BUSINESS PRACTICES ADOPTED BY AIRTELAbstractBharti 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.IntroductionAirtel is founded by Sunil Bharti Mittal in 1976.
The company has grown from being a manufacturer of bicycle parts to one of the most respectedand 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 19 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 with the best in class network. With 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 names in international business have partnered Bharti. Currently, Singtel, Qatar Foundation Endowment, IBM, Ericsson, Nokia Siemens and Alcatel-Lucent are key partners in telecom. AXA Group is the partner for the insurance business and Del Monte Pacific for the processed foods division. Brand positioningIn 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 impressionin 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 unveiled 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 airtelAirtel 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. Company uses 2-Tier and 3-tier distribution network system.
Under 2-tier distribution network, company appoints urban distributors and rural distributors. Urban distributors distribute the items to retailers according to the demand and transfer easy balance to retailer through Field officer sales SIM who work under urban distributors.Under 3-tier distribution rural suppliers distributes the items to rural distributors and transfer easy balance into rural distributor’s SIM, who then distribute it to Retailers.Extensive distribution system and as high as 300+ million subscribers has helped Airtel in crafting market leader position for itself over the years. Also Airtel has shifted from a technological brand to a communication brand through its continuous evolving branding & marketing efforts.
It has rechristened its logo to make it more of international, young & Energetic.1 More high revenue (ARPU) customers • Grab increased share of 4G devices• Drive rapid data consumption, accelerate SIM consolidation and accelerate postpaid2 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 B2B3 Brilliant customer experience • Eliminate customer frustration across clusters• Deliver a world class network experience• Revamp our stores for improved growth and customer experience4 Win with the Portfolio • Accelerate home broadband, B2B growth, and DTH• Drive new revenue streams through a combination of content, innovation & alliances5 War on waste • Drive down cost through challenging the status quo• Accelerate active sharing, fiber and joint sourcing of bandwidthSet back for airtelOn 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 customers. 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 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. Earnings before interest, tax, depreciation and amortization, an indicator of operating profitabilitydeclined 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 this year. 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 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.Comeback effortsAs 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 used 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” one of the people 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 daysAirtel 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.Swot analysisStrengths:1. Airtel is the biggest mobile service providerin 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 more than 18 years and thus has towers all over the country which is a major advantage because deployment of new technologies or increasing capacity at times requires software and minimal hardware upgrade.
Having infrastructure already on the ground makes that process much faster and smoother. Secondly, it is easier to capture new customers if a telcomm company already has a network in place.3. Airtel is among India’s most visible brands omnipresent in most parts of the nation through television, print and various other forms of advertising. Celebrity endorsements and innovative advertising that understand the pulse of 4. Bharti Airtel runs one of the better mobile networks’ in India. They have nationwide penetration and although there is no dearth of consumer complaints regarding dropped calls and slow data against Airtel, it still offers a higher quality telecom service experience as compared to most other telcos.
5. Strategic Alliances – The company has top notch 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 been adversely affected by the extreme price competition. The story is similar with data and 4G tariffs. As a result, the company has been reporting declining profits.2.
Outsourcing operations helped Airtel in lowering its cost. But on the other hand, they are running the risk of being dependent on some other companies which may affect its operations.3. Although it’s been 4 years that Airtel has acquired Zain’s Africa business, but Airtel is still struggling to turn around the unit which was bought at a huge sum of 9 billion dollars.4. With its acquisitions turning out to bad investment, and credit being high and margins being low, Airtel group is under high debt.
Opportunities 1. Partnering with smart phone companies is going to be a smart strategy as far as MNP (mobile number portability in India) is concerned. This will ensure fixed cash flows in the future and a higher customer base.2. With high competition in the telecom industry & shrinking margins, venturing out in new markets and developing economies will prove fruitful for the company.3. Value Added services is going to be future of the telecommunication industry & by specializing in this vertical Airtel can differentiate itself in highly competitive market.
With introduction of unique services, Airtel can avail higher margins.4. Although it is currently providing 3G & 4G services, but these services are limited to specific geographical locations.
Expansion of these services to most of its regions will help the company get more margins and customers.5. The whole wireless world is moving towards LTE (long term evolution or 4G). LTE for mobile broadband can be a good solution for India where fixed broadband penetration is otherwise low. Airtel has taken the lead with this version of LTE in 4 areas cities initially now expanded to 10 areas, but deployment needs to catch up pace. Despite a weak LTE ecosystem in India, Airtel should portray itself as the embracer of that technology .
Threats:1. With the auction of spectrum & change in the government policies on a regular basis, it is a potential threat to the stability & existence of this industry thereby affecting the players.2. Price war in the home market and declining margins due to this is adversely affecting the overall business of the group.3. Mobile Number Portability gives the customer independence to change the service provider while retaining the number and as Airtel charges are premium over other service providers, it can see slump in subscriber base in the next fiscal year with PAN India MNP applicable from May 3rd 2015.ConclusionFor any business ups and downs are common.
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.References • https://wirelesstelecom.wordpress.com/2013/11/11/swot-analysis-of-indias-largest-mobile-telecom-operator-bharti-airtel• http://www.airtel.in/airtel-annual-report-2016-17/financial-highlights.html• http://www.livemint.com/Companies/Ycs6CjuVIWmvUDpzg52xuJ/Airtels-Q1-profit-falls-75-Rs367-crore.html• http://www.business-standard.com/article/markets/jio-impact-ril-three-telecom-companies-lost-rs-22-522-crore-m-cap-116090100648_1.html