Bharti Airtel in

Africa

Group - 11
Introduction
the case & the issue
Bharti pioneered a as growth in India in 2010, Bharti poor infrastructure,
high volume low began to tapper off, acquired Zain obsolete hardware &
cost telecom model Bharti decided to Telecom for software equipment,
in India expand to Africa as its $10.7 billion limited supply of
demographics resources
mirrored that of
India’s
low employees
morale & vast
keep on investing in differentiation in
rural networks & work cultures
slashing tariffs to
increase demand
Bharti was leading in
revenue market share in 9 market share revenue
wait and watch, of 16 countries but in & EBITDA was falling
leave price at other larger markets MTN every month
market level, focus continued to lead
on urban – sub
urban areas
Introduction of
Bharti Airtel
Bharti Airtel in India
 The timeline of Bharti Airtel in India –
1992 Sunil Mittal secured a partnership with 3 companies to make joint bid for the cellular
licensing in India after liberalizing of Indian telecommunications market
1995 Mittal’s Bharti Cellular became the first company to launch mobile telephony services
in New Delhi under the brand name of Airtel
2003 It acquired mobile licenses for 15 out of 23 circles in India

2004 It was a pan-India operator expanding into new territories and entering new
businesses, they decided to outsource some of its key activities
2008 It started marketing Airtel SIM cards and prepaid recharge cards through network of
retailers to access the low income market of India
2010 It acquired Bahrain based Zain Telecom for $10.7 billion
2011 It had a distribution network of 2.5 million retailers & distributors in south Asia &
Africa
 “
Conventional Telecom Wisdom
mobile telephony was meant for upper
class customers who could pay
premium prices

Operators’ belief
high tariffs should be kept to
discourage users from talking too
much thus reducing capital
expenditure & improving RoI
 “
Bharti Airtel’s belief
goal of a manufacturing organization
is to maximize the number of units
produced while maintaining margin
per unit

Bharti Airtel’s strategy

expand production of minutes keeping
margin/minute constant & improve
market penetration by lowering tariff
Outsourcing Operation –
Bharti outsourced some of its key activities like –
• building & maintenance of telecom networks to Nokia and Ericsson
• IT operations (supplying, installing, managing) to IBM
• customer services to BPO firms like IBM Daksh, Mphasis etc

based on three key factors –

• who had better domain knowledge
• who enjoyed better economies of scale
• who could attract better human resources
Creating a Market –
In order to access the low income market Bharti decided to focus on prepaid
customers through –
• Matchbox strategy (partnership with state owned Indian Oil)
• training of rural distributors & retailers to teach first time phone users
• tie up with Indian Farmers Fertilizer Corporation
• tie up with SKS micro finance to provide microloan
• partnership with Nokia to raise awareness about mobile phones
• reducing the minimum cost of recharge & local call tariffs
• introduction of life time prepaid cards
• selling talk time in denominations of 66, 44, 22 cents
 Bharti Airtel’s Distribution Model –
Bharti Airtel

three layer model two layer model for

for more spread out more concentrated
population population
Rural Retailer Urban Retailer

Rural Distributor
Small
Enterprises

Super Distributor
SWOT Analysis
of Africa
 internal
Strengths Weaknesses
• relatively large & world’s youngest • high termination charges due to lack of
population liberalization in international gateways
• spectrum allocation process more • high cost of accessing the mobile services
transparent than India • low monthly minutes of use per customer
• growing economy & 2nd largest mobile compared to India
market in the world

favorable unfavorable

• expected growth in market penetration of
cell phones
• 96% prepaid mobile subscription with
dominating voice revenues in 2011
• value added mobile services as a major
driver of industry’s growth
• lack of skilled workforce & high cost labor
• limited supply of infrastructure
• poor mobile network coverage hampering
customer growth
• competition from existing stabilized
leading players

Opportunities Threats
external
 Africa’s
Mobile Telecom Market
Analysis
Porter’s five force analysis –
Suppliers’ bargaining power Buyers’ bargaining power
medium -high low – medium

limited availability of skilled workforce, mobile users in African market

higher cost of labor than Rivalry among exiting were relatively inelastic to
getting equivalently skilled competitors the price charged per
labor from India to Africa high minute for a call
shift to video calls for making well established telecom comparatively higher
international calls over providers already leading in entry barrier made it hard
Internet but poor voice some of African countries for other players to enter
quality issue in Internet telephony the industry

medium low – medium

Threat of substitutes Threat of new entrants
Thanks !!