Comparative analysis between Airtel & Videocon Mobile Services

Introduction Airtel was Established in 1985, Bharti (Airtel) has been a

pioneering force in the Telecom Sector. Bharti Airtel is one of India's leading private sector providers

of telecommunications services based on an aggregate of 66,689,943 customers

Approx 64,370,434 GSM mobile subscribers. Approx 2,319,509 Bharti Telemedia subscribers. Bharti has recently entered into retail business as Bharti

Retail Pvt. Ltd. The businesses at Bharti Airtel have been structured into

three individual strategic business units (SBU’s) Mobile Services, Airtel Telemedia Services & Enterprise Services

ON July 07,1995 it established as public ltd company Provides Telemedia services (fixed line) in 94 cities in India

About Videocon Mobile Services The Videocon Group is a $4 billion, global business conglomerate with

a strong presence in Household Consumer Goods, Oil & Gas, Retail, Telecom, DTH and the Power sector.

Videocon Telecommunications Limited a Videocon group company,

Offering GSM Mobile services under brand name Videocon.

The Videocon Group became the 13th mobile operator in India with its launch of GSM services & currently providing Prepaid service.

Providing the services in Tamil Nadu, Punjab, Haryana, Mumbai, Gujarat, Kerala, Madhya Pradesh & soon will be present across the country.

The Videocon group envisages investment of Rs 14,000 crores in its mobile services over the next three years.

•This is also the primary activity of the company. Their mission is to commit themselves to total customer care by delivering world-class products and services.

•Satisfaction of the customers is the main mission of Airtel.

•Maintain high standards of quality.

Mission

•By 2010 Airtel will be the most admired brand in India:

•Loved by more customers

•Targeted by top talent

•Benchmarked by more businesses

•Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more

Vision

Key steps towards Strategic Planning Mission--“To delight and deliver beyond expectation through

ingenious strategy, intrepid entrepreneurship, improved technology, innovative products, insightful marketing and inspired thinking about the future.”

Vision– “ To bring happiness in every home with global presence offering high quality e-products to ease & enrich human life”.

Goal--- “To provide a much higher level of service to all those who seek information.

Why Videocon?

Offering Prepaid plans at competitive price. For most of the current Prepaid plans the cal rates are 1

paisa/sec which will be reduced very soon. Under Special Tariff Benefits Pack cal rates are for V to V 20

paisa/sec & for V to other local cal 40 paisa/sec. On recharge of Rs.59 unlimited local V to V calling & Sms for

30 days.

Continue….. under the Rs 149 monthly recharge plan, subscribers can

make one hour of local calls free every day. Recharge options are V Top-up by visiting nearby mobile

showroom, online or through IVR system. Offering value added services like

Music downloads, Sports updates, V rashi every day, Other News & Updates, Entertainment– jokes, Railway inquiry, Social Networking---- Face book.

BCG Matrix

Stars ?

Cows Dogs • Fixed Line Services

Market ShareLOWHIGH

Mark

et

Gro

wth

R

ate

HIG

HLO

W

8

Mobile Services

BCG Matrix

HIGH

Market Growth rate

LOW

HIGH LOW Relative Market Share

Television---Videocon LCD

?

Consumer Electronics & home appliances,GSM Mobile Services,Mobile Phones,Oil & Gas.

StarsVideocon D2h

Dogs

Colour Picture Tube Glass

Cash Cows

PLC (Product Life Cycle)

3G Servic

e

Introduction Growth Maturity Decline

Mobile Service

Fix line

Product Life Cycle

Continue……… costs reduced due to economies of scale.

sales volume increases significantly.

profitability begins to rise.

public awareness increases.

competition begins to increase with a few new players in establishing market.

increased competition leads to price decreases.

SWOT Analysis

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.

Continue…… 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 Indian 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.

SWOT Analysis

Strengths1.Leading Brands

2.Customer Loyalty & Relationship

3.Presence across country

4.Competitive products price

Weaknesses1. The sim cards are

not available in many outlets.

2. Network issues3. At present only Prepaid plans, no corporate plans

Opportunities1. Planning to provide

services in all the remaining states, thereby making

presence across India.2.Invetment of

Rs.14000 Cr. Will improve services

3. There by attracting more customers in near

future.

Threats1. Market is captured by existing players.2. Many new service providers are coming

in this field.3. Presences of other

service providers across the country.

Internal Factors

External Factors

Positive Negative

Mar

ket A

ttra

ctive

ness

Strong Medium Weak

Low

Med

ium

Hig

hBusiness Strength

5.00 1.002.333.67

5.00

3.67

2.33

GE Matrix Classification

Business Strength

Current market share Brand image Brand equity Production capacity Corporate image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness

Factors Underlying Market Attractiveness

Factors Weight Rating(1 –5)

Value =(Weight * Rating)

Resource availability 0.20 3.5 0.7

Overall market size 0.15 4 0.6

Annual Market growth rate

0.20 4 0.8

Profitability 0.15 4 0.6

Competitive intensity 0.10 4 0.4

Technological requirements

0.20 4.5 0.9

Total 1.0 4.0

Factors Underlying Market/Biz Strength

Factors Weight Rating(1 –5)

Value =(Weight * Rating)

Market share 0.15 5 0.75

New product development

0.10 3.5 0.35

Brand Image 0.10 4 0.40

Sales force 0.15 3 0.45

Pricing 0.15 3 0.45

Distribution capacity 0.10 4.5 0.45

Product quality 0.10 4.5 0.45

R&D Performance 0.15 3 0.45

Total 1.0 3.75

GE Matrix of Airtel

Business Strengths

Mar

ket

Att

ract

iven

ess

Low

High

LowHigh

Attractive

Moderate Attractive

Unattractive

Mobile Airtel

TeleMedia

5.00 1.002.333.67

5.00

3.67

2.33

Enterprise

GROUP 7

GE Matrix of Videocon Company

Business Unit Strength

High Medium Low

Industry

Attractiveness

High Videocon CTR TVs

Thomson CPT & Display Components

Allwyn Refrigerators

Medium

Mobile Phones,Mobile Services,Electrolux Kelvinator

Videocon Oil & Gas

Videocon LCD TVs

Low Videocon Cassette AC

Videocon Side by side Refrigerators

Videocon Multimedia Speakers

Porter’s Generic Strategy

25GROUP 7

Porter’s 5 Forces

Threat from Competition

Customer Bargaining

Power

Threat of Substitutes

Supplier Bargaining

Power

Threat of New Entrants

1. Threat from Competition

Wireless Market – Top 4 garnering 75% market share

HIGH

Competitor Analysis

Bharti Rcom IDEA MTNL0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

Competitor Analysis

OP Margin Net Margin

Company Sep-07 Sep-08 Sep-072 Sep-083

Bharti 43.00% 38.00% 26.40% 19.30%

Rcom 37.90% 31.60% 23.90% 13.20%

IDEA 32.80% 26.60% 14.10% 6.50%

MTNL 23.70% 22.90% 7.00% 6.80%

Best OP Margins & Net Profit

Margins among Peers

Source: CMIE November 2008

Continue…….

838

461

303

88Russia

China

India

USA

0

2

4

6

8

10

Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007

ARPU

(USD

per

mon

th)

GSM CDMA

Minutes of Usage per Month – Mobile Services

ARPU* in India – Mobile Services

Despite a low teledensity of approximately 19 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity to telecom companies.

The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.

2. Customer Bargaining Power

Lack of differentiation among Service Providers

Cut throat Competition

Low Switching Costs

Number Portability will have –Ve Impact

Businesses & Consumers

HIGH

Market Scenario

Postpaid Vs Prepaid Customers & Market Share

Threat of New Entrants 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

3. Suppliers Bargaining Power

33 GROUP 7

LOW

4. Threat of Substitutes

Landline CDMA

Video Conferencing

VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites

BROADBAND SERVICES

DIMINISHING MARKET HIGH

Continue….

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

LOW

Core Values

• Empowering People - to do their best

• Being Flexible - to adapt to the changing environment and evolving customer needs

• Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit

• Openness and transparency - with an innate desire to do good

• Creating Positive Impact – with a desire to create a meaningful difference in society.

TARGETING Elite Up market professionals Entrepreneur with business plans Low income mass category Youth Women and senior citizens by post paid connection

POSITIONING

“Power to keep in touch” “Touch tomorrow” “Live every moment” “Express yourself”

Strategy

Airtel partnered with leading players in telecommunication players across the globe.

It has managed to work with the best of domain specialists globally and emerge as a world class entity.

Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.

RURAL STRATEGIES Airtel follows “Match-box strategy”

Advertisements Sales promotion Publicity and events

The firm expands regularly in Bihar, piggybacking on 300 distributors and more than 50,000 retail outlets selling Airtel prepaid cards

Covers over 4,00,000 villages and hopes to expand to other 1,00,000 by 2009

AIRTEL ADVERTISEMENT Airtel basically uses two appeal to connect to the users

Emotional Humorous

Total advertising budget of Airtel is Rs. 150 crore

SALES PROMOTION “Friendz” pre-paid plan

“Ladies special” plan

“Senior citizen” plan

Youtopia Special tariff plan for youth- Youtopia

Reduced tariffs, access to cell phones

14-19 years of age

Expand customer base (limited to the older age groups till now)

Deviation from earlier positioning for older people symbolizing dignity and power

Re 0.25 for 30 seconds- night!, special bidding portal, music download facilities, SMS at affordable prices

PUBLICITY AND EVENTS

Sponsored events Delhi half marathon Delhi golf tournament

Sponsored TV shows Big Boss KBC Indian Idol

Outsourcing deals in 2004

Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles.

IBM was given the mandate to handle the back office requirements of Airtel’s presence in India

Performance till date Bharti Airtel has enjoyed an excellent run ever since the

telecom sector opened.

It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone.

Has coped well with regulatory changes.

Continues to attract and delight customers.

Future Strategies

• Translate its expertise in Indian markets to other emerging economies.

• This could call for acquisitions globally.

• Technology leadership is a must – Airtel must ensure that its reliance on GSM technology does not render it obsolete.

• Indian market in spite of being the worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.

THANK YOU !!