A of biggest renowed names in international business

                      A CASE STUDY ON BUSINESS
PRACTISE OF AIRTEL

                                 Dr. R.
Narsaiah*  ,  Dikonda. Swathi Mallika**

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        *Faculty in Management Studies,Department of
Humanities and Social Sciences(H&SS),

                                  JNTUH College
of Engineering ,Hyderabad,Telangana.

         ** Student pursuing 5Th
year in Integrated Dual Degree Programme(IDP),B.Tech+MBA,

                                 JNTUH College
of Engineering  ,Hyderabad,Telangana

Abstract

Bharti Airtel
Ltd headquartered in New Delhi, India, is a global telecommunications company
with operations in 19 countries across Asia and Africa. The company ranks
amongst the top four service providers, globally, in terms of number of
subscribers, and top mobile service provider in India. In India, the airtel
product offerings include 2G, 3G and 4G wireless services, mobile commerce,
fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services
including national and international long distance services . In the rest of
the geographies, it offers 2G, 3G wireless services and mobile commerce.
It holds major share of volume in telecom sector in India. But due to advent of
Reliance Jio, It has to face some major challenges which resulted it its
drastic reduction of profits in the form of huge missed profits. In this paper
the brand positioning, strategies adopted by the company and its SWOT analysis
is discussed.

Key
words: Telecommunications, Technology, Strategies, Brand positioning.

Introduction

 

Airtel is founded by Sunil Bharti Mittal in 1976. The
company has grown from being a manufacturer of bicycle parts to one of the most
respected and  largest business groups in
India which has created world-class businesses in telecom, insurance, retail,
and foods. Bharti started its telecom services business by launching mobile
services in Delhi (India) in 1995. Since then it has emerged as one of the top
telecom companies in India, and is amongst the top three wireless operators in
the world. Bharti Airtel, is one of the world’s leading providers of
telecommunication services with presence in 20 countries across Asia and Africa.

Bharti Airtel offers GSM mobile
services in all the 22-telecom circles of India and is the largest mobile
service provider in the country, based on the number of customers.The
group offers high-speed broadband network and fixed line services in 87 cities.
In the rest of the
geographies, it offers 2G, 3G and 4G wireless services and mobile commerce.
Bharti Airtel had over 354 million customers across its operations at the end
of March 2017.

Over the years some of
biggest renowed names in international business have partnered with Bharti.
Currently, Singtel, Qatar Foundation Endowment, IBM, Ericsson, Nokia Siemens ,
Alcatel-Lucent and SK Telecom are key partners in telecom. AXA Group is the
partner for the insurance business and Del Monte Pacific for the processed
foods division.

Brand positioning

In
years 1995-1998 Airtel used the tag line “power to keep in touch”, which is
aimed at elite class of the society. In years 1999-2001, it started talking to
new segments by positively positioning and establishing itself as a brand that
improves the quality of life by introducing the line “Touch Tomorrow”.In late-2002,
Bharti Cellular Ltd released a television commercial, which instead of using
the usual movie stars/sports celebrities, it chose 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. Bharti claimed to
have scored an impression in terms of getting Rahman to compose five exclusive
music tunes downloadable as ring tones for Airtel users.

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

Later in July 2014, the company undertook a new campaign on
July 25 on television and other media including print, digital and outdoor. “As
large parts of India are graduating towards smartphones, we as an operator are
positioning ourselves as the most preferred network for smartphones. That is
where the next phase of growth will come from. This time, while the logo
remains unchanged, we have tried to make the look and feel of the brand more
youthful, premium, and international, to inject some excitement around Airtel.
This time around, our brief was to build on Airtel’s brand, which stands for
human connections and togetherness. The brand needed to be coherent across the
business, consistent within the business, stand out in a crowded market and
make the brand more aspirational” says Mohit Beotra, Chief Brand Officer of
Bharti Airtel.

 

Strategies
adopted by airtel

Airtel
uses mix of segmentation strategies to segment its offerings like basic call
/SMS plans, prepaid / Post-paid plans, VAS– Data, caller tunes etc. Apart from
geographically segmenting the market in East, West, North, South & central,
the market is also segmented in each region on the basis of demographic variables like age, Income, Social groups.
Different geographic regions are handled differently and independent campaigns
are run according to the people in each region. Airtel has targeted by using different campaigns
over the period of time i.e. campaign like “Har Ek friend Jaruri hota hai” “Jo
tera hai wo mera hai” and recently launched campaign of “one touch internet.
Airtel has been successful in top-of-the-mind recall amongst cellular phone
users and is enjoying a leadership position in most markets. After changing
its logo it has repositioned itself as a Young and energetic international
brand.

Under distribution
strategy in the marketing strategy of
Airtel, It has wide spread simple and effective
channel structure. This consists of system of rural and urban distributors
who are allotted territories and service retailer who had shops at local
market. The distribution network generally consists of
Distributors, Field sales Executives, Urban and rural retailers and Customers.
There is another channel where Airtel exclusive stores are set up in popular
areas ,which are franchises owned by dealers to serve not only for customer
service but also as distribution
centres.The other type of network consists of online trade where company’s own
website and various other recharge sites such as freecharge, paytm etc to make
online transactions.                                

                                           Strategies
planned to improve performance

1

More high revenue (ARPU) customers

·        
Grab increased share of 4G devices
·        
Drive rapid data consumption,
accelerate SIM consolidation and accelerate postpaid

2

More services per customer

·        
Build the largest Payments Bank by
creating differentiation
·        
Accelerate Airtel homes through
brilliant service bundling
·        
Drive depth of product portfolio
in B2B

3

Brilliant customer experience

·        
Eliminate customer frustration
across clusters
·        
Deliver a world class network
experience
·        
Revamp our stores for improved
growth and customer experience

4

Win with the Portfolio

·        
Accelerate home broadband, B2B
growth, and DTH
·        
Drive new revenue streams through
a combination of content, innovation & alliances

5

War on waste

·        
Drive down cost through challenging
the status quo
·        
Accelerate active sharing, fiber
and joint sourcing of bandwidth

 

Set
back for airtel

On
September 2016, Jio had officially launched its mobile network service, within
the first month of commercial operations, Jio declared that it had acquired 16
million subscribers. This is the fastest accumulation by any mobile network
operator anywhere in the world. Jio crossed 50 million subscribers  in 83 days since its launchand  crossing 100 million subscribers on 22
February 2017. By October 2017 it had about 130 million subscribers.
Reliance Industries and three telecom companies – Bharti Airtel, Idea
Cellular and Reliance Communication RCom have collectively lost Rs 22,522 crore
of market capitalization in single day after RIL chairman Mukesh Ambani at the
42nd annual general meeting announced the launch of Reliance
Jio offering customers free domestic voice calls and zero national roaming
charges.

 Before the official launch of Jio, in July,
Airtel has already cut off  its data
tariffs to retain its customer base. After its launch Bharti Airtel’s
revenue fell 3 per cent to Rs 23,363.9 crore in the third quarter of  FY 2016-17. Mobile data revenue dropped to Rs
4,049 crore due to “free voice and data offering by a new operator”. Data
revenues at Rs 3,087 crore de-grew by 3 per cent. Mobile broadband customers increased
by 22 per cent.The revenues on data contribute to 22.8 per cent of the company’s
mobile revenues in that year when compared to 23.1 per cent in the
corresponding quarter last year. Among telecom stocks, Bharti Airtel, the
largest loser in terms of m-cap, lost Rs 8,455 crore m-cap at Rs 124,199 crore,
the BSE data shows. The company
reported a 72% drop in quarterly profit on Tuesday, as free voice and data
services offered by Reliance Jio Infocomm Ltd until 31 March affected rivals
and forced them to cut down tariffs to retain customers.

Net profit fell to Rs 373.4 crore in the three months ended 31 March 2017
from Rs 1,319.2 crore when compared to earlier year, the company
said. This is the second straight decline in quarterly profit at the
country’s largest telecom company. Profit fell 55% in the three months ended 31
December. Revenue of the company declined by 12% to Rs 21,934.6 crore in the
March quarter of 2017. Earnings before interest, tax, depreciation and
amortization, an indicator of operating profitability declined 13% to Rs7,992.8
crore from Rs9,188.1 crore a year ago. The company’s average monthly revenue per
user fell sharply from Rs196 in the March quarter of previous year when
compared with Rs156 in 2017. Average data revenue per user declined to Rs162
from Rs196.Data average revenue per user fell by 4.5% to Rs185 in the year
ended 31 March 2017 from Rs194 in the previous year. The number of minutes
spent on calls on its network, however, grew 13.4% in the full year. In
response, Bharti Airtel slashed capital expenditure to Rs 3,808.2 crore in the
March quarter, down 37.13% from Rs 6,057.4 crore in the previous year. For the
year ended 31 March, company’s net profit declined 37.4% from last year to Rs
3,800 crore. Revenue rose 1.1% to Rs 95,468 crore. As it can be observed from
the below listed statistics , Bharti Airtel faced a huge losses due to the expenses
occurred during the financial year 2016-2017.

 

 

 

      List of income generated and profit/Loss after expenditures and taxes
of years 2013-2017

S.no

Year

Income in Rs.Cr

Profit/Loss in Rs.Cr

1

2013

46,814.00

5096.3

2

2014

50,771.90

6600.2

3

2015

60,689.40

13,200.50

4

2016

61,785.80

7546.5

5

2017

62,460.60

-9,925.60

 

Comeback efforts

As
soon as Jio came up with its mind-blowing offers,  Airtel left no stone unturned to win the
competition by offering high-quality services. The company cited ‘predatory
pricing’ when it reported a worse-than-expected 55% drop in quarterly profit on
24 January.The introduction of jio 4g services acted as a catalyst for airtel
data and 4g services. The stronger user adoption, positive network usage
monetized airtel its 4g network investments quickly. Bharti Airtel in November 2016, has awarded a $60 million (402
crore) pan-India deal to Finnish gear maker Nokia to implement
voice-over-LTE calling technology.”Airtel was piloting the technology in a few
areas and after successful testing, is now looking at a bigger launch by giving
a pan-India contract for IMS  (IP multimedia system) solution to
Nokia” sources said. The Industry
watchers said Airtel may be in an advantageous position if it launches VoLTE
services any time soon, considering that Jio hasn’t been able to properly
publicize the benefits of this technology due to the interconnection issue,
which the 4G entrant claimed due to massive connectivity issue . Airtel used VoLTE as a complimentary service to its
existing voice offering. In case VoLTE is not available in an area, Airtel
users would be able to fall back within the network to lower technologies,
which are 2G and 3G, industry watchers say. The biggest telecom operator in the
country has announced that it will establish its own VoLTE service across the
country by March 2018. 

“Bharti
Airtel will be focused on cost controls and
cornering a majority share of all 4G devices entering the India
market to its data network in a bid to stave off the stiff challenge posed by
new entrant Reliance Jio Infocomm”, the company’s managing director (India
& South Asia), Gopal Vittal  said. It started on an aggressive cost-optimisation drive
through a mix of fibre-sharing and active-infrastructure sharing measures to
improve finances for effectively giving competition to Jio. Airtel has
announced several new recharge packs for its prepaid customers ranging from Rs
8 to Rs 399.It announced  Rs 399 plan,which  offers 1 GB data per day at 4G speed along
with unlimited local and STD calls. The plan is to counter the Jio’s Rs 399
plan which also offers unlimited local and STD calls along with 1 GB data per
day for 84 days

Airtel Quarter 1 profit beats estimates despite
falling 75% on Reliance Jio impact. The better-than-expected Quarter 1 results was
partly because of the eased pressure on Airtel after Reliance Jio started
charging customers in April, after offering services for free for almost six
months.

Presently Airtel teamed up with ericsson  to work towards the development of 5G
technology. It recently entered into strategic alliance with SK telecom to
build advance telecommunication network .

Swot analysis

Strengths

1.     
 Airtel is the biggest mobile service provider in
India.With about 870 million wireless subscriptions, India ranks second after
China in the wireless market. Airtel has a 22.2% share of that market.

2.     
Airtel has been in the market for
many years and thus has towers all over the country. It is a major advantage
because deployment of new technologies or increasing capacity at times requires
minimal hardware upgrade. Having infrastructure already established makes that
process much faster and smoother.

3.     
Airtel is among India’s most visible
brands which is present in most parts of the nation through television, print
and various other forms of advertising.

4.     
Bharti Airtel  have nationwide penetration and although there
is no lack of consumer complaints regarding dropped calls and slow data, it
still offers a higher quality telecom service experience as compared to most
other telcos.

 The
company has top notch and highly reputed stakeholders,
namely Sony Ericsson, Nokia and singtel, and the recent one
being Apple. Such strategic alliances boost the brand equity.

Weakness

1.      
Airtel, like all other service
providers in India, has beenaffected by the extreme price competition. Due to
this there is a considerable decline in the profits of company.

 Outsourcing
operations helped Airtel in lowering its cost. But on the other hand, they
are running the risk of being dependent on some companies which may affect
its operations.
 With
its acquisitions turning out to be a 
bad investment, and credit being high and margins being low, Airtel
group is under high debt.

 

 

Opportunities

1.     
Partnering
of Airtel  with smart phone companies is
going to be a smart move as mobile number portability in India is
concerned. This will ensure fixed cash flows in the future and a
higher customer base.

 With high
competition in the  industry and  shrinking margins, venturing out in
new markets and developing economies will prove beneficial for the
company.
 Introduction
of valube added services can be helpful to the company in attracting
consumer base.

4.     
Although
it is currently providing 3G & 4G services, but these services are not been
able to reach certain  geographical
locations. Expansion of these services to geographies where no network is
established yet can be a fruitful one.

  Airtel
has to increase its pace for the penetration f its LTE as it presently
offers in 10 areas only.

 Threats:

1.     
With changing Governaments and its
policies and auction of spectrum it can be a hard task for the company to adapt
to the environment.

2.     
Declining profit margins and price
completion in the market can affect the company adversely.

3.     
 While  Mobile Number Portability gives
the customer independence to change the service provider while retaining
thepresent number it may affect the company as it charges high when compared
with other telecomm players in the market.

Conclusion

For any
company  ups and downs are common in
business environnment. Prior to the advent of jio, airtel has been the market
leader with highest share volume percentage. After the advent of new comer its
not been a smooth sail for Airtel, even though it fought back the new
challenges.  Even though the profits for
the company are lost drastically for few quarters, it managed to get impressive
number of subscribers. It adapted to new changes and modified its preferences.
It is working towards new technological advancements for the provision of
quality services towards consumers even though the process has been going in
slower pace.

Data
Analysis using SPSS software

Null
Hypothesis: Statistically there is no
significant difference between the income generated before expenditure and
profit or loss after expenditures and taxes.

Data
view in SPSS:

 

                                     

                                1-Income
generated before expenditure and taxes

                                2-Profits/
Losses after expenditure and taxes

 

Variable view in
SPSS software

 

 

 

Output in SPSS

Level
of significance- 95% -0.05

Group
statistics here gives information on number of observations taken on income
before the expenditure and taxes and profits/losses after expenditure and
taxes, mean of observations, standard deviation and standard error mean of
those observations

Independent Sample
Test

To
know whether equal variances to be assumed or not to be assumed we make use of
Levene’s test for equality of variances.

 As a rule if p- value Sig.>0.05, we use the
first line of t test results.

Whereas
when p- value  Sig

x

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