Mobile Telephony In India-Case Study


Case Details:

Price:

Case Code:BSTR300For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Growth Strategy | Globalization
Case Length:21 Pages
Period:2005-2008
Pub Date:2009
Teaching Note:Available
Organization:Bharti Airtel Ltd.
Industry:Telecom and Broadband
Countries :India; Global

Abstract:

In the 2000s, telecommunications (telecom) company Bharti Airtel Limited (BAL) was the market leader in the Indian telecom market. It had established itself as the leader in the market by differentiating itself with its focus on building a strong brand through innovation in sales, marketing, and customer service, and an innovative cost effective business model. Analysts also credited BAL with negotiating the regulatory hurdles in this emerging market and competition very effectively. This enabled it to become profitable despite the Indian telecom market having the lowest tariffs in the world.


Some analysts opined that BAL's unique business model had become the benchmark for emerging markets. Mobile telephony in India was experiencing the fastest growth in the world and India was already one of the leading markets in terms of mobile subscriber base. Despite Average Revenue per User (ARPU) figures in the country being quite low compared to many other markets, it was viewed as an attractive market as mobile penetration of the market, particularly in the huge rural areas in India, was still low. With the developing market in the West reaching high levels of saturation (70% in US and 100% in some European markets), many global telecom operators were looking at emerging markets for their growth and this made India a prime target market for these firms. The market in India was also expected to witness many changes with the introduction of new technologies and mobile number portability.

Since 2007, BAL had been facing serious threats to its leadership position. On the one hand, there was the onslaught from global players such as Vodafone and Virgin Mobile, and on the other, the threat from established Indian companies such as Reliance Communications Ltd., Tata Teleservices Ltd., and the state-owned Bharat Sanchar Nigam Ltd (BSNL). Moreover, the market was expected to witness the entry of some more Indian and foreign companies. BAL had responded to investing heavily in expanding its network, technology, and marketing. It was trying to cover all segments of the population -from the tech-savvy youth population who coveted the latest value-added services (VAS) to the Bottom of the Pyramid (BoP) segment who would be satisfied with a low-cost offering.

In early 2008, BAL, which still dominated the Indian telecom market and was the world's tenth largest telecom company, was also readying itself to replicate its success story in some other emerging markets.

Issues:


» Understand how Bharti Airtel Ltd. tapped the opportunities in the Indian telecom sector and established itself as the market leader.

» Analyze the booming telecom sector in India that was experiencing high growth rates, with special emphasis on the competitive landscape in the sector.

» Understand the opportunities that emerging markets such as India offer to global business enterprises.

» Understand the issues and challenges faced by organizations operating in emerging markets.

Contents:

Keywords:

Industry analysis, Competition, Growth strategy, Market leader strategy, Business model innovation, Globalization, Emerging market, Base of the pyramid, Promotion, Airtel , Vodafone, India, Telecom

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The Indian mobile subscriber base is likely to sustain the rapid growth recorded in the past few years. Presence of skilled labour pool, improving telecom infrastructure, favourable demographics, rising disposable incomes of consumers, declining tariffs, increasing demand, growing attraction for mobiles with new features and greater availability of handsets at lower prices, are expected to continue driving the growth of the telecom sector, going forward.
However, the companies are likely to encounter a more challenging business environment in the near future, given the sustained fall in ARPUs, rapidly increasing competition and consequent pressure on margins and regulatory risks. Companies with good rural coverage, better operational efficiency, and superior quality of service are likely to stay ahead of competitors.
The industry will also witness the mergers of relatively smaller companies with the big players. Only big three or four players will dominate the market and direct price war may stop and Industry will agree on a standard pricing and competition will on the services and offerings.

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