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Sales & Marketing case study

The Road Ahead
AlphaTel has been the leading telecom enterprise from the time it came into being 25 years
earlier. Since its advent, infrastructure investments and customer centricity has been at the
forefront of AlphaTel’s vision. AlphaTel built its internal teams on the shared values of AIR
(Alive, Inclusive and Respectful). However, never has the journey for AlphaTel been so exciting
as it has been in the last 2 years since BetaTel made aggressive move to grab share of the
pie.

The journey as truly described by the CEO of AlphaTel: “it has been a rollercoaster ride in the
last couple of years. This was an industry that had 10 players a couple of years ago, which are
not down to 3. With 1.3 billion customers to serve, this is a promising playfield. We have seen
a massive surge on the demand side, with data consumption growing by 14x in 2 years
space. The flip side of this is huge network capex requirements for building pipeline for this
massive demand driven growth. We have huge network capex investments of about $ 3.5 Bn
over the last 2 years”

Mobile services contributed around 70% of AlphaTel’s revenue. The product offerings include
2G, 3G and 4G wireless services, mobile commerce, fixed line services, high speed home
broadband, DTH, enterprise services including national & international long distance services
to carriers. The revenue from local mobile services in Q4’19 was $ 1.5 Bn, up 4 % sequentially
and 3 % on year, which, some said, signaled a turnaround. They added that the rise was
helped by the effects of the minimum recharge plan, which had pushed up average revenue
per user (ARPU) – a key performance parameter – and data consumption.

Market scenario

BetaTel entered the telecom industry in Aug’16 on back of 4G LTE network and spectrum
investments (Annexure 1). It offered a 10 month free usage disrupting the industry which was
on per unit pricing to a bundled per customer pricing (Voice unlimited and data GBs per day).
Industry saw a heavy decline in realization rates with voice becoming free and data prices
slashing from Rs 250/GB to Rs 20 per GB. Freebies along with pricing changes led to tremen-
dous growth in data usage in the industry. A clear shift of data usage is visible with data
usage per customer at 10 GB from 1 GB within a span of 2 years. Clearly the customer now
wants data more than ever before and with 4G speeds.

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Telecom industry in FY’16-17 was Rs.1.8 lac Cr with 10 players. With the entry of BetaTel, and
heavy price discounting, most of the value players had to bail out of the Indian telecom industry,
leaving only 3-4 players to fight for a bigger share out of the same pie. (Annexure 2). Industry
revenue over 2 years declined by 25% down to Rs 1.35 lac Cr, thereby severely impacting indus-
try health. The 4G ecosystem has exploded on the back strong network and 4G handsets infusion
working in tandem. (Annexure 3). BetaTel has also created a disruption through the launch of 4G
LTE enabled feature phone to capture the lower end of the market.

Over the last 2 years, Beta has built the largest 4G footprint network and spectrum pool, having
invested US$ 40 Bn in the industry till now. Beta has also invested heavily in in-house content
building like TV, Music, Gaming, News, payment gateways etc.

AlphaTel’s response:
Given the advent of this new entrant BetaTel offering freebies and enormous investment, AlphaT-
el’s response to fight back has been:
1. Fight for market share: Alpha nearly matched it prices to remain competitive with Beta.
Major product changes happened, where, it moved from a per GB price regime to a Bundled
product portfolio offering.
2. Alpha has made aggressive investments on Spectrum and network with all-time high
network capex being incurred.
3. Seizing the opportunity, it has bought 2 players and their network capacity, as well as,
pectrum from 6 operators. Thus taking its network strength a notch higher than the
competition
4. Alpha launched its own music and entertainment/TV apps and has also launched massive
consumer engagement/reward programs

GammaTel & DeltaTel Merger:

Player No. 2 and 3 in the industry (GammaTel and DeltaTel) decided to merge operations and
pursue cost synergies to survive this phase of hyper-competition. Their focus has been on realiz-
ing economies of scale and to tread cautiously in terms of network spends post-merger.

Problem Statement

1) What do we infer from the case? What are the key findings in the industry dynamics?
2) What’s the difference in approach from response perspective – AlphaTel vs GammaTel/
DeltaTel? What are the pros and cons of both the approaches?
3) What is the financial/business model for Industry and BetaTel?
4) What should be AlphaTel’s approach to further consolidate its market share?
5) What should be AlphaTel’s approach to grab share and stay a preferred network/brand in
consumer mind?

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Annexure 1: Industry Revenue construct
Base Q4'16 Q4'19
AlphaTel 150,000 110,000
GammaTel 110,000
115,000
DeltaTel 92,000
ThetaTel 26,000 2,200
KappaTel 25,500
12,000
PhiTel 27,000
HeptaTel 15,000
OctaTel 7,000
NonaTel 3,400
DecaTel 12,000
BetaTel - 120,000
Industry 467,900 359,200

Annexure 2: Industry Base construct

Base Q4'16 Q4'19

AlphaTel 260 330
GammaTel+ DeltaTel 380 370
BetaTel 30 260
Industry 970 1020

Alpha Base Split Q4'16 Q4'19

4G 18 140
3G 50 20
2G 190 170
Total 258 330

Annexure 3: Network Footprint

4G footprint June'17 June'19
AlphaTel 70,000 1,70,000
BetaTel 1,35,000 2,35,000
GammaTel +DeltaTel 95,000 1,30,000

Non 4G footprint June'17 June'19

AlphaTel 1,60,000 1,80,000
GammaTel +DeltaTel 2,70,000 1,90,000

Annexure 4: All by yourself

It’s time to read lots and lots on the industry. All the best!

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