GENERAL ENVIRONMENT

(A) TECHNOLOGY TREND Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded drumbeats, lung-blown horns, or sent by loud whistles, for example. In the modern age of electricity and electronics, telecommunications now also includes the use of electrical devices such as telegraphs, telephones, and teleprinters, the use of radio and microwave communications, as well as fiber optics and their associated electronics, plus the use of the orbiting satellites and the Internet. A basic telecommunication system consists of three primary units that are always present in some form:

A transmitter that takes information and converts it to a signal. A transmission medium, also called the "physical channel" that carries the signal. An example of this is the "free space channel". A receiver that takes the signal from the channel and converts it back into usable information.

Communications signals can be either by analog signals or digital signals. There are analog communication systems and digital communication systems. For an analog signal, the signal is varied continuously with respect to the information. In a digital signal, the information is encoded as a set of discrete values (for example, a set of ones and zeros). During the propagation and reception, the information contained in analog signals will inevitably be degraded by undesirable physical noise. (The output of a transmitter is noise-free for all practical purposes.) Commonly, the noise in a communication system can be expressed as adding or subtracting from the desirable signal in a completely random way. This form of noise is called "additive noise", with the understanding that the noise can be negative or positive at different instants of time. Noise that is not additive noise is a much more difficult situation to describe or analyze, and these other kinds of noise will be omitted here. Broadly speaking, technologies of mobile telecommunications and Internet are going to set the contours of further technological progress in the current decade and the next. The most recent initiative aims at convergence of voice and data received from multiple sources, both web based and real time video streams, in mobile handheld devices. Global satellite systems, mobile handsets and calling cards have made virtual presence possible almost everywhere and anywhere overcoming the barriers of distance, topography and remoteness.

There has been phenomenal growth in mobile subscribers in the world in the nineties, increasing from 11 million in 1990 to 941 million by the end of 2001. In 1991, less than one per cent of the world population had a mobile phone. The proportion has grown to the vicinity of one phone per every six people by the end of 2001. Similarly, one-third of the total number of countries of the world had cellular network in 1991. The ratio rose to over 90 per cent by end-2001. Considering that the fixed telephone lines numbered just over a billion in this year, it is likely that mobile phones would surpass fixed line in 2002. It is interesting to observe that China has surpassed USA to become the largest mobile market of the world. In Africa, mobile subscribers outnumber fixed line subscribers in more than half the countries. Mobile telephony has emerged as the major growth driver in this sector. But for expansion in mobile network, there would have been hardly any growth in telecommunications in many countries. In developed countries, mobile phones have complemented fixed lines whereas in many developing countries with low-level fixed line penetration, mobile has already surpassed fixed lines filling up supply gaps created due to inadequate growth in the latter. It has been observed that the ability of a country to grow its mobile network to the point where it overtakes the fixed-line network is not a function of its wealththe crossover point can come as low as a fixed teledensity of 0.4 (for instance, in Malwai) to as high as 75 (the case of Luxembourg) and at any point in between.

There are three important economic implications of mobile explosion for the developing countries. First, by offering a viable techno-economic alternative it is helping in improving telecom penetration bypassing shortages of fixed lines. Consequently, it is bringing along with it all concomitant economic benefits of enhanced telecom accessibility. Second, it is promoting a better entrepreneurial culture and supporting employment generation through proliferation of kiosks. Third, there has been a shift in investment burden from state to private sector and the consumers.

Cellular mobile telephones subscribers in India increased from 77 thousand in 1995 to 3.6 million in 2000. By March 2002, it has grown to 6.4 million. Cellular subscribers in proportion to total number of telephone subscribers (basic plus cellular) has increased from 0.6 percent in 1995 to 14.6 percent in 2002. This is still lower than the average of 24.6 percent achieved by the low-income countries in 2001. The corresponding ratio for lower middle-income countries is 41.8 percent, 52.8 percent for upper middle-income countries and 50.2 percent for high-income countries. India is yet to experience mobile explosion of the scale other countries have seen. One would expect a rapid growth in mobile telephony in coming decades. India has also achieved significant quality upgradation of its network in the 90s. Digital lines in proportion to total number of main telephone lines have increased from 87 per cent in 1995 to 99.8 percent in 1999.

Like mobile, the last decade witnessed phenomenal growth in Internet usage. In 2001, 95 per cent of the countries were connected to Internet compared to 15 per cent in 1990. There are about half a billion Internet users in the world in 2001with subscribers numbering an estimated 230 million. It is also interesting to note that in 1995 Internet users in developed countries were seven times more than the number of Internet users in the developing countries. In 2001, this gap has narrowed down to less than four times. DEMOGRAPHIC TREND Total Tele-density stood at 39.86 per cent. -density came in at mere 3.22 % whereas wireless subscription contributed 91.9 % of overall Tele-density. ubscription in Urban Areas was at 328.55 Million and Rural subscribers increased to 136.27 Million. country will witness continued urbanization. The urban population is expected to rise from 28 per cent to 40 per cent of total population by 2020. population of one million or more.

(B)

ECONOMIC STRUCTURE

It has been observed that growth in the number of new telephone subscribers has far exceeded the growth in the global economy in the last twenty years. This shows that aggregate growth alone does not determine telecom expansion and there may be need to look at composition of growth as well. However, influence of economic structure on telecom expansion (or for that matter on achievable level of tele-density) does not find explicit consideration in todays literature on telecom economics as much as the other two factors, i.e., competition and technology. One plausible reason could be because of the importance that has been attached to income gap as a factor explaining digital divide. Moreover, income gap, by itself subsumes differences in certain structural characteristics and therefore diverts the focus of attention from structural gap to income gap. Proponents of income determinism may stop short of addressing structural factors because of their primary concern regarding income transfer between the developed to the developing countries as the only way to address the problems of digital divide. Structural issues, on the other hand, are more pertinent to the believers of leapfrogging capabilities of the countries who are on the wrong side of the divide. It is for them that the present paper goes on to prove that the effectiveness of direct promotion of telecommunications as a complementary policy to overall macroeconomic reforms will be determined in an important way by how structural issues in the economy are addressed.

(C)

GOVERNMENT AND POLITICAL

Government also has supported the growth of this sector by coming out with a number of initiatives for the low end subscribers of rural India, and Universal Service Obligation (USO) fund was one such initiatives. The USO fund was an initiative taken up by the government to increase rural teledensity. In recent developments, BSNL and two private operators will erect 427 towers in remote areas offering over four lakh mobile connections. All the towers are expected to be erected and commissioned by December 2008. Under the second phase, DoT aims at erecting 11,000 towers throughout the country to offer over 11 million mobile connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to provide support for BSNL's rural telephone obligation. Telecom Regulatory Authority of India (TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and the subsequent passing of the benefit to the consumers by the telecom operators.

(D)

SOCIO CULTURE

Telecommunication has played a significant role in social relationships. Nevertheless devices like the telephone system were originally advertised with an emphasis on the practical dimensions of the device (such as the ability to conduct business or order home services) as opposed to the social dimensions. It was not until the late 1920s and 1930s that the social dimensions of the device became a prominent theme in telephone advertisements. New promotions started appealing to consumers' emotions, stressing the importance of social conversations and staying connected to family and friends.[38] Since then the role that telecommunications has played in social relations has become increasingly important. In recent years, the popularity of social networking sites has increased dramatically. These sites allow users to communicate with each other as well as post photographs, events and profiles for others to see. The profiles can list a person's age, interests, sexual preference and relationship status. In this way, these sites can play important role in everything from organising social engagements to courtship.[39] Prior to social networking sites, technologies like short message service(SMS) and the telephone also had a significant impact on social interactions. In 2000, market research group Ipsos MORI reported that 81% of 15 to 24 year-old SMS users in the United Kingdom had used the service to coordinate social arrangements and 42% to flirt.

(E)

GLOBAL SCENARIO

The Indian telecom market has been displaying sustained high growth rates. Riding on expectations of overall high economic growth and consequent rising income levels, it offers an unprecedented opportunity for foreign investment. A combination of factors is driving growth in the telecom market, promising rich returns on investments. Example: TATA DOCOMO sia after China, Japan and South Korea.

among emerging economies. r US $ 8 billion is expected to increase three fold by 2012. The expansion of the telecom industry in India has been fuelled by a massive growth in mobile phone users, which has reached a level of 10 million users in December 2002, an increase of nearly 100 per cent in 2002. digital cellular technology and decrease in tariffs due to competitive pressures. For the first time in India, the growth of cellular subscriber base has exceeded the fixed line subscriber base.

A)

Industry definition: The manufacturing or technically productive enterprisesin a particular field, country, region, or economy viewed collectively, or one of these individually. A single industry is often named after its principal product; for example, the auto industry. For statistical purposes, industries are categorized generally according a uniform classification codesuch as Standard Industrial Classification (SIC). 2. Any general business activity or commercial enterprise that can be isolated from others, such as the tourist industry or the entertainment industry. Group of productive organizations that produce or supply goods, services, or sources of income. In economics, industries are customarily classified as primary, secondary, and tertiary; secondary industries are further classified as heavy and light. Primary industry includes agriculture, forestry, fishing, mining, quarrying, and extracting minerals. Secondary ormanufacturing industry processes the raw materials supplied by primary industries into consumer goods, or further processes goods from other secondary industries, or builds capital goods used to manufacture consumer and nonconsumer goods; secondary industry also includes energy-producing industries and the construction industry. Tertiary or service industry includes banking, finance, insurance, investment, and real estate services; wholesale, retail, and resale trade; transportation, information, and communications services; professional, consulting, legal, and personal services; tourism, hotels, restaurants, and entertainment; repair and maintenance services; education and teaching; and health, social welfare, administrative, police, security, and defense services.

B) Dominant economic characteristics:

1) Market size Over 20.2 million new subscribers were added in the month of February, thereby raising the total mobile phone subscription in the country to 791.38 million. Moreover, the statistics for February state that the rate of growth (2.82 per cent) in the number of rural mobile phone subscribers surpassed than those of the urban areas (2.52 per cent) across the country. The broadband subscription in February, 2011 was 11.47 million as compared to 11.21 million in January, 2011.

The Indian telecom sector is largely dominated by private operators that control a share of 87.9 per cent share of the entire sector. Among the top players in the

telecom sector, Bharti Airtel owns the largest share at 20.09 per cent, followed Sr, No. 1 2 3 4 5 6 7 8 9 Name of Company Bharti Airtel Vodafone Essar BSNL IDEA Aircel Reliance Telecom Spice MTNL BPL Total Sub Figures 8,29,20,593 5,87,64,164 4,04,87,511 3,28,09,720 1,53,75,258 95,82,695 37,05,894 38,21,277 18,82,324 % Market Share 33.25% 23.57% 16.24% 13.16% 6.17% 3.84% 1.49% 1.53% 0.75%

All India 24,93,49,436 100.00% by Reliance (16.7 per cent), Vodafone (16.54 per cent), state-owned BSNL (11.41 per cent), Tata (11.08 per cent) and Idea (10.97 per cent). Vodafone has recorded the fastest growth rate in the month of February, at 17.61 per cent in its subscription base. Reliance (16.36 per cent), Bharti (15.85 per cent), Idea (12.43 per cent), Aircel (8.26 per cent) and Tata (7.93 per cent) have also recorded decent growth rate figures for the month of February, 2011, according to Telecom Regulatory Authority of India (TRAI) database. As per statistics, the total number of mobile phone base in the country will rise to 900 million by the end of 2012 and it is further expected that this figure will steadily rise to 1.25 billion by 2015. It has also been projected that the users for the broadband base are going to reach 100 million mark by 2014, particularly after the telecom companies roll out their 3G services as per the research study conducted by Crisil.

Indian Telecommunication - The Road Ahead The telecom sector in India is a major contributor to the economy and is a vital employment generating industry for thousands of professionals. With a direct impact on the socio economic structure of the country, the sector has been able

to successfully surpass the targets set up by the policy makers. The dynamism displayed by the government and the private sector for uplifting the telecom sector has been recommendable and speaks volumes about the efforts behind the success story

2) Stage of life cycle: As far as product life cycle of industry is concern than it can be said that it somewhere between growth and maturity. The industry does have a tremendous growth potential but the only requirement for that is the proper exposure of technology. And as far as technology is concern India is yet to be developed so it can be said that it is in a growth stage, but if we focus on a core business of a telecom industry the business has a huge completion and also there are players who have entered recently in spite of that they are have a good hold over the determination of a price. 3) Growth rate:

Switching to the growth rate of Bharti Airtel

Year

Overa ll Subsc riber Base 2,61,5 4,405 4,10,2 5,940 6,91,9 3,321 12,14, 31,166 18,44, 13,702

Airtel Subscriber Base

Market Share 16.1208 7 25.5413 6 28.2963 8 30.5862 3 33.6117 8

Mar-04

42,16,317

Mar-05

1,04,78,585

Mar-06

1,95,79,208

Mar-07

3,71,41,210

Mar-08

6,19,84,721

In 2005-2006, the telecom industry witnessed a growth of 21% with a total revenue of Rs. 86,720 crores, and the total investment rising to Rs. 2,00,660 crores. It is projected that the telecom industry will be enjoying over 150% growth in the next 4-6 years. The growth also requires a huge investment by the players in the sector. Bharti Airtel is planning to invest about $8 billion by the year 2010. Liberalization policy and some socio-economic factors are mainly responsible for the immense growth in the sales volumes. The lifestyle of the people has changed. They need to be connected to the other people all the time. With the lowering down of the tariffs the affordability of the mobile phones has increased. The finance sector has also come up with loans for handsets on 0% interest. Mobile services providers are also expanding their coverage area by installing more and more antennas and other equipments. The telecom sector in the country has already adopted the latest technological advancements to cater to the demands of the growing market. Telecom Expo India, Convergence India, VAS India and IPTV India being organized year to year are all efforts in this direction. Budget 2007 has brought disappointment to the telecom sector. Mobile service providers have been asked to cut down their roaming rentals as well as their long distance and international call tariffs. This has led to discontent on the part of the service providers. However, Telecom Regulatory Authority of India (TRAI) is of the opinion that this will lead to increased use of roaming, which will ultimately lead to more revenue generation. Moreover, with cheaper handsets and lesser tariffs, it is expected that by the year 2010 there will be over 500 million subscribers in the Indian telecom market. Also, the telecom industry this year will be focusing more on rural areas to connect them with the urban areas so that the farmers and the small-scale industries can have faster access to information related to weather and market conditions.

4) Vertical integration: Telecom companies are trying to merge with other telecom companies to have the advantage of the technology else to achive the synergy.Airtel tried to enter the market of south Africa with the help of Zen communication.

5) Product service differentiation for Airtel: Electronic recharge Hello tunes Airtel Live! Portfolio manager Song catcher Easy music Black berry handsets M-cheques

C Porter's 5 Forces Analysis

1. Threat of New Entrants. It comes as no surprise that in the capital-intensive telecom industry the biggest barrier to entry is access to finance. To cover high fixed costs, serious contenders typically require a lot of cash. When capital markets are generous, the threat of competitive entrants escalates. When financing opportunities are less readily available, the pace of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier to entry. In the U.S., for instance, fledgling telecom operators must still apply to the Federal Communications Commission (FCC) to receive regulatory approval and licensing. There is also a finite amount of "good" radio spectrum that lends itself to mobile voice and data applications. In addition, it is important to remember that solid operating skills and management experience is fairly scarce, making entry even more difficult. 2. Power of Suppliers. At first glance, it might look like telecom equipment suppliers have considerable bargaining power over telecom operators. Indeed, without high-tech broadband switching equipment, fiber-optic cables, mobile handsets and billing software, telecom operators would not be able to do the

job of transmitting voice and data from place to place. But there are actually a number of large equipment makers around. There are enough vendors, arguably, to dilute bargaining power. The limited pool of talented managers and engineers, especially those well versed in the latest technologies, places companies in a weak position in terms of hiring and salaries.

3.

Customer Bargaining Power: Lack of differentiation among Service Providers Cut throat Competition Low Switching Costs Attractive Schemes for new connection Availability of all operators everywhere Difficulty to differentiate Brand Number Portability will have Ve Impact Businesses & Consumers

4. Power of Buyers. With increased choice of telecom products and services, the bargaining power of buyers is rising. Let's face it; telephone and data services do not vary much, regardless of which companies are selling them. For the most part, basic services are treated as a commodity. This translates into customers seeking low prices from companies that offer reliable service. At the same time, buyer power can vary somewhat between market segments. While switching costs are relatively low for residential telecom customers, they can get higher for larger business customers, especially those that rely more on customized products and services. 5. Availability of Substitutes. Products and services from non-traditional telecom industries pose serious substitution threats. Cable TV and satellite

operators now compete for buyers. The cable guys, with their own direct lines into homes, offer broadband internet services, and satellite links can substitute for high-speed business networking needs. Railways and energy utility companies are laying miles of high-capacity telecom network alongside their own track and pipeline assets. Just as worrying for telecom operators is the internet: it is becoming a viable vehicle for cut-rate voice calls. Delivered by ISPs - not telecom operators - "internet telephony" could take a big bite out of telecom companies' core voice revenues. Landline CDMA World Phone Video Conferencing VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites

Threat of New Entrants

Low Because Huge License Fees to be paid upfront & High gestation period Entry of MVNOs & WiMAX operators Spectrum Availability & Regulatory Issues Infrastructure Setup Cost - High Rapidly changing technology High Because Entry through 3G New Entrants are ready to enter with Huge Capital Considering the attractiveness of the market Increase Of FDI to 76% bringing competiton from Foreign players New Entrants from Non telecom companies with the ease of Outsourcing

D) Industry attractiveness or What Makes Indian Telecom Sector Attractive?

Telecom has been an active sector in India in terms of M&A deals in the last six-seven years. Yet, we can expect many more equity deals to take place sooner or later. The rush of overseas telecom companies will continue, as they are facing saturated markets at home, while the Indian market has a huge potential for further growth. The prominent overseas

telecom companies that are seeking an entry in to the lucrative Indian market include a number of Middle-East and European service providers such as Qatar Telecom, Kuwait-based Zain Group, Bahrain Telecom, Italy-based Telecom Italia SpA, a leading Turkish telecom company Turkcell etc. South Africas MTN Group has also been interested in acquiring, or being acquired by, or merge with an Indian company. Acquiring a stake in an existing Indian company is the only certain way of entry in the Indian market, as the only other option available right now is to participate in the auction for 3G services, which are expected to happen very soon. The Government of India has set a target of 45% tele-density compared with the current level of 31.50%. The government has estimated that the telecom sector will need $73 billion during the next five years to achieve the target of 45% tele-density, and a major chunk of the required investment is expected to come through Foreign Direct Investment (FDI) inflow, which has gone up to $1261 million in 2007-08 from $478 million in 2006-07

Despite the gloomy outlook owing to the global recession/slowdown in the economy, the telecom sector of India continues to attract record number of new subscribers. The Indian mobile phone operators have been adding about 8-10 million subscribers every month through out this year, and the figure has regularly topped the 10 million mark during the last threefour months. Considering the current pace of fresh additions per month, India has the potential of taking the total tally of subscribers to 700 million in the next five years from the current level of about 350 million, second only to China. About 10.35 million wireless subscribers were added during the month of November 2008, taking the total number to 336.08 million and a similar number was expected during the month of December 2008. The total number of both wireless and wireline subscribers reached at 374.13 million at the end of November 2008, according to the Indian telecom industry regulator, Telecom Regulatory Authority of India (TRAI). In terms of projected revenues, such a huge subscriber base is expected to generate more than $37 billion by 2012 growing at a CAGR (compounded annual growth rate) of 18%. This all rights reserved. 2009 www.IndusView.comgrowth potential offers enough incentive to overseas telecom companies to vie for their share of the pie. Investor-friendly regulations by the government, allowing up to 74% holding in a domestic entity by a foreign company, is an icing on the cake.

3 competitior environment
A. Future objectives follow:

1. Profitability Objectives To achieve a 20% return on capital employed by August 2019. 2. Market Share Objectives To gain 25% of the market for sports shoes by September 2018 3. Promotional Objectives To increase awareness of the dangers of AIDS in France from 12% to 25% by June 2017. To increase trail of X washing powder from 2% to 5% of our target group by January 2019. 4. Objectives for Survival To survive the current double-dip recession. 5. Objectives for Growth To increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in 2018. 6. Objectives for Branding To make Y brand of bottled beer the preferred brand of 21-28 year old females in North America by February 2017.

Bharti Airtel's big dream

Last week, it became the third telecom brand in the world to cross the 100-million subscriber mark. That took
15 years, but Airtel now wants to add another 100 million in just three years.

It's celebration time for Bharti Airtel which last week became the third telecom brand in the world to cross the magic 100 million-subscriber mark in a single country. The gap between Airtel and its nearest competitor, Vodafone, is now about 26 million subscribers. But Sunil Mittal is in a hurry: He now wants to hit the next 100 million mark in just three years a fifth of the time taken to reach the first milestone. This means Mittal wants to continue to control around one-fourth of the mobile subscriber base, which is expected to hit 750 million by 2012. Or, grab around 28 per cent of the incremental mobile subscribers every month. Simply put, Airtel is planning to add about 2.8 million customers every month. That shouldn't have been difficult as Airtel is already adding roughly the same number over the past few months, but the catch is that the telecom space will see much more intense competition with five to six new players expected to join in. Mittal knows more than anybody else that the strategy to corner the next 100 million subscribers will have to be fundamentally different. So Bharti Airtel's Deputy CEO Sanjay Kapoor says the new strategy includes four key elements focus on youth between the age of 18 to 25; spread further into the rural markets with customised services; get a larger share of consumers wallets; and, most importantly, concentrate on revenue market share rather than subscriber market share. Rural customers, for instance, already constitute 60 per cent of new customer additions. Airtel is now planning to set up over 100,000 (from 18,000 now) centres in villages that will provide services in 400 different languages and dialects. The company has also tied up with partners like Nokia to roll out over 200 vans which sell mobile phones with Airtel connection. Besides, S K Microfinance and fertiliser giant IFFCO have been roped in to sell Airtel services to farmers across the country.

Industry-leader Bharti Airtel has nearly got 100 million customers. As it readies to reach the next 100, it has
appointed company veteran Sanjay Kapoor as the deputy CEO in charge of running the company on a daily basis. Kapoor tells Surajeet Das Gupta and Ishita Russell the company will require brand new strategies to get the next 100 million customers, three-fourths of whom will be from rural areas. Excerpts:

Do you need another plan to get the next 100 million subscribers?
The two dominant segments in the next 100 million are the youth and those living in rural areas. There are 560 million youth in India , more than the population of the US and Indonesia. Our outlook needs to completely transform to understand the youth their ability to upgrade to more value-added services is very high and we need to do a lot to meet their requirements.

Right now, around half the new customers are rural; in the next-100, this could shift to threefourths just 13 per cent of rural India has phones, so theres a long way to go. What will change for us is the brand-connect, the product offerings, the communication and the distribution. We have partnered with IFFCO, a fertiliser company, to help us go rural and that is working very well. Since there are 400 different languages/dialects, weve developed the Airtel Service Centre concept we have around 18,000 of these up already, in villages, trying to serve the local community in their dialect; we have a local face serving them instead of someone from urban areas. Breaking into this market will require more creativity and you will see changes in our overall approach. What other changes are expected? In future, we will have the ability to participate in the revenues of many industry verticals it will be m-commerce, music, video, gaming, retail device-to-device applications will get developed so that we look at the consumers entire wallet, not just the telecom share of his/her wallet. Today, we sell more music than HMV and Saregama put together once the data-pipe gets broadened with 3G and HSPA, you will see more internet applications coming up. But the biggest opportunity will be in the m-commerce arena. We are focusing on three or four areas. First, the area of financial inclusion involving 80-85 per cent of the population which continues to remain unbanked. The mobile phone will act as your ATM in the future. The domestic money-transfer market is another huge opportunity. Around Rs 50,000 crore (Rs 500 billion) gets transferred from one part of the country to another through post offices alone every year. We can offer better value-for-money here. International money transfer is another opportunity around $42 billion gets transferred to India each year. We are not competing with banks and Western Union, but will work with them to speed up the offering and make it pervasive because we have 1.2 million retail outlets. No one has more reach. We have also invested into some very sophisticated service-delivery platforms which can be leveraged tomorrow for information about the customer, for targeted marketing and even promotions. Others are also trying this. Currently, under a tenth of revenues come from non-voice. And this concentrates mainly on the mobiles share of the wallet. Few have moved to target the entire wallet. The opportunity is very real and we need an ecosystem of partners to make it happen.

So will you have niche brands for rural markets and for the youth? We used to have multiple brands Magic was a brand of prepaid that we had but we discontinued it since we see more merit in one Airtel common brand which extends into various parts of a customers lifestyle. The scalability that this brings to us is a lot higher. How will new players targeting these very segments affect you? When we entered the market, the customer was more forgiving and more willing to wait since all operators were at the same level. Today, the customer experience has reached another level and so have their expectations. It took us 13 years to build a network to be able to service rural areas. If resources are not such a problem today, it may take less time to replicate this, but itll still take at least 5-6 years. No part of the world has seen 10-12 operators survive and India wont be any different. Will the next 100 million be new users or those churning from your rivals? Ninety per cent of the market is with the top 4-5 operators, so churn cannot be the strategy for established players. Leaders have to look at uncovered areas in the country. There will be new opportunities in even urban areas Delhi nearly 100 per cent penetration, so we have to look at multiple connections for subscribers. How important will average revenues per user (ARPU) be for the next 100 milllion? When we say the next 100 million, we dont only mean mobile, we mean mobile and DTH as a mass market. There will be interplay between the DTH and mobile services in the future. The expansion will come from both mobile and DTH and mobile-internet. ARPUs coming down, as we go to rural areas, is natural. Our philosophy is that as long as our capital productivity is improving, our operating costs and productivity are getting better, and as long as our topline is increasing, we never shy away from investments. In the last one year, our customers have gone up by 51 per cent and our revenues have gone up by about 40 per cent, while our minutes of usage fell by only 4 per cent. ARPUs are not that important, we have always believed in total minutes of usage. How will the 3G market pan out? 3G will require a full ecosystem if it is to work at full potential getting in just 2-3 players wont allow this to happen. 3Gs success will depend on the availability of devices, applications and content. The base that we have been building over the last few years is 3G-ready just selling a pipe doesnt help, you have to have the right content and application for the customer to experience the benefit of 3G. The GSM Association is working on getting affordable 3G devices below $50 to create the critical mass that is required. How will number portability affect the market?

Mobile number portability is more relevant in countries where you have long-term contracts. India is a prepaid market where churns are reported to be upwards of 5 per cent per month. I dont think consumers will stop switching without number portability. Number-portability wont be a game-changing opportunity for anybody. The exit and entry cost on prepaid connections is so low, I dont think mobile number portability really adds to value. How do you see the threat from existing CDMA firms which have begun GSM services? The customer is very sharp he takes something the moment you offer it free, and dumps it the moment the offer ends. If you make attractive offers to new customers and not to existing ones, the latter decide to become new customers. People have realised that just looking at customer numbers without looking at revenues is not sensible. There are several examples of firms who have a 10 per cent market share, but just a 2 per cent share of industry revenues. We took several years to establish ourselves in circles where we began as the fourth operator. The gestation periods for the 10th or the 11th operator are going to be significantly higher.

B. Current strategies :

Cost Leadership Strategy : A firm gains cost leadership in an industry when its cost of production is lower than that of its competitors. Airtel has gain cost leadership by managing its processes and resources efficiently and effectively. By bringing down its operational costs, an Airtel has offer its products and services at lower prices. It has also earn higher profits because either the profit margins are greater or the sales volume has increased.

Differentiation Strategy : The differentiation strategy adopted by the firms needs to possess sufficient skills and abilities to differentiate the product from that of the competitors based on some attributes that allow the consumers to perceive the product as different from that of the competition. Firms that adopt the differentiation strategy successfully have access to advanced scientific research, a highly skilled labor force, effective customer communication strategies, etc.Airtel is providing free digital EPABX with free leased lines (no connectivity charges).So the firm is providing latest EPABX to the customer which is costing approx Rs 50,000. 1. Best service provider, good call center service esp. in local languages, good service even in the remote areas, emphasis on barriers break when people speak, new initiatives like google search on airtel live, downloads etc 2. Long term HR strategy, Gallup Great Workplace Award, Both internal developments as well as external hiring, development programs with iims.

Focus Strategy : A firm pursuing a focus strategy tends to serve a specific segment instead of catering to the entire market. This segment may be a special group of customers, a specific geographic area, or a particular product or service line. The customers will also be loyal to the company and therefore, the entry of a new competitor into that area becomes difficult. Airtel is focusing on the customers who is having more than Rs10000 monthly landline billing. Airtel is offering landline services which consist of PRI (Primary Rated Interface). Airtel can provide its service to a specific geographic area i.e. from Dahisar to Churchgate in western region & Thane to Panvel in eastern region

c. Capability Defined
Capability represents the identity of your firm as perceived by both your employees and your customers. It is your ability to perform better than competitors using a distinctive and difficult to replicate set of business attributes. Capability is a capacity for a set of resources to interactively perform a stretch task. Organizational Capability Approach vs. Traditional Functional Paradigm "In the capability model, senior managers are predominantly concerned with issues about the quality of products and services provided to customers (external and internal), the flow of value-added work, and roles and responsibilities. The dominant view on performance measurement shifts from the traditional focus of actual-vs.-budget to a more balanced model that includes the timeliness, quality, and cost of providing products and services to customers. Allocation and budgeting of resources moves from the traditional practice of individual units vying for resources based on their own needs toward cross-group teams that jointly assess resource needs based on the flow of work needed to create value to customers. Problem solving would seldom involve situations in which unit managers had to compete with each another; instead, organizations would adapt to departmental interdependence, recognizing that issues are best addressed through cross-group problem-solving sessions focused on providing services to customers and the required flow of work."9 Distinctive and Reproducible Capabilities The opportunity for your company to sustain your competitive advantage is determined by your capabilities of two kinds distinctive capabilities and reproducible capabilities and their unique combination you create to achieve synergy. Your distinctive capabilities the characteristics of your company which cannot be replicated by competitors, or can only be replicated with great difficulty - are the basis of your sustainable competitive advantage. Distinctive capabilities can be of many kinds: patents, exclusive licenses, strong brands, effective leadership, teamwork, or tacit knowledge. Reproducible capabilities are those that can be bought or created by your competitors and thus by themselves cannot be a source of competitive advantage. Many technical, financial and marketing capabilities are of this kind. Your distinctive capabilities need to be supported by an appropriate set of complementary reproducible capabilities to enable your company to sell its distinctive capabilities in the market it operates. Building Capability through Leadership Attributes Leaders are responsible for building organizational capability. You need the ability to translate organizational direction into roadmaps, vision into action, and purpose into process. To do so, you must demonstrate at least five abilities7: 1. To build your organizational infrastructure 2. To leverage diversity 3. To deploy teams 4. To design human resource systems 5. To make change happen

Creating a Culture for Innovation The first step is to understand where the greatest deficiencies lie, and which levers will deliver the most impact. For many organizations, the most critical levers to assess initially include structure and metrics, though establishing innovation processes and providing employees with new skill sets are also critical drivers of culture. The act of visibly sponsoring (let alone personally driving) specific initiatives focused on creating new organizational capabilities that promote innovation serves to send a message and establish new symbols and stories that reinforce a culture of innovation .More

4 internal environment
MARKETING STRATEGY

CORE VALUE OF AIRTEL: Performance Dynamism Ledership

TARGETING Elite Up market professionals Entrepreneur with business plan Low income mass Youth Women and senior citizen by postpaid connection ADVERTISMENT Airtel basically uses two appeal to connect to the user Emotional Humorous

procurement
bharti airtel's requirements with respect to planning, scheduling, and execution. When a contract or purchase order is executed between bharti airtel and a partner, one of the obligations of the partner is to provide the ordered products or services when agreed upon, as defined in the purchase order. planning

Planning for items/services is done at different time horizons

o o o o Long Term Planning Annual Planning Quarterly / Monthly Planning Daily Planning

long term planning

The time horizon is three years and it is strategic in nature. Strategic / privileged partners would be a part of the planning process and the long term plans would be communicated to all partners. These plans would help partners to align their vision and business model with bharti airtel and covers areas of business model, market drivers, supply chain alignment, technology and emerging trends
annual planning

The time horizon is one year and it is tactical in nature. Strategic / privileged partners would be a part of the planning process and the Annual plans would be communicated to all partners. These plans would help partners to provide for resources in their business plan to support the requirements of bharti airtel.
quarterly/monthly planning

Quarterly / Monthly plans are operational in nature. The plans would cover tentative requirement of a quarter and confirmed requirements for a shorter period of time (generally a month). These plans would include inventory levels, demand forecast and replenishment requirements. These plans would help partners to plan their operations.
daily planning

Daily plans are at the execution level and would capture changes in the earlier planning cycles. Partners need to adhere to the daily plans and make adjustment to their long term / short term plans as per the changes communicated from time to time.

MISSION
To provides error free and cost effective service with innovative products and service to the customer.

COMPETITORS
National long distance BSNL Reliance VSNL Vodaphone Idea TATA

International long distance BSNL VSNL Reliance

VALUE CHAIN
Customer importance: first they find customer requirements Technology: latest change in telecom technology

Competitive position: conduct SWOT analysis of competitors.

Capable suppliers: suppliers capable of component design.

Start: decide which service we are going to provide using which technology, who is our customer, vendors and partners.

FINANCIAL
Wireless customer market share leadership at 24.7% Total minuets on network carried in Q3- 143 billion. Total employee strength 25,553

Balance sheet strength: Assets : $12 billion Net debt : $677 million Net debt to EBITDA- 0.21 times.

5 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. 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.

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.

Airtel comes to you from Bharti Airtel Limited, India's largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services