family members. Commenting on the rationale behind the new campaign, Sachdev said,
"The new campaign and positioning was designed to highlight the relationship angle and
make the brand softer and more sensitive."

According to company sources, the new positioning was aimed at developing a

strong relationship with the customers. Sachdev said, "Mobile telephony is taken for
granted – in one of our researches, consumers have described mobile telephony as being

30
'kept close to the heart.' What is adding a new dimension to the cellular category is the
advent of new features like roaming, SMS, and the Net, which are taking communication
beyond voice to data and video. This has tossed a challenge: how to bond with
consumers."

Explaining the need for repositioning, Sachdev said, "Airtel was perceived as a
premium brand. The new positioning is intended to add warmth to these attributes." In
line with the company's objectives, the new TVCs and advertisements focused on
highlighting Airtel as a brand that made it possible for customers to derive all benefits of
cellular telephony.

The new commercials developed for this campaign reflected humane,

aspirational, family-centric and softer brand values while promising easy reach. Bharti
also created a new logo for the Airtel brand, which had red, black and white colors with
'Airtel' enwrapped in an eclipse. The tagline 'Touch Tomorrow' was placed below in a
lower case typography to convey a warm and informal style.

The campaign was first rolled out in the states of Karnataka, Madhya Pradesh,
Himachal Pradesh and Chennai. As a part of this campaign, Airtel also shifted its focus
from SEC, audiences to SEC B audiences. The company also increased its Touch Point
network (Airtel's shop-in-shop points at various departmental stores and lifestyle
establishments). In line with its repositioning efforts, Bharti also revamped the entire
Airtel network including Airtel Connect centers. As a part of this, Bharti focused on
giving a contemporary look to Airtel Connect centers with e-kiosks, facades, collaterals,
signages and merchandising material. It also changed the color scheme of these outlets by
adopting a coordination of red, black and white to give the outlets a soothing, soft but
classy look. The dress code at these outlets was also changed. Men wore black trousers
and a white shirt bearing the Airtel logo with and a red tie. While women sported red tops
and black trousers with ivory, schiffon scarves.

While the Touch Tomorrow campaign was still running, Bharti announced a
major brand restructuring exercise at the corporate level. This was done in order to

31
facilitate its entry into new areas of the telecom sector and establish itself as a global
telecom brand In early-2000s, Bharti unveiled a three-tier Airtel brand architecture that
was aimed at defining every service with a special brand name and place them under a
mother brand (Refer Table III). Commenting on the new brand architecture, Sachdev
said, "All convergent technologies in the sphere of telephony will be a part of the new
brand architecture."

Commenting on this initiative, Sandeep Goyal, President, Rediffusion DY&R

(Brand Communications), said "An Equity Research undertaken by ORG-MARG and
quarterly Brand Track studies by IMRB have given us insight into the needs of
tomorrow's consumer. The new branding initiative takes into cognizance the findings that
consumers consider Airtel as a brand of the successful people and a preferred address."

As a part of the restructuring efforts, the basic telephone services of Bharti were
brought under the Touchtel brand and the National Long Distance (NLD) telephony
under the 'India One' brand. Though the cost of creating new brands was high, the
company was inclined to create independent brands for its various services. The Bharti
brand and Magic (the prepaid cellular brand) were not included in the Airtel brand
architecture, and they continued to operate as distinct brands. According to company
sources, the new structure was aimed at positioning Airtel as the power brand with
regional sub-brands reflecting customer needs in various parts of the country. Bharti felt
that a single brand name for all cellular operations might not always work in the urban
markets, which were heading towards saturation.

Moreover, as a more towards product segmentation, the Internet-Interface

services (WAP5) offered to cellular users were brought under the brand name 'Tango' in
2001. Commenting on the launch of Tango, a senior Bharti official said, "The idea was
to bring Internet and mobile in perfect harmony." However, Tango was not as successful
as Bharti had expected it to be. The company sources mainly attributed this to the limited
utility and inefficiency of WAP services. Soon the company discontinued the
advertisements for Tango. However, the brand was retained for the company's permanent
Internet connectivity (GRPS6) services (on its cellular phones).

32
 Bharti also decided to introduce a tariff plan (specifically) to attract the youth.
The service, called Youtopia, planned to cash in on the fact that with reduced tariffs,
cellular phones would become accessible to teenagers. By targeting youth in the age-
group 14-19 years, Bharti planned to expand the customer base, which was presently
limited to the older age groups.

Youtopia was a clear deviation from Airtel's earlier positioning as a brand for
older people symbolizing dignity and power. Youtopia offered lower tariff rates (at Re
0.25 for 30 seconds) at night. Special merchandising exercises were also undertaken. For
instance, a special portal was created, where young people could buy or bid for goods.
The company also announced plans for providing customers with various other services
such as music download facilities, and SMS (Short Messaging Service) rates at
affordable prices. According to the analysts, the company's repositioning strategies paid
back well as Bharti became the leading player in most of the circles (it operated in) across
the country in early-2002.

REPOSITIONING AIRTEL – ONCE AGAIN!

Due to consistent marketing efforts, the Airtel and Touch Tomorrow campaign
became very popular. Therefore, Bharti's decision to withdraw this campaign (Touch
Tomorrow) in 2002 came as a surprise to many. The new campaign was accompanied by
a change in the logo as well (Refer Figure II). The idea behind the new logo was to give
Airtel a younger look. The logo (with new design and colour pattern) symbolized
innovation, energy and friendliness.

As part of its restructuring and repositioning exercise, Bharti unveiled a new

brand architecture that replaced the three-tier architecture. The proposed two-tier
architecture was categorized under two heads – wired and wireless. All the wireless
products were placed under the Airtel brand, which also included Tango, Freenet and
Magic. According to company sources, the objective of this new architecture was to
establish Bharti as a global telecom company.

33
 The company reportedly allocated Rs 1 billion for media coverage and other
brand building activities. Commenting on the new brand identity of Airtel, a Bharti
spokesperson said, "Airtel's brand identity and campaign will now have a new younger
and international look and feel that builds on the earlier positioning of 'Touch Tomorrow,'
injected with renewed energy and heightened optimism."

However, it still remains to be seen whether the latest round of repositioning and
the strategic partnerships would help Airtel sustain the competition and retain its
leadership in the market. The shift to Live Every Moment from Touch Tomorrow had
nevertheless, proved that Bharti is consistently on the lookout for best marketing
strategies for Airtel.

34
SWOT Analysis Bharti Airtel
Strengths

• Bharti Airtel has more than 65 million customers (July 2008). It is the largest
cellular provider in India, and also supplies broadband and telephone services - as
well as many other telecommunications services to both domestic and corporate
customers.
• Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel,
with whom they hold a strategic alliance. This means that the business has access
to knowledge and technology from other parts of the telecommunications world.
• The company has covered the entire Indian nation with its network. This has
underpinned its large and rising customer base.

Weaknesses

• An often cited original weakness is that when the business was started by Sunil
Bharti Mittal over 15 years ago, the business has little knowledge and experience
of how a cellular telephone system actually worked. So the start-up business had
to outsource to industry experts in the field.

35
 • Until recently Airtel did not own its own towers, which was a particular strength
of some of its competitors such as Hutchison Essar. Towers are important if your
company wishes to provide wide coverage nationally.
• The fact that the Airtel has not pulled off a deal with South Africa's MTN could
signal the lack of any real emerging market investment opportunity for the
business once the Indian market has become mature.

Opportunities

• The company possesses a customized version of the Google search engine which
will enhance broadband services to customers. The tie-up with Google can only
enhance the Airtel brand, and also provides advertising opportunities in Indian for
Google.
• Global telecommunications and new technology brands see Airtel as a key
strategic player in the Indian market. The new iPhone will be launched in India
via an Airtel distributorship. Another strategic partnership is held with
BlackBerry Wireless Solutions.
• Despite being forced to outsource much of its technical operations in the early
days, this allowed Airtel to work from its own blank sheet of paper, and to
question industry approaches and practices - for example replacing the Revenue-
Per-Customer model with a Revenue-Per-Minute model which is better suited to
India, as the company moved into small and remote villages and towns.
• The company is investing in its operation in 120,000 to 160,000 small villages
every year. It sees that less well-off consumers may only be able to afford a few
tens of Rupees per call, and also so that the business benefits are scalable - using
its 'Matchbox' strategy.
• Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea
Cellular to create a new independent tower company called Indus Towers. This
new business will control more than 60% of India's network towers. IPTV is
another potential new service that could underpin the company's long-term
strategy.

36
Threats

• Airtel and Vodafone seem to be having an on/off relationship. Vodafone which

owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead
invested in its rival Hutchison Essar. Knowledge and technology previously
available to Airtel now moves into the hands of one of its competitors.
• The quickly changing pace of the global telecommunications industry could tempt
Airtel to go along the acquisition trail which may make it vulnerable if the world
goes into recession. Perhaps this was an impact upon the decision not to proceed
with talks about the potential purchase of South Africa's MTN in May 2008. This
opened the door for talks between Reliance Communication's Anil Ambani and
MTN, allowing a competing Inidan industrialist to invest in the new emerging
African telecommunications market.

Bharti Airtel could also be the target for the takeover vision of other global
telecommunications players that wish to move into the Indian market.

37
ABOUT VODAFONE ESSAR LIMITED

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced

operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license
for Mumbai. Vodafone Essar now has operations in 21 circles covering 86% of India's
mobile customer base, with over 41.1 million customers.

It was one of the first cellular providers in the city of Mumbai. Over time it has
expanded operations across the country and is one of the most respected cellular service
providers known for providing world class and innovative services.

It is one of the most reputed telecom companies in India.

Hutchison Telecom is a part of the multinational conglomerate - Hutchison Whampoa
that has its origins dating back to 1828 in Hong Kong. The Group operates five core
businesses in 42 countries across the world, of which, Hutchison Telecom has been one
of the pioneers in mobile multimedia communication and spans five continents.

Over the years, Vodafone Essar, under the Hutch brand, has been named the
'Most Respected Telecom Company', the 'Best Mobile Service in the country' and the
'Most Creative and Most Effective Advertiser of the Year'.

Vodafone is the world's leading international mobile communications company. It

now has operations in 25 countries across 5 continents and 40 partner networks with over
200 million customers worldwide. Vodafone has partnered with the Essar Group as its
principal joint venture partner for the Indian market.

38
 The Essar Group is a diversified business corporation with interests spanning the
manufacturing and service sectors like Steel, Energy, Power, Communications, Shipping
& Logistics and Construction. The Group has an asset base of over Rs.400 billion (US$
10 billion) and employs over 20000 people.

Despite the official name being Vodafone Essar, its products are simply branded
Vodafone. It offers both prepaid and postpaid GSM cellular phone coverage throughout
India and is especially strong in the major metros.

Vodafo ne Essar provides 2G services based on 900 MHz and 1800 MHz
digital GSM technology, offering voice and data services in 21 of the country's 23 licence
areas.Contents

Ownership

Vodafone Essar is owned by Vodafone 52%, Essar Group 33%, and other Indian
nationals 15%. On February 11, 2007, Vodafone agreed to acquire the controlling interest
of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping
Reliance Communications, Hinduja Group, and Essar Group, which is the owner of the
remaining 33%. The whole company was valued at USD 18.8 billion. The transaction
closed on May 8, 2007.

Previous brands

In December 2006, Hutch Essar re-launched the "Hutch" brand nationwide,

consolidating its services under a single identity. The Company entered into agreement
with NTT DoCoMo to launch i-mode mobile Internet service in India during 2007.

The company used to be named Hutchison Essar, reflecting the name of its
previous owner, Hutchison. However, the brand was marketed as Hutch. After getting the
necessary government approvals with regards to the acquisition of a majority by the
Vodafone Group, the company was rebranded as Vodafone Essar. The marketing brand

39
was officially changed to Vodafone on 20 September 2007. On September 20, 2007
Hutch becomes Vodafone in one of the biggest brand transition exercises in recent times.

Vodafone Essar is spending somewhere in the region of Rs 250 crores on this

high-profile transition being unveiled today. Along with the transition, cheap cell phones
have been launched in the Indian market under the Vodafone brand. There are plans to
launch co-branded handsets sourced from global vendors as well.

A popular daily quoted a Vodafone Essar director as saying that "the objective is
to leverage Vodafone Group's global scale in bringing millions of low-cost handsets from
across-the-world into India."

While there is no revealing the prices of the low-cost Vodafone handsets, the
industry is abuzz that prices might start at Rs 666, undercutting Reliance
Communications' much-hyped 'Rang Barse' with cheap handsets beginning at Rs 777.
Meanwhile, Vodafone Essar sources said there would be no discounts or subsidized
handset offers -- rather handset-bundled schemes for customers.

Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the

country, is expected to provide several Vodafone handsets in India. Earlier this year,
Vodafone penned a global low-cost handset procurement deal with ZTE.

Apple iPhone 3G

Vodafone has successfully launched the Apple iPhone 3G in India. It has been
made available to its consumers from the 22nd of August. The phone's launch saw a big
celebration at select Vodafone stores and Vodafone sponsored malls across the country.

GROWTH OF HUTCHISON ESSAR (1992-2005)

In 1992 Hutchison Whampoa and its Indian business partner established a

company that in 1994 was awarded a licence to provide mobile telecommunications

40
services in Mumbai (formerly Bombay) and launched commercial service as Hutchison
Max in November 1995. Analjit Singh of Max still holds 12% in company.

In Delhi, UP (E), Rajasthan and Haryana, ESSAR was the major partner. But later
Hutch took the majority Stake. By the time of Hutchison Telecom's Initial Public
Offering in 2004, Hutchison Whampoa had acquired interests in six mobile
telecommunications operators providing service in 13 of India's 23 licence areas and
following the completion of the acquisition of BPL that number increased to 16. In 2006,
it announced the acquisition of a company (Essar Spacetel - A subsidiary of Essar Group)
that held licence applications for the seven remaining licence areas.

In a country growing as fast as India, a strategic and well-managed business plan

is critical to success. Initially, the company grew its business in the largest wireless
markets in India - in cities like Mumbai, Delhi and Kolkata. In these densely populated
urban areas it was able to establish a robust network, well known brand and large
distribution network -all vital to long-term success in India. Then it also targeted business
users and high-end post-paid customers which helped Hutchison Essar to consistently
generate a higher Average Revenue Per User ("ARPU") than its competitors. By adopting
this focused growth plan, it was able to establish leading positions in India's largest
markets providing the resources to expand its footprint nationwide.

In February 2007, Hutchison Telecom announced that it had entered into a

binding agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and
indirect equity and loan interests in Hutchison Essar Limited for total cash consideration
(before costs, expenses and interests) of approximately US$11.1 billion or HK$87 billion.

1992: Hutchison Whampoa and Max Group established Hutchison Max

2000: Acquisition of Delhi operations Entered Calcutta and Gujarat markets through
ESSAR acquisition

41
2001: Won auction for licences to operate GSM services in Karnataka, Andhra Pradesh
and Chennai

2003: Acquired AirCel Digilink (ADIL - ESSAR Subsidiary) which operated in Rajastan,
Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch brand

2004: Launched in three additional telecom circles of India namely 'Punjab', 'Uttar
Pradesh West' and 'West Bengal'

2005: Acquired BPL (Except Mumbai)- 3 Circles, another mobile service provider in
India

2008: Vodafone acquired the Licence in remaining 7 circles and has started operations in
Orissa, Assam, North East, Bihar & Jharkhand and Madhya Pradesh & Chhattisgarh.
Soon it will start its services in Himachal Pradesh and Jammu & Kashmir

2008: Vodafone launched the Apple iPhone 3G to be used on its 17 circle 2G network.

Hutch was often praised for its award winning advertisements which all follow a
clean, minimalist look. A recurrent theme is that its message Hello stands out visibly
though it uses only white letters on red background. Another recent successful ad
campaign in 2003 featured a pug named Cheeka following a boy around in unlikely
places, with the tagline, Wherever you go, our network follows. The simple yet powerful
advertisement campaigns won it many admirers.

Subscriber Base

The Vodafone subscriber base according to COAI - Cellular Operator Association of

India as of August 2008 Figs/GSM 2008/All India GSM sub figures - Sep'08 was:

Mumbai 3960444
Delhi 3602249

42
Kolkata 2301538
Chennai 1427500
Gujarat 6920502
A.P 3227062
Karnatka 3249809
Punjab 1843891
Haryana 1666946
U.P.(E) 5012687
Rajasthan 3928177
UP (W) 3548261
West Bengal 3649778
Maharashtra 3521585
Tamilnadu 4180859
Kerala 2512603
Orissa 60826
Assam 7140
North East 2952
The total is 5,46,24,809 or 23.38% of the total 233,676,930 GSM mobile connections in
India till Sept 2008. Vodafone does not operate in Himachal Pradesh and Jammu &
Kashmir

Vodafone Product Range

Vodafone prepaid: It’s the ready cellular card from Hutch. Prepaid is easy. And
rewarding, with maximum talk time and exciting offers. Not to mention a host of value
added services, two-way national roaming and much more.
Vodafone Postpaid: It is the postpaid service from Hutch. It gives the customer a choice
to choose from a variety of affordable and attractive talk plans, and many convenient
payment options for your monthly bill.
Value added services: The different value added services provided by Hutch are-
♣ Instant Balance Enquiry
♣ News & Updates

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 ♣ Astrology
♣ Entertainment
♣ Sports
♣ Finance
♣ Travel
♣ Tunes& Downloads
♣ Mail, Messaging
♣ Call management Services
♣ Dial in Services
♣ Hutch4help
♣ Planet Hutch

Hutch: Colour coded

Hutch is the brand name of Hutchison Essar. Back in 1995 Hutch entered Mumbai with
the tagline “Hello Bombay” and was pitted against consumer electronic giant BPL. The
decision was to cultivate the Brand personality as Foreign. Consequently the campaign
was designed as “ world in your pocket” to express the foreign pedigree and was built by
using Indian celebrities. Hutch, too, needed to educate consumers about cellular
telephony. So, it also had ads like "Can I call STD?", "Can I use my phone in a lift?"
"What is airtime?"
International was believed to be synonymous with sophisticated, and the customer
service reflected that. Max Touch introduced Integrated Voice Response systems, and for
face-to-face interactions, it had swanky customer spaces with smartly dressed executives
who had been trained in customer relationships. Even as Hutch's communication
appealed to the upper class, it was working on innovative product offerings: in 1996, it
was the first cellular company to establish national roaming; later that year, it introduced
over-the-counter prepaid cards.
Orange Worked wonders for Hutch. The almost accidental use of the colour in an
ad campaign - changed at the last minute from green - was fortuitous.
In February 2001, Max Touch became Orange and the account shifted from Mudra to
Ogilvy. By replacing a highly recognized brand with a virtual unknown in just two

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weeks, the new Ogilvy campaign redefined conventional communication strategies. For
example, in Mumbai, ads compared the cost of a mobile phone call to an inexpensive
cutting chai. The colour orange was a seminal attribute; the brand's slogan was 'The
future's bright, the future's orange'.
In 2002 an Umbrella Brand known as Hutch was created but Mumbai retained the
Orange brand. The separate identities of the two brands were duly emphasized, although
strategic sponsorships of theatre, music and art events overlapped - as did the use of
orange colour.
The new brand name also heralded the arrival of a new mascot, the "Hutch" pug.
When Hutch launched the Abby-winning "Wherever you go our network will follow'" ad,
viewers believed that was Hutch's new slogan, but it was just one brand attribute. Twelve
other campaigns followed; each one with a single communication of a value-add, all
stylized to be uniquely Hutch. Hutch believed in Effective branding built on bedrock of
fundamentals of service - great network, customer service and great billing systems.
Value-added services - such as "Privileges" (discount coupon booklets), cricket
scores and stock market information formed a critical part of Hutch's marketing efforts as
it’s advertising. Other services like Hutch World (GPRS service), Hutch Alive (non-stop,
streaming action) and Hutch4Help, a unique dial-in 'convenience' service, all emphasized
the premium attributes of the service. But now there's Chhota Recharge, small value
recharge cards (starting at Rs 10), which will also help mobilize small spenders.
And now there's pink. In Dec 2005, Mumbai was overrun with billboards that
simply said "Bye". A week later, the same billboards, along with the rest of the country,
sported the Hutch tristar in a new, vivid pink. The reason given for this was that it was
just to refresh the brand, and inculcate a new 'Hutch spirit'." But the brand makeover had
less to do with creating excitement and more with renouncing the Orange brand to
Orange Telecom and creating the new pan-Indian Hutch brand.
The all India GSM subscriber base grew by 4.23% to 75.3% for the month of May
2006. May saw net addition of 3.2 m subscriber as compared to 2.93 m in the month of
April 2006. Bharti Airtel witnessed the highest growth of 5.7% taking its total subscriber
base past the 21mn mark. Bharti also improved its market leadership with 29% market
share.

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Transition from Hutch to Vodafone

After the recent buyout of Hutch, Vodafone has not only evolved an effective
rebranding strategy, but has also gone in for many changes in the external identity and
the promotional strategy of the brand. This is aimed at changing the brand to meet its
global image and also to ensure that it stays relevant in the competitive scenario in the
Indian telecommunications market. This article explores the various changes adopted
by Vodafone and their implications for the brand.

Cosmetic makeover

It was one of the most visible identity changes for a brand in the recent years in
India, when Vodafone was overwritten all over Hutch so brusquely. This new brand
name with red background, stared into the eyes of the Indian consumers in various forms:
as pavement signages, glow signs, hoardings, commercial name boards, in shop posters,
print advertisements, televisions commercials and what not! Wherever consumers went, it
seemed to follow them ubiquitously, as the company’s famous tag line used to promise
their consumers earlier. But it appears that the new brand also aims at making lot of
deviations from the way the brand was communicated before.

Upon creating awareness, the Rs 350 crore promotion budget of Vodafone helped
it change the previous soft pink colour into new deep red colour completely. Consumers

46
have earlier witnessed many brand buyouts wherein the ownership changed hands but
brand names were mostly retained, as in the case of Hamam, good knight, Complan,
Thumps up, Nihar, Dalda and many more. In some other case, the new owner retained the
brand name for some time, as per the agreement and had a smooth transition to a new
name later, as in the case of IBM to Lenova, VSNL to Tata Communications Ltd. And so
on. Unlike all these, this particular changeover took 35 million customers and 4 lakh
business associates in the various 16 circles by surprise, since Vodafone gobbled up
Hutch on day one. Though Hutch had seen many evolutions before, from Max Touch
(1990s) to Orange (2001) to Hutch (2005), this was certainly the biggest of all!

Alterations of traits

The initial cues derived from the promotion campaigns of Vodafone indicate that
it is not going to be a mere cosmetic change for the brand. The brand seems to have
assumed a new personality now, as the signals from Vodafones advertisements point to a
change in the way the music is played, the characters are selected and the visuals are
used. It only reveals that (The Subtle, modest and trustworthy brand) may give way for a
(more pompous, louder and dynamic brand) This is the brand personality that Vodafone
believes will suit its global image and help the company connect to the modern
generation customers better. This change is noticeable in Vodafones initial
advertisements announcing the change of brand name and in the subsequent
advertisements announcing its sales promotion schemes involving alert services. As
explained by the Creative head of O&M, the advertising agency promoting the brand, the
alert services touch upon the five most interest areas of consumers- cricket, astrology,
news, beauty tips and art of living- and hence will instill curiosity in people from all
walks of life. The change of personality of the brand will become more obvious, once the
brand building advertisements of Vodafone are out. Though O&M has not admitted to
discontinuing the usage of the famous pug and the older creative aspects of the brand
communication directly, it appears that they are working on bringing in many changes
which are expected to project a brand personality for Vodafone quite different from that
of Hutch.

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Newer Positioning

A successful brand is one, which evokes positive and warm feelings towards its
advertisements on the face of it and subsequently connects to its target customers well by
the merit of its unique appeal, persuasive message, creative execution and the consistent
focus on its core values. Hutch was able to achieve this and it established a positioning of
(A well networked communication tool that is lovable / faithful companion for the
sophisticated urban youth). There is definitely a nostalgic value associated with erstwhile
Hutch in the minds of the customers, which continue to provide a positive rub-off on the
fortunes of Vodafone. Consumers see and evaluate Vodafone by keeping the fond
memories of Hutch at the back of their minds. That is the reason why Vodafone wants to
go slow and attempt a gradual change of positioning for the brand.

What Prompted the Change?

It is true that Hutch became successful by striking a chord with their customers
effectively through its marketing communications. On the contrary, Hutch would have
been more successful, had its marketing communication been more inclusive by
appealing to a larger section of consumers. In a developing country like India, a
telecommunication service provider cannot survive long by positioning the brand only for
the sophisticate Indian consumers. It needs to cater to all the sections of people from,
various societal and regional backgrounds. A shinning example for this is Airtel which
has had a changeover from being a brand meant for class to the one now, which is for
mass. Airtel is attracting consumers from all strata of society, from high-end business
professionals to paan shop owners.

In fact, Hutch seemed to have, of late realized this and the recent advertisements
used for announcing its sales promotion schemes stand testimony to this. These sales
promotional advertisements deviated from its earlier choice of sophisticated brand
building advertisements; especially, the ones for Hutch bonus cards, Hutch Rs 99
recharge cards and Hutch SMS tones. Though they were distinct and creative, they were

48
basically rustic. It might have been a conscious move by the brand for reaching the mass
audience as well but the task was nevertheless unfinished.

Secondly, the positioning of Hutch was becoming redundant in the changing

scenario, even for its originally intended target customers. The target customers did not
seem to find any adequate value in a brand, which was just an affable and a loyal friend
offering impeccable connectivity. As the need for newer usages engulfed the customers,
they looked for many additional benefits than a mere strong connectivity. Besides,
telecommunication as a product/ service category has now evolved and good connectivity
and infrastructure cannot be used as an index of differentiation anymore. It has become a
minimum expected value for customers and moreover, telecommunications service
providers have begun to pool their infrastructure resources together, which means the
ownership of towers may be common to all. Many companies will be using the same
network and it cannot become an advantage for only one.

Not Making Most of Hutch?

It is imperative that Vodafone wants to thrust its own image over Hutch’s and
alter the positioning created by the latter, which was anyway due for a change. It seems
that what Hutch set out to achieve through its sales promotion advertisements will be
followed by Vodafone more visibly its brand building advertisements too. Vodafone has
started promoting their own tagline, (Make most of now) in place of Wherever you go
our network will follow) The proposed repositioning through this brand caption of
Vodafone is very valid for the brand, as it can project a value of multifunctional, faster
usage which can serve as a good differentiator for the brand in the market. A tag like this
with a slew of technologically superior feature will connect to the target customers better
in the fast moving world of telecommunications. Vodafone seems to be better suited for
this transformation by virtue of its existing image of offering cutting –edge technology in
the 25 countries where it caters to about 200 million customers.

Vodafone has also made a beginning in using below the line promotions for
projecting this brand positioning among the consumers. Vodafone is the largest sponsor

49
for Saarang, the annual cultural festival of IIT-Madras, an association that is expected to
strengthen its popularity more intensely. In the above the line category also, Vodafone is
planning to air advertisements comprising of characters and visuals that showcase the
dynamism and functional superiority of the brand. The challenge for Vodafone lies in
helping their existing customers and the potential ones replace their fond memories of
Hutch with a new and dynamic image of Vodafone effectively. The process of unlearning
is possible for human beings, when they are convinced that the proposed change is
inevitable and is for better. How O&M will help Vodafone customers and associates
appreciate this change, is going to be am interesting observation.

In simple terms, Vodafones scheme of changes for the brand is threefold:

• Changing Brands Exterior: Vodafone has done it effectively using a new name,
font, logo, colour and slogan and it has created a good impact in the market through
large investments in promotions from day one.
• Changing brand personality: Vodafone has moved from being a subtle brand to a
more pompous one, as communicated through new energetic characters in
commercials, loud music, bright colours and flamboyant scenes.
• Changing Brands positioning: Vodafone has attempted to achieve this through its
new brand communications supplemented by some value added services. This can be
analyzed further by using the following three dimensions of brand positioning:
a) Brands Core Value: Brand is not merely a strongly networked
companion for people; it is also a dynamic and progressive guide, which
helps people become proactive in life.
b) Target Audiences: They are mot merely the urban sophisticated youth
anymore; but they are people from all walks of life.
c) Brand Differentiation: It is not merely a tool to connect with friends and
relatives better than others; it is now a gadget which an offer
technologically superior functions and all unique value-added services for
making most out of ones life faster, where there us no second chance.

50
The Ad Campaigns of Vodafone

51
THE NEAR FUTURE OF THE INDIAN CELLULAR MARKET

According to a Gartner report, after China, India would be fastest growing mobile
telephony market in Asia Pacific with revenues slated to increase at a rate of 18.4% to
reach $25 billion in 2011 from current $9 billion.

Cellular penetration would increase to 38.6% in 2011 with 58% of rural

population and 95% of urban population possessing mobile phone. The market will be
driven by prepaid connections, which will account for more than 93% connections. The
voluntary churn rate is expected to reach 41% from current 30.6%.

Gartner reports expect that the penetration will be driven by an increased focus on
rural market, cheap handsets, aggressive promotions and handset bundle offers. The low
rural mobile penetration of 2% represents an immense opportunity for cellular players.
The call rates will further drop to become closer to fixed-line rates, further lowering the
entry barrier.

The revenues from data services will contribute to the revenue growth, however
the bulk of the revenues will continue to come from voice services. Customers with low
disposable incomes will increase; as such the Average Revenue Per User will decline.

52
 Large players will have an advantage as they expand their presence and take
advantage of economies of scale. But they will face tremendous challenges owing to
intensifying competition.

However, scarcity of spectrum could impact expansion plans and the quality of
service. Gartner report mentions that release of 3G spectrum will be essential to sustain
growth in the industry and bridge the gap generated because of lower voice tariffs and
handset subsidies.

CONCLUSION

Above facts and figures give a clear picture about Bharti Airtel Ltd and Vodafone
Essar Ltd. However we can notice that Airtel is doing well as against Vodafone because
their strategies are more inclined towards the masses whereas Vodafone has portrayed
itself as an up market brand.

The strong performance of Indian economy along with strong performance of

telecom sector and an unsaturated market gives all the telecom operators a good
background and bright future. Moreover it is anticipated that the telecom sector will
perform well and keep showing good results at least till the year 2010. India is in
desperate need of good infrastructure, which can be developed rapidly through
privatization.

With the Indian cellular market predicted to cross 500 million subscribers by 2010
and rural markets being tapped slowly we cannot underestimate other private players like
Idea, Tata Indicom etc. Although Vodafone is at no.3 spot, it has to really work hard to
reach the top as Three more telecom operators namely Aircel (A 74% stake in Aircel is
held by Malaysia's MAXIS TELECOM), Idea Cellular (An Aditya Birla Group company

53
that recently came up with an IPO) AND Spice Telecom (owned by B. K. Modi, this
company too has set its eyes on an IPO to raise money) too are looking forward for pan-
India presence in the telecom sector. And how can we forget Mr. Ratan Tata and

Anil Ambani who are very close in the queue.

But one thing is for sure, irrespective of which company manages to grab the top
spot, there will be only one king - He is called CUSTOMER. And if you ask me on which
horse should you put the money, I can suggest just one thing - It is Best to Keep the
Money in your Pocket for Now!

BIBLIOGRAPHY

Websites

www. google.com

www.googleimages.com

www.bhartiairtel.in
www.wikipedia.org

www.vodafone.in
www.india-cellular.com
www.coia.com
www.trai.com

Magazines
Advertising express

Books

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ICFAI Marketing books.

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