Strategy Airtel (1)

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AIRTEL

STRATEGIC MANAGEMENT

Group No 32

Chaitanya Pothakanoori 166Raghu Chittari 167

Ankur Malhotra 168

Amrit Keyal 169Ackshatt Aradhye 170





PESTELPolitical :

• Disorderly regulatory regimes left behind by corrupt previous

governments.

• Many countries freshly out from the civil war and apartheid.

• Government intervention in the industry

Economic:

• Penetration rate in mobile market has increased.

• Monthly mobile ARPU has broken the US$10 barrier in most markets,but some operators are achieving up to 60% higher ARPU than their

direct competitors.

Socio-cultural:

• Women in sub-Saharan African countries contribute over 40% of theeconomic activity of most nations.

• The literacy of women is low relative to men and lower still relativeto literacy figures in most world nations even many other developingnations.

• The Grameen Telecom model of the Village Pay Phone has facilitatesmobile phone entrepreneurs in rural villages through microcredit.

Technological:

• Extensive national fibre optic backbone networks are being rolledout.

• 3G mobile services launched in Nigeria and underway in othercountries

• Expansion of GSM networks even in instable Somalia

• Upgradations in data transmissions due to rapid growth of ADSL andwireless broadband services.

Legal:

Strengths :

• Largest cellular provider in India. Broadband,telephone,other

services

• Has access to knowledge and technology from other Eg:Sony-Ericsson, Nokia - and Sing Tel

• Covered the entire Indian nation with its network

Weaknesses :

• Did not own its own towers until recently

Opportunities :

• Customized version of the Google search engine which willenhance broadband services to customers- enhance theAirtel brand

• Strategic partnership is held with BlackBerry WirelessSolutions

• Less well-off consumers may only be able to afford a fewtens of Rupees per call-'Matchbox' strategy

• Indus Towers -joint venture with Vodafone Essar and Idea

Cellular

• IPTV is another potential new service that could underpin thecompany's long-term strategy.

Threats :

• Knowledge and technology sharing-

• Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5.6% stake in theAirtel business sold it back to Airtel, and instead invested in

its rival Hutchison Essar.

• Acquisition trail which may make it vulnerable if the worldoes into recession

SWOT



Competitive Advantage of zain – Consumer and market knowledge inafrica & licences in the contiguous countries

• Why ZaIN • Drawbacks

• Africa is the next growthdestination – HugeOpportunity

- The addressable base inAfrica is around 1 billion”currently there are 500million people in thecontinent of working age,

and by 2040, this number isexpected to exceed 1.1billion.

- The median age of Africa’spopulation is 17 years, lower

than that of India.- The urbanization is 40% in

• ZAIN present in countries with

lower penetration & Revenue

Potential + Political Issues

(Sub-Saharan Africa).

• A Costly deal at $10.8 Billion

• Shoddy Infrastructure & Poor

Governance will make it adifficult Market

• No integration & Synergies of

operations in the 15 nations.

• ZAIN is a poor second to MTN



The other side of the coin !

AdvantageA) ZAIN from BHARTI

•) Bharti may bring in tariff schemes for a low ARPU but highvolume market.

•) Zain can also benefit from Bharti ‘s efficiency in managingnetwork operations.

B) BHARTI from ZAIN

•) Bharti can understand African market better.

•) It can learn a lot from zain expertise in data service such as3G and 3.5G



Issues & Results• Africa-specific challenges faced by

Airtel- The principle of age: age = experience

= wisdom = authority; no meritocracy

- The timelessness principle: no timebounds on taking decisions, especiallywhen large number of people is goingto be affected

- The nepotism principle: African firms

do not frown upon favouring kith andkin over ‘external’ prospectiveemployees; again, no meritocracy

- Underdeveloped support infrastructure

- Low purchasing power of nativepopulations

• Bangladesh-specific challenges facedby Airtel

- Relatively lower thancultural/commercial issues in Africa,since Bangladesh has morecommonalities with Indian businessethos

- poor resource planning & inadequate

infrastructure- Autocratic tendencies of managers &

• Results- By the numbers: 42 mn(existing) customers plushuge untappeddemographic

- Airtel became world’s 5th-

largest wireless telecomcompany- For Zain: $3.3 bn (dealworth $10.7 bn)

- Bharti Airtel stock rose2.11% to Rs. 277.90 [Jun

10, 2010, BSE], withcorresponding upwardswing in marketcapitalization



Thank You

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Strategy Airtel (1)