Project Report on Airtel

Operation/ Production Layout

Submitted To: Submitted By:

XXXXXXXXXXX XXXXXXXXXXX

In Partial Fulfillment of the

Requirements of MBA Program
Batch (2022-2024)
 Acknowledgement
The satisfaction and euphoria that accompany the successful completion of any work
would be incomplete unless we mention some of the persons, as an expression of
gratitude, which made it possible, whose constant guidance and encouragement
served as a beckon light and crowned the efforts and success.

We take this opportunity of expressing our gratitude to Dr. Jayasree who has always
been of immense help during the making of this project, which helped us a great deal
in enhancing our knowledge by virtue of practical application. Her guidance and
support carried us all through the preparation of this project.

Last but not the least I would also like to acknowledge contributions of
various official websites and books named in the references for helping me with the
data collection and analysis which have provided me with the relevant information
for me to successfully complete my Project Report.
 Table of Contents

S.No CONTENTS
1. Introduction

2. Research Methodology

3. Company Profile

4.
Review of Literature
5.
Operational Layout
 Chapter – 1

Introduction
ORGANISATION

STRUCTUE Airtel's initial

corporate structure concentrated on the hierarchy of the operations inside the company as
a whole. The structure depicted the corresponding operation/region of different in-
charges and it didn't hold anyone responsible for each of its services. So, the company
found it better to restructure its corporate hierarchy. The transformed organisational
structure has two distinct Customer Business Units (CBU) with clear focus
on B2C (Business to Customer) and B2B(Business to Business) segments. Bharti Airtel's
B2C business unit will comprehensively service the retail consumers,

TYPES OF OWNERSHIP PATTERN

Airtel-Ericsson

As per a five-year managed services agreement signed recently Ericsson will manage and
optimise Airtel's mobile networks in Africa. Ericsson will modernise and upgrade Airtel's
mobile networks in Africa with the latest technology including its multi standard RBS
6000 base station. As part of the modernisation, Ericsson will also provide technology
consulting, network planning & design and network deployment. Ericsson has been the
managed services and network technology partner in the Asian operations.

Rebranding

Logo used by Airtel till November 2010

On 18 November 2010, Airtel rebranded itself in India in the first phase of a global
rebranding strategy. The company unveiled a new logo with 'airtel' written in lower case.
Designed by London-based brand agency, The Brand Union, the new logo is the letter 'a'
in lowercase, with 'airtel' written in lowercase under the logo. On 23 November 2010,
Airtel's Africa operations were rebranded to 'airtel'. Sri Lanka followed on 28 November
2010 and on 20 December 2010, Warid Telecom rebranded to 'airtel' in Bangladesh.

Sponsorship

On 9 May 2009 Airtel signed a major deal with Manchester United. As a result of the
deal, Airtel gets the rights to broadcast the matches played by the team to its customers.

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of
the Champions League Twenty20cricket tournament. But now the deal is terminated
and Karbonn Mobiles is sponsoring Champions League Twenty20cricket.

Airtel, also signed a deal to be title sponsor the inaugural Formula One Indian Grand
Prix during the 2011 season.[57]

Airtel, signed a deal to be title sponsor the I-League for 2013–14 I-League.

Signature tune

The signature tune of Airtel is composed by Indian musician A. R. Rahman. The tune
became hugely popular and is the world's most downloaded mobile music with over 150
million downloads. A. R. Rahman along with Anu Malik has re-used the same tune in
Kannada movie titled Love. A new version of the song was released on 18 November
2010, as part of the rebranding of the company. This version too was composed by
Rahman himself.

Green initiative

Bharti Infratel is the only telecom tower company, which has installed almost 3 MWT of
solar capacity on their network, generating more than 5 million units of electricity every
year. The Green Towers P7 program is scoped for 22,000 tower sites (primarily rural
areas having low or no Grid Power availability) out of which 5,500 sites have already
been implemented in the first year as a part of this 3-year program. Once completed, the
initiative will reduce diesel consumption by 66 million litres per year with a significant
carbon dioxide reduction of around 150,000 MT per year. Bharti Infratel bagged the 2011
'Green Mobile Award ' at the GSMA Mobile World Congress at Barcelona and was also
awarded the 2010 innovative infrastructure company of the year award at the CNBC
Infrastructure Awards for this groundbreaking initiative. Bharti remains the first company
in the world to introduce the practice of sharing of passive infrastructure by collaborating
with their competition to share mobile towers and to reduce the collective carbon
footprint of the industry. This has become a subject of case studies in institutions
including the Harvard Business School

Energy Conservation

The company has installed solar hot water generator at its main campus in Gurgaon for
fulfilling the hot water requirement in the cafeteria. Majority of its facilities across NCR
region are now equipped with LES (Lighting Energy Savers) which have reduced energy
consumption in the lighting system to the tune of 10–25%. Variable Frequency Drives
installed in AHU (Air Handling Unit) at its campus have helped in enhancing the
efficiency of cooling system by 10%. These measures have resulted in a total saving of
850,000 units of electricity per year. Airtel has embarked upon technology related
initiatives like virtualisation of servers that has helped it release over 500 CPUs. Also the
drive of sending e-bills to the post-paid customers is helping save 12,840 trees annually.
Within its campus the 'Secure Print Solution' – an automated queue management–based
secured printing solution has led to an annualised saving of about 8 metric tonnes of
paper. Alternative energy sources such as solar energy used at 1050 sites saving 6.9 mn
litres of diesel and approximately  280 million.

Energy efficiency measures such as Integrated Power Management Systems and variable
speed DC generators have resulted in reduction in the rate of diesel consumption by 1.2
million litres, leading to savings of  47 million across 900 sites.

Demand side management like Free cooling Units (FCU) instead of air conditioners has
been implemented acros 3400+ sites, saving consumption of 4.1 million litres of diesel.
 Chapter – 2

Research Methodology
Research Design:-
Research design of study is a conceptual structure a sketch or plan laid out for conducting the
study. It is considered as a blue print of the final copy of the project where it shows the activities
undertaken while doing the study. It constitutes the steps taken beginning with of collection of
clarifying it. Analyzing, interpreting, processing and finally putting it is an actual form.

Methodology:-
No series assumptions so far were made as to limit the usefulness of the study was made
at any stage. However the following assumptions were made –
A study period of four years (2017 to 2022)

Objectives of the study and the research design as agreed upon by the company and the
researcher are sufficient, accurate and correct portray true state affairs of Ratio analysis
of the company.

Published information from the company is accurate and true.

Research Design:-
Research design means a search of facts, answers to question and solution to problems. The data
are analyzed through ratio analysis common size balance sheet, comparative balance sheet and
fund flow analysis.
It is a prospective investigation. Research is a systematic logical study of an issue or problem
through scientific method. It is a systematic and objective analysis and recording of controlled
observation that may lead to the development of generalization, principles, resulting in prediction
and possibly ultimate control of events there are various designs, which are descriptive and
helpful for analytical research.
Data Source:-
This study makes extensive use of secondary data collected in the forms of annual reports. The
nature of secondary data collected was both qualitative and quantitative in nature. Considering
the above plan, research plan for the study is essentially a combination of qualitative and
quantitative aspects.

The secondary sources of data can be divided in to mainly two parts.

Internal
 HRD department
 Miscellaneous records

External
 Information for published materials like,
 Annual reports of the company
 Balance sheets and profit and loss accounts
 Magazines
There was also primary data, which was through discussions held with the concerned company
officials from finance department. The primary data was obtained through survey method i.e.
personal interview method.

.
Limitations Of The Study:-
1. The study is limited to Bharti Airtel and the finding need not apply in similar sense
to other firms.
2. The inferences that have been framed only on the basis of available records & data
from HR department.
3. Based on the limited information it is not possible to arrive at a proper conclusion.
4. Limitations of core Human Resources analysis.
 Chapter – 3
Company Profile
Bharti Airtel Limited, commonly known as (d/b/a) Airtel, is an
Indian multinational telecommunications services company based in New Delhi. It operates in 18
countries across South Asia and Africa, as well as the Channel Islands. Currently, Airtel
provides 4G and 4G+ services all over India and 5G service in selected cities. Currently offered
services include fixed-line broadband, and voice services depending upon the country of
operation. Airtel had also rolled out its VoLTE technology across all Indian telecom circles. It is
the second largest mobile network operator in India and the second largest mobile network
operator in the world.  Airtel was named India's 2nd most valuable brand in the first ever Brandz
ranking by Millward Brown and WPP plc.

Airtel is credited with pioneering the business strategy of outsourcing all of its business
operations except marketing, sales and finance and building the 'minutes factory' model of low
cost and high volumes. The strategy has since been adopted by several operators. Airtel's
equipment is provided and maintained by Ericsson, Huawei, and Nokia Networks whereas IT
support is provided by Amdocs. The transmission towers are maintained by subsidiaries and joint
venture companies of Bharti including Bharti Infratel and Indus Towers in India. Ericsson agreed
for the first time to be paid by the minute for installation and maintenance of their equipment
rather than being paid upfront, which allowed Airtel to provide low call rates
of ₹1 (1.3¢ US)/minute.

In 1984, Sunil Mittal started assembling push-button phones in India, which he earlier used to

import from a Singaporean company, Singtel, replacing the old-fashioned, bulky rotary
phones that were in use in the country then. Bharti Telecom Limited (BTL) was incorporated and
entered into a technical tie-up with Siemens AG of Germany for the manufacture of electronic
push-button phones. By the early 1990s, Bharti was making fax machines, cordless phones and
other telecom gear. He named his first push-button phone as 'Mitbrau'.

In 1992, he successfully bid for one of the four mobile phone network licenses auctioned
in India. One of the conditions for the Delhi cellular licenses was that the bidder have some
experience as a telecom operator. So, Mittal clinched a deal with the French telecom
group Vivendi. He was one of the first Indian entrepreneurs to identify the mobile telecom
business as a major growth area. His plans were finally approved by the Government in
1994[12] and he launched services in Delhi in 1995, when Bharti Cellular Limited (BCL) was
formed to offer cellular services under the brand name AirTel. Within a few years, Bharti
became the first telecom company to cross the 2 million mobile subscriber mark. Bharti also
brought down the STD/ISD cellular rates in India under the brand name 'India one'.

In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to
Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell Communications, in
Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises
went public in 2002, and the company was listed on Bombay Stock Exchange and National
Stock Exchange of India. In 2003, the cellular phone operations were re-branded under the single
Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005,
Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice
services all across India.

Airtel launched "Hello Tunes", a caller ring back tone service (CRBT), in July 2004 becoming
the first operator in India to do so. The Airtel theme song, composed by A.R. Rahman, was the
most popular tune in that year.

In May 2008, it emerged that Airtel was exploring the possibility of buying the MTN Group, a
South Africa-based telecommunications company with coverage in 21 countries in Africa and
the Middle East. The Financial Times reported that Bharti was considering offering US$45
billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by an
Indian firm. However, both sides emphasize the tentative nature of the talks, while The
Economist magazine noted, "If anything, Bharti would be marrying up," as MTN has
more subscribers, higher revenues and broader geographic coverage. However, the talks fell
apart as MTN Group tried to reverse the negotiations by making Bharti almost a subsidiary of the
new company.[16] In May 2009, Bharti Airtel again confirmed that it was in talks with MTN and
the companies agreed to discuss the potential transaction exclusively by 31 July 2009. Talks
eventually ended without agreement, some sources stating that this was due to opposition from
the South African government.
In 2009, Bharti negotiated for its strategic partner Alcatel-Lucent to manage the network
infrastructure for the fixed-line business. Later, Bharti Airtel awarded the three-year contract
to Alcatel-Lucent for setting up an Internet Protocol access network across the country. This
would help consumers access internet at faster-speed and high-quality internet browsing on
mobile handsets.

In 2009, Airtel launched its first international mobile network in Sri Lanka. In June 2010, Bharti
acquired the African business of Zain Telecom for $10.7 billion making it the largest ever
acquisition by an Indian telecom firm. In 2012, Bharti tied up with Wal-Mart, the US retail giant,
to start a number of retail stores across India. In 2014, Bharti planned to acquire Loop
Mobile for ₹7 billion (US$88 million), but the deal was called off later.

On 18 November 2010, Airtel rebranded itself in India in the first phase of a global rebranding
strategy. The company unveiled a new logo with 'airtel' written in lower case. Designed by
London-based brand agency, The Brand Union, the new logo is the letter 'a' in lowercase, with
'airtel' written in lowercase under the logo. On 23 November 2010, Airtel's Africa operations
were rebranded to 'airtel'. Sri Lanka followed on 28 November 2010 and on 20 December 2010,
Warid Telecom rebranded to 'airtel' in Bangladesh.

Acquisitions and mergers

MTN Group merger negotiations

In May 2005, it emerged that Airtel was exploring the possibility of buying the MTN Group, a
South Africa-based telecommunications company with operations in 21 countries in Africa and
the Middle East. The Financial Times reported that Bharti was considering offering
US$45 billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by
an Indian firm. However, both sides emphasized the tentative nature of the talks. The
Economist magazine noted, "If anything, Bharti would be marrying up", as MTN had more
subscribers, higher revenues and broader geographic coverage. However, the talks fell apart as
MTN Group tried to reverse the negotiations by making Bharti almost a subsidiary of the new
company.

In May 2009, Airtel confirmed that it was again in talks with MTN and both companies agreed to
discuss the potential transaction exclusively by 31 July 2009. Airtel said "Bharti Airtel Ltd is
pleased to announce that it has renewed its effort for a significant partnership with MTN
Group" The exclusivity period was extended twice up to 30 September 2009. Talks eventually
ended without agreement.

A solution was proposed where the new company would be listed on two stock exchanges, one
in South Africa and one in India. However, dual-listing of companies is not permitted by Indian
law.

Airtel India

Main article: Airtel India

Bharti Telecom (BTL) is a holding company of Bharti Airtel with Bharti Enterprises
and Singtel owning 50.56 percent and 49.44 percent, respectively, in BTL, which in turn owns
35.80 percent of Bharti Airtel.

Airtel India is the second largest provider of mobile telephony after Jio and the second largest
provider of fixed telephony in India and is also a provider of broadband and subscription
television services. It offers its telecom services under the Airtel brand, and is headed by Sunil
Bharti Mittal.

Broadband

Airtel provides broadband internet access through DSL, internet leased lines and MPLS
(multiprotocol label switching) solutions, as well as IPTV and fixed line telephone services.
Until 18 September 2004, Bharti provided fixed line telephony and broadband services under the
Touchtel brand. Bharti now provides all telecom services including fixed line services under the
common brand Airtel. As of June 2019, Airtel provides Telemedia services; in 99 cities. [74] As on
30 June 2019, Airtel had 2.342 million broadband subscribers.

Airtel Broadband provides broadband and IPTV services. Airtel provides both capped as well as
unlimited download plans. However, Airtel's unlimited plans are subject to free usage policy
(FUP), which reduces speed after the customer crosses a certain data usage limit. In most of the
plans, Airtel provides only 64KByte/second beyond FUP which is equal to other competitors'
tariffs. The maximum speed available for home users under the new V-Fiber program is up to
300Mbit/s and with DSL is 16Mbit/s.
In May 2012, Airtel Broadband and some other Indian ISPs temporarily blocked file sharing
websites such as vimeo.com, megavideo.com, and thepiratebay.se, without giving any legal
information to customers.

In June 2011, The Economic Times reported that the Telemedia business was merged with
Mobile and DTH businesses.

Digital television
Main article: Airtel digital TV

The digital television business provides Direct-to-Home (DTH) TV services across India under

the brand name Airtel digital TV. It started services on 9 October 2008 and had about
16.027 million customers at the end of June 2019.

Banking
Main article: Airtel Payments Bank

Airtel Payments Bank was launched in January 2017.

Business

Airtel Business consists largely of six products: cloud and managed services, digital signage,
NLD/ILD connectivity (VSAT / MPLS / IPLC and Ethernet products), Wi-Fi dongles, voice
solutions (like toll-free numbers, TracMate, and automated media reading) and conferencing
solutions (VoIP, audio, video, and web conferencing), serving industry verticals like BFSI,
IT/ITeS, manufacturing, hospitality and government.

Airtel Business, the B2B arm of Bharti Airtel, has rolled out a first of its kind dedicated digital
platform to serve the growing connectivity, communication and collaboration requirements of
emerging businesses, including SMEs and startups. The digital platform will offer solutions [ to
emerging enterprises to enable ease of business and faster time to market.[81]

Android-based tablet[

Beetel Teletech Ltd., a unit of Bharti Enterprises Ltd., on 18 August 2011, launched
a ₹9,999 (US$130) 7-inch tablet in India based on Google Inc.'s Android operating system. The
offering is intended to capitalise on the expected demand for cheap computing devices in the
world's fastest-growing and second-largest mobile phone market.[82]
One Network

One Network is a mobile phone network that allows Airtel customers to use the service in a
number of countries at the same price as their home network. Customers can place outgoing calls
at the same rate as their local network, and incoming calls are free. [98] As of 2014, the service is
available in Bangladesh, Burkina Faso, Chad, Democratic Republic of Congo, Congo
Brazzaville, Gabon, Ghana, India, Kenya, Madagascar, Niger, Nigeria, Rwanda, Seychelles,
Sierra Leone, Sri Lanka, Tanzania, Uganda, and Zambia only for international roamers
from Airtel Africa[99]

Joint ventures and agreements

Airtel-Vodafone
Main article: Airtel-Vodafone

On 1 May 2007, Jersey Airtel and Guernsey Airtel, both wholly-owned subsidiaries of the Bharti
Group, announced they would launch mobile services in the British Crown Dependency islands
of Jersey and Guernsey under the brand name Airtel-Vodafone after signing an agreement
with Vodafone. Airtel-Vodafone operates a 4G network in Jersey and Guernsey.

Airtel-Ericsson

In July 2011, Bharti signed a five-year agreement with Ericsson, who will manage and optimize
Airtel's mobile networks in Africa. Ericsson will modernize and upgrade Airtel's mobile
networks in Africa with the latest technology including its multi-standard RBS 6000 base station.
As part of the modernization, Ericsson will also provide technology consulting, network
planning & design and network deployment. Ericsson has been the managed services and
network technology partner in Asian operations.

Sponsorship

On 9 May 2009, Airtel signed a major deal with Manchester United. As a result of the deal,
Airtel had the rights to broadcast the matches played by the team to its customers.

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of
the Champions League Twenty20 cricket tournament.
Airtel also signed a deal to be the title sponsor of the Formula One Indian Grand Prix.

Airtel sponsored the 2018–21 FIA GT World Cup.

Airtel signed a deal to be the title sponsor of the I-League for 2013–14 I-League.

Airtel is also the main sponsor of Airtel Super Singer and Airtel Super Singer Junior since 2006,
which are currently broadcast on Vijay TV.

Signature tune

The signature tune of Airtel is composed by Indian musician A. R. Rahman. The tune became
hugely popular and is the world's most downloaded mobile music, with over 150 million
downloads. Rahman along with Anu Malik re-used the same tune in a 2004 Kannada
movie Love. A new version of the song was released on 18 November 2010, as part of the
rebranding of the company. This version was also composed by Rahman.

Controversies

Net neutrality debate

Further information: Net neutrality in India

In February 2014, Gopal Vittal, CEO of Airtel's India operations, said that companies offering
free messaging apps like Skype, Line and WhatsApp should be regulated similar to telecom
operators. In August 2014, TRAI rejected a proposal from telecom companies to make
messaging application firms share part of their revenue with the carriers or the government. In
November 2014, TRAI began investigating if Airtel was implementing preferential access by
offering special internet packs which allowed WhatsApp and Facebook data at rates that were
lower than its standard data rates. The statements of Chua Sock Koong, Group CEO
of Singtel and also a shareholder (32.15%) of Bharti Airtel share similar statements about the
Anti-Net Neutrality position.

In December 2014, Airtel changed its service terms for 2G and 3G data packs so that VoIP data
was excluded from the set amount of free data. A standard data charge of 4 paise (0.050¢ US)
per 10 KB for 3G service and 10 paise (0.13¢ US) per 10 KB (more than ₹10,000 (US$130) for
1 GB) for 2G service was levied on VoIP data. A few days later, Airtel announced a separate
internet pack for VoIP apps, it offered 75 MB for ₹75 (94¢ US) with a validity of 28 days. The
TRAI chief Rahul Khullar said that Airtel cannot be held responsible for violating net neutrality
because India has no regulation that demands net neutrality. Airtel's move faced criticism on
social networking sites like Facebook, Twitter and Reddit. Later on 29 December 2014, Airtel
announced that it would not be implementing the planned changes, pointing out that there were
reports that TRAI would be soon releasing a consultation paper on the issue.

In April 2015, Airtel announced the "Airtel Zero" scheme. Under the scheme, app firms will sign
a contract and Airtel will provide the apps for free to its customers. The reports of Flipkart, an e-
commerce firm, joining the "Airtel Zero" scheme drew negative response. People began to give
the one-star rating to its app on Google Play. Following the protest, Flipkart decided to pull out
of Airtel Zero. The e-commerce giant confirmed the news in an official statement, saying, "We
will be walking away from the ongoing discussions with Airtel for their platform Airtel Zero."

In October 2016, India's telecom regulator TRAI recommended imposing a combined penalty
of ₹3,050 crore (equivalent to ₹37 billion or US$470 million in 2020) on three mobile network
operators — Vodafone, Bharti Airtel and Idea Cellular — for denying interconnection to
Reliance Jio Infocomm (Jio), the latest entrant into India's telecom service.

User privacy

In June 2015, a code used by the company was accused of compromising subscribers' privacy.
 Chapter – 4
Review of Literature
The Indian telecommunications industry is one of the fastest growing in the world, with about 19
million additions a month. The industry has witnessed consistent growth during the last year on
the back of rollout of newer circles by operators, successful auction of third-generation (3G) and
broadband wireless access (BWA) spectrum, network rollout in semi-rural areas and increased
focus on the value added services (VAS) market. there have been several new entrants in the
markets lately. This has led to ever lowering tariffs and a decrease in the revenue of existing
players. Fresh acquisition of customers is no longer a guarantee to increase in revenue.
Consequently, in addition to the lower calling rates, the operators have been forced to provide a
host of value added and auxiliary services. To retain its leadership position, Airtel is already
leading the way in areas of mobile commerce, banking etc.

As the Indian telecom industry enters its third phase, growth in the markets is bound to mirror
the growth in the economy. This provides valuable pointers to the next driver of growth – the
rural India – where mobile penetration levels still remain an abysmal 15%. Airtel has been
looking to expand and learn in the rural/low income market segment. Airtel has already ventured
into providing mobile financial services, mobile money transfers to customers in rural areas,
further leveraging its existing base of cellular subscribers.

Vision and Mission

Vision

“By 2015, Airtel will be the most loved brand, enriching the lives of millions.”

Mission

We will meet the mobile communication needs of our customer through  error-free service

delivery

Innovative Product and Service

Cost efficiency

Unified messaging solution

Objectives/Goals

To undertake transformational projects that have a positive impact on society and contribute to
the nation building process

To diversify into new businesses in agriculture, financial services and retail business with world
class partners

To lay the foundation for building a conglomerate for future.

Environment Analysis

Porter’s Five Forces (Cellular Services)

1. Threat of new entrants – MEDIUM

 TRAI has been following a “liberal regulatory regime” to encourage greater competition
with better quality and affordable prices”
 The government presently allows FDI of 76% in the sector, encouraging foreign players
to enter the Indian market.
 Heavy capex requirements and strict licensing policy hinders entry

2. Bargaining Power of buyers – VERY HIGH

 Lack of product differentiation- There are short term gains that one player may have from
innovation/ first mover advantage into a new value added service
 Extremely low switching costs in moving from 1 service provider to another
 Multiple service providers- very wide variety of choice for the customers.
 Competitive landscape implies consistently better offers and deals for customers.
3. Bargaining power of suppliers – VERY LOW

Airtel outsources most of its operations. Since contracts are allocated to the highest bidder, Airtel
only looks at getting the best deal. This mechanism provides Airtel with a high degree of
flexibility. For eg. Network outsourcing/maintenance partners: Ericsson(15 circles), Siemens(7
circles), Huawei., IT system partner: IBM, Tower maintenance and other infrastructure: Bharti
Infratel and Indus towers.

4. Pressure from substitutes – HIGH

The communications space is very dynamic with new technology (3G and 4G) and products
flooding the market. Mobile services are competing with products such as, Wired-lines ,CDMA,
Video telephony, Tata/ Reliance- Walky phones, Internet telephony- Skype, google, fring etc,
VSAT phones.Additionally, data services on cellular phones have become an essential product
feature. On this front, mobile services face a significant threat from local ISPs, broadband
service, leased lines, Blackberry and iPad.

5. Current Rivalry – MEDIUM-HIGH

Airtel is the current market leader in the mobile service (GSM) sector with 31% market share.
Vodafone, BSNL, Idea are its major competitors.

Competitive Advantage

Airtel has the following competitive advantages:

Strategic alliances: Acquisitions and JVs

Airtel has been entering into various JVs and acquisitions to increase its footprint as well as
global presence. The firm has stake in JT mobiles, Sky Cell etc. With the acquisition of Zain and
other players, Airtel has used this strategy effectively to become a global player

Outsourcing:

Airtel has a clear outsourcing strategy. It outsources all its functions except marketing, sales and
finance; this has helped the firm focus on its core competencies. Further due to its market
leadership position and volume of its operations, there are multiple bidders; which has ensured
high quality service/products for Airtel

Supplier Relationships

Airtel has strong relationships with its suppliers. It relies on Bharti Infratel for towers, IBM for
IT systems etc. It is able to sustain its innovative business model ,by focusing on relationship
management with vendors

International Presence

Airtel’s global presence and deep pockets are a source of competitive advantage for the firm.

Value Chain Analysis

The traditional mobile industry value chain basically involved the mobile operator, service
provider, device manufacturer and the customer. However the mobile services industry is rapidly
evolving with value added services, data services etc. gaining significance. These are a very
profitable revenue stream for the service provider.

For example in the value added services segment, the network operator keeps about 60% of
revenue, the technology/software developer retains about 25%, while the content provider gets
about 20% of the revenue from value added services (Source: IMRB Research).

With M-Commerce contents becoming increasingly important in the value chain, it is seen that
the operator share in the value chain has been declining. Airtel has been tying up with
entertainment providers, FMCGs, insurance companies to maintain a share in the value chain.
From a strategy perspective, this should be one of the focus areas for Airtel.

Business Level Strategy

Airtel cellular service follows a cost leadership strategy. The market focus is broad- with the firm
catering to 137 million customers as of FY10. Further, since differentiation is very short lived
and immediately imitated by competitors; firms attempt to maintain a cost advantage over their
competitors. Airtel has maintained its cost leadership by reducing its operational costs and its
unique business model- which outsources all major functions except, sales, marketing and
finance. Differentiation is also attempted with the help of value added services. While there are
several player in the market, including the new entrants, Bharti-Airtel, Rcom and BSNL are the
only players to gain a differential advantage on the account of existing infrastructural capability.

Differentiation

Focused differentiation

Cost leadership- AIRTEL CELLULAR

Focused Cost

Integrated

Competitive Scope

Narrow

Broad

Source of competitive advantage

Differentiation

Cost

Corporate Level Strategy

Bharti Airtel has been divided into distinct business units, as follows:

The Mobile Services division is probably the most valuable division of Bharti Airtel. Airtel
offers GSM mobile services in all the 23-telecom circles of India and is the largest mobile
service provider in the country, based on the number of customers. It provides numerous value
added services such as mobile apps, hello tunes, m-commerce, wireless internet etc.
The Airtel Telemedia Services division provides high speed broadband internet and related
services. It also provides landline service in 93 cities across India. It also launched its DTH
services in 2008 and is present in more than 150 cities now.

The Enterprise Services division provides a diverse portfolio of services to large Enterprise and
Carrier customers. This division is further divided into two unite: Carrier business unit and
Corporate business unit.

The Corporate Business Unit provides end to end telecom solutions to India’s large corporate. It
specializes in providing customized solutions to address the unique requirements of different
industry verticals.

The Carrier Business Unit provides long distance wholesale voice and data services to carrier
customers as well as to other business units of Airtel. It is present in significant capacity in the
International arena as well.

Differentiation

Focused differentiation

Cost leadership- AIRTEL CELLULAR

Focused Cost

Integrated

Competitive Scope

Narrow

Broad

Source of competitive advantage

Differentiation
Cost

The Digital TV Services provides customers with a unique TV viewing experience with a wide
variety of channels and programmes and with the on-demand content on Airtel Live.

The international business group deals with all of Airtel’s operations outside India and South
Asia.

Bharti Airtel has comparatively low levels of diversification, and it follows a Dominant Business
strategy. The second quarter financials of Airtel show that its mobile services division had a
gross revenue of Rs. 8099 crore, which is roughly 82% of its total revenue of Rs. 9846 crore.

Thus its mobile services division is its dominant business.

The reasons for Airtel to diversify are purely based on value creation. As all its divisions focus
mainly on telecommunication and related technologies, the transfer of core competencies
becomes much easier and much more useful. Moreover sharing activities and resources,
especially technological knowledge, is very helpful and creates a positive synergy for Airtel. It
also gives Airtel to increase its market power by engaging in multipoint competition with
competitors such as Tata. Further it provides efficient internal capital allocation opportunities to
airtel, as the retained earnings from its hugely profitable Mobile services can be put to good use
in other divisions.

Value creation through diversification

Airtel seeks to create value through diversification by moving across businesses that share both
operational and corporate relatedness. With this approach, it expects to achieve high resource
sharing and consequently, significant cost reduction.

It looks at operational relatedness since a number of its businesses operate across similar
technologies and thus the platform for a given product can be used directly for extending the
service from a completely new product. As an example, the cables for a telephone connection
provided by Airtel can be used to provide broadband service to the customer without any
significant change in infrastructure. The skills required from the technicians are also not very
different and thus economies of scale are quite possible. The same logic can be extended to
exploring the corporate relatedness. All the diversified businesses require similar managerial and
technical expertise as can be seen in the example provided above.

In pursuing this strategy, Airtel will have to be conscious of the fact that it can lead to
diseconomies of scope. This can arise primarily from the very factor which Airtel is banking on
– similarity across its businesses. A wrong move in any one of the businesses can spill over to its
other business and cause repercussions even in the short term. This is the very reason that the
organization cannot afford to ‘go easy’ on any of its domains and needs to keep up to speed in all
its businesses.

International Strategy

Today Bharti Airtel operates in 19 countries throughout the world. Apart from being the largest
cellular service provider in India, it is the fifth largest telecom operator in the world. It has about
207.8 million subscribers worldwide – 152.5 million in India, 50.3 million are in Africa. This has
helped Airtel to increase its global market share and revenues significantly.

International Business Level Strategy

We will view this in further detail using Porter’s Determinants of National Advantage model:

It is worth noticing here that after the Indian subcontinent, Airtel’s main region of operation is
Africa. It is possible that the company found it attractive to enter Africa because due to its
economic conditions, countries there would be lacking in necessary factors of production.
Domestic companies in Africa would be lacking in technological resources, human resources,
and capital necessary in the telecommunications sector. On the other hand, there is no lack of
such resources in India. This is one of the major reasons why Airtel chose to expand there.

Although the demand for services provided by Airtel is increasing at a rapid pace in India, there
is still a lot of competition and the demand is smoothing out slowly. To further increase its
revenues and market share Airtel has to expand to other nations as well. Due to the lack of
existence of bare minimum infrastructure in Africa and the slow but steady increase in its
economic well being, the demand conditions over there should be very high.
The related and supporting industries are also very competitive and there are a lot of players in
the telecommunication sector, like Vodafone, BSNL and Reliance.

International Corporate Level Strategy

The business of Airtel has been divided into two units based on geography.

Need for cost responsiveness

There are three basic international corporate level strategies availaible to any firm:

Need for local responsiveness

Airtel has always made it a point to focus on the needs of customers and provide solutions to
customers according to their requirements. For example, the mobile services that they offer vary
even among the different states of India according to customers’ preferences. Similarly, the kind
of services, offers, plans and value addition that they offer in India is very different than what
they offer in other nations. For Airtel, need to address local responsiveness has always been of
the utmost importance.

On the other hand, the need for global integration is not very high. The two business groups, as
shown above, are distinct from each other. Due to the lack of proximity of the locations where
Airtel operates, and other strategic factors, it is best for Airtel to have low levels of global
integration.

Keeping the above points in mind, it is clear that Airtel follows a multidomestic strategy.

Organizational Structure

Bharti Airtel follows an integrated structure responsible for all aspects of its telecom business in
India. Significant reorganization took place in October 2006 in line with the vision of making
Airtel, the most admired brand in India by 2010.

As quoted by their president, it is their endeavor to build an integrated business, leading to higher
synergies & efficiencies and creating an organization that has a truly national character in every
aspect of business operations. The present structure marks the transition of Airtel towards a
customer focused organization while building sustainability & scalability to seamlessly manage
100 million customers and beyond. The new organization has been designed to enable strong
corporate governance whilst ensuring operational freedom, through functional & matrix
reporting relationships.

Actual Structure

Bharti Airtel is structured into four strategic business units – Mobile services, Broadband &
Telephone (B&T) services, Enterprise services and DTH services. The mobile business provides
mobile & fixed wireless services using GSM technology across 23 telecom circles. The B&T
business provides broadband & telephone services in 94 cities. The Enterprise services provide
end-to-end telecom solutions to corporate customers and national and international long distance
services to carriers. All these services are provided under the Airtel brand. The top level
management of Airtel across its four divisions is as shown in the following figure.

In the case of Airtel, a matrix organization structure introduces, or at least recognizes, the real
life complexity of a business environment. Geography, function, technology, business unit and
technology (among others) are the important factors that are recognized in the matrix
organizations structure.

However, the above mentioned structure also introduces a higher level of internal complexity
and some additional people management challenges, so there must be significant advantages that
are seen by the organization that outweigh the matrix people management challenges.

Matrix organization structures were initially introduced in complex projects such as the airspace
industry to cope with complex projects. Since then a number of organizations, often prompted by
large strategy consultancies, have adopted or altered the matrix organization structure to help
deal with internal and external complexity.

In the following figure, a sample matrix organizational structure is shown. In the case of Airtel,
the project manager refers to the managers of the different services provided by Airtel across its
divisions. It is clear that this allows for sharing of resources across the various projects.
At its simplest the matrix organization structure just reflects this external complexity in the
internal structure. Airtel is a brand that is aiming for a global presence and realizes that
geography is important but so are function, customer grouping, product and technology.

Basically, a matrix organization structure is an acknowledgment of the notion that since it is

improbable to specify the weightage of importance that can be attributed to these factors, there is
a need to allow a structure that is flexible and permits balancing and prioritizing on a daily basis
between the various divisions. Thus there is a conscious trade-off for clarity in return for more
flexibility.

An important issue to consider here is that while the organization structure itself is a good fit for
Airtel, a lot of emphasis needs to be laid on the successful coordination of the people and their
skill sets within the organization.

Advantages

As a synopsis, the advantages reaped by Airtel as a result of its organizational structure include:

 Improved resource accessibility across the old functional and geographic silos.
 Effective coordination on shared technologies across the organization (extended to a
global level)
 Decentralization of management decisions
 Improved access to a diverse range of skills and perspectives.
 increased communication and coordination across the business
 Flexible as per the needs of global or regional customers

Structural Issues

Dual reporting structures run a risk of initiating power struggles. Dual lines of authority in the
matrix often create power struggles between the vertical and lateral forces as each tries to secure
member loyalty and budget rupees.
Teams may develop ‘groupitis’, the matrix depends on team functioning, there may be an
overdependence on group decision-making even where it is unnecessary. This can slow down
projects and further be a point of frustration for people managers.

It is a widely acknowledged fact that the matrix structure increases administrative overhead, it
also ideally suits the progressive development of new ideas into projects. However, when a
slump hits, one common tendency is to discard the matrix in favor of more traditional
approaches. The matrix can become a scapegoat for inefficiencies.

Decision strangulation – matrix organizational structures legitimize multiple information flows

throughout the organization, creating the danger that too much information will be processed
before a decision will be made. Some project managers may feel compelled to check with
everyone on every project decision.

Corporate Governance

Corporate Governance is a set of mechanisms used to manage their relationship among

stakeholders and to determine and control the strategic direction and performance of
organisations. An organisation is owned by its shareholders but is managed by the ownership
(Principal Agent Issues). Many a times the decisions taken by the management may not be in the
best interests of the shareholders and thus Agency costs arise. To ensure that such a scenario
does not arise it is essential for the firm to have strong corporate governance tools.

Bharti Airtel limited firmly believes in the principles of Corporate Governance and is committed
to conduct its business in a manner, which will ensure sustainable, capital-efficient and long-
term growth thereby maximising value for its shareholders, customers, employees and society at
large. Company’s policies are in line with Corporate Governance guidelines prescribed under
Listing Agreement/s with Stock Exchanges and the Company ensures that various disclosures
requirements are complied in ‘letter and spirit’ for effective Corporate Governance.

As proof of the excellence of Bharti Airtel in the Corporate Governance it has been Rated ‘Level
1’ by CRISIL which is the highest Governance and Value Creation rating (GVC).
One way to ensure strong corporate governance is by having independent directors on the board
of Directors. Their sole purpose is to ensure that the decisions taken by the management are in
the best interests of the shareholders.

In order to ensure that this corporate governance tool is a sound check, Airtel has ensured the
following:

The board has 2 executive members and 14 non executive members. 50% of the members of the
board are independent directors which is a good sign of corporate governance. The board meets
regularly outside the presence of management.

The chairman of the board is not the CEO or a former CEO of the firm. Else it may impair the
ability and willingness of independent board members to express opinions contrary to those of
management.

Independent board members have a primary or leading board member in cases where the
chairman is not independent.

Board members are not closely aligned with a firm supplier, customer, share-option plan or
pension advisor. This may lead to a conflict of interest scenario.

Another suitable means of aligning the interests of the shareholders with that of the management
is by means of changing the structure of executive compensation. Having parameters such as
stock options as part of the pay will ensure that management will take decisions that benefit both
the stockholders as well as themselves indirectly. This a strategy that is used extensively at Airtel
particularly as far as the top management compensation goes.

Other Corporate Governance Initiatives taken by Airtel are

Shareholders

Board of Directors

Audit Committee
Managing Director

HR/ Remuneration

Management & Operations

ESOP Compensation

Investor Grievance

Corporate Governance Mechanisms at Airtel

Audit Committee

Six members, two-third of which is independent directors.

At least four times a year. (Max time gap – 4 months)

The Committee Chairman shall attend the Annual General Meeting.

To ensure that the financial statements are true and accurate and provide sufficient information.

Recommending to the Board, the appointment, re-appointment and, if required, the replacement
or removal of the statutory auditor and the fixation of their audit fees.

Human Resource (HR)/ Remuneration Committee

Six non-executive directors, out of which four members including the chairman are independent
directors.

Attraction and Retention strategies for employees.

Employees Development Strategies.

Compensation

All Human Resources related issue.

ESOP Compensation Committee

Constituted in accordance with SEBI Guidelines, 1999.

Six members of whom four are independent and all are non-executive

Formulate ESOP plans and decide on future grants.

Formulate terms and conditions Employee Stock Option Schemes of the Company

Investor Grievance Committee

Constituted in accordance with Clause 49 of the Listing Agreement.

Four members of whom three members including the Chairman, are non-executive directors

Ensure speedy disposal of various requests received from shareholders

from time to time (within 7-10 days from the date of receipt of

complaint).

Redressal of shareholders and investor complaints/ grievances.

Monthly meeting

The above detailed initiatives clearly point towards the importance that Airtel gives to Corporate
Governance and this is further reaffirmed by Level 1 rating for GVC by CRISIL again in 2006.

Organizational Controls

They guide the use of strategy, indicate how to compare actual results with expected results and
suggest corrective measures when the difference is unacceptable. It is an important part of the
organisational structure and its key to a firms plans to exploit its core competencies.

The organisational controls can be broadly classified as

Strategic control: It is used to determine the fit between what a firm might possibly do on the
basis of opportunities in the environment and what it can do on the basis of its core competencies
and competitive advantages. In other words, the process of evaluating strategy, is practiced both
after the strategy is formulated and after it is implemented

Financial controls: They are used to measure the performance of the firm against set thresholds
and analyse the reasons for being unable to meet them if the case by. Such controls generally
include measures like Return on Investment (RoI), Return on Assets (RoA).

Management control: It focuses on the accomplishment of the objectives of the various sub
strategies comprising the master strategy and the accomplishment of the objectives of the
intermediate plans.

Operational control: It is concerned individual and group performance as compared with the
individual and group role prescriptions required by organizational plans.

Each of these types of control is not a separate and distinct entity and, in fact, may be
indistinguishable from others. Moreover, similar measurement techniques may be used for each
type of control.

While both Financial and strategic controls are important the extent of importance accorded to
each is determined by the firm strategy. Airtel which is following a cost leadership strategy
focuses more on financial controls more than strategic ones.

However a firm should not get too carried away along just one set of controls as that would hurt
the long term sustainability. So if a firm focuses just on strategic controls while giving a cold
shoulder to financial ones, it may soon face a scenario wherein it will run out of cash.

The organizational control to a very large extent is determined by the Organisation Structure.

Recommendations

Considering the heavy fragmentation of the Indian mobile market, we propose the following
recommendations so as to ensure that Airtel continues to be the market leader in this domain.
As the above figure suggests, there has been a heavy influx of new players in this arena of late
which has seen the market share of Airtel fall from above 50 % to about 30 % in half a decade.
This means that Airtel should look at hereto untapped markets specially in developing countries
with low penetration. Thus following the Multi Domestic strategy more aggressively is crucial to
continued success

Moreover the ARPU (Average Revenue per User) in India is pretty low. Thus more acquisitions
like that of Zain telecom (ARPU of $55 vs Bharti ARPU $7) makes sense. There is no point in
proliferating the number of subscribers if Airtel cannot charge them at competitive prices

Since the competition in India has intensified, most players are engaging a price war which can
be deleterious to the company’s short term prospects. Herein Airtel should leverage its’ strong
network and brand equity and not engage in a price war and try in move towards an integrated
cost leadership/differentiation strategy.

The urban market penetration is about 95 % and hence the only way of expanding revenues from
this stream is by introducing quality VAS (Value Added Services). These give high margin
services and are going to be in much greater demand as the smart phone market swells. Entry and
quality innovations into this niche domain (presently) would give it a big first mover’s
advantage.

Forging strategic alliances with mobile phone manufacturers specially those of high end handsets
will be a great way to tap the premium segment. This segment often has very high usage and
contributes significantly to the revenue stream. By locking them in with Airtel at the point of
purchase itself, Airtel guarantees itself a long customer lifetime value. Also given the economic
spurt, many such players have expressed their keen interest to enter the Indian markets.
 Chapter – 5
Operations Management/ Production System
PRODUCTION LAYOUT
Airtel is the one of the largest mobile operator in the world in terms of subscriber base
and has a commercial presence in 20 countries and the Channel Islands.

Its area of operations include:

The Indian Subcontinent:

Airtel India, in India

Airtel Bangladesh, in Bangladesh

Airtel Sri Lanka, in Sri Lanka

Airtel Africa, which operates in 17 African countries:

Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon,
Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone,
Tanzania, Uganda and Zambia.

The British Crown Dependency islands of Jersey and Guernsey, under the brand

name Airtel-Vodafone, through an agreement with Vodafone.

Airtel operates in the following countries:

Country Site Remarks

Airtel Bangladesh had

Airtel about 8 million
Bangladesh
Bangladesh customers as on Sep
2013.[24]
 Airtel Burkina Faso is
Airtel the dominant player with
Burkina Faso Burkina 1,433,000 customers
Faso representing 50% market
share.[25]

Airtel Chad is the No. 1

Chad Airtel Chad operator with 69%
market share.

Airtel is the market

leader with almost 5
Democratic Republic of the Congo Airtel DRC
million customers at the
end of 2010.

Airtel Gabon has

Airtel 829,000 customers and
Gabon
Gabon its market share stood at
61%.

Airtel Ghana had about

Airtel
Ghana 1.76 million customers
Ghana
at the end of 2010.

Airtel is the market

leader with almost
India Airtel
193.4 million customers
as on 30 Sep 2013.

Kenya Airtel Airtel Kenya is the

Kenya second largest operator
and has 4 million
 customers.

Airtel is the market

leader in Madagascar
Airtel
Madagascar with 39% market share
Madagascar
and 2.5 million
customers.

Airtel Malawi is the

Airtel
Malawi market leader with a
Malawi
market share of 72%.

Airtel Niger is the

Niger Airtel Niger market leader with a
68% market share.

Airtel
Nigeria
Nigeria

Airtel Congo is the

Airtel
Republic of the Congo market leader with a
Congo B
55% market share.

Airtel launched services

Airtel
Rwanda in Rwanda on 30 March
Rwanda
2012.

Seychelles Airtel Airtel is the leading

Seychelles comprehensive
telecommunications
services providers with
over 55% market share
of mobile market in
 Seychelles.

Airtel Sierra
Sierra Leone
Leone

Airtel Sri Lanka

commenced operations
Airtel Sri on 12 January 2009. It
Sri Lanka
Lanka had about 1.8 million
mobile customers at the
end of 2010.

Airtel Tanzania is the

Airtel
Tanzania market leader with a
Tanzania
38% market share.

Airtel Uganda stands as

Airtel
Uganda the No. 2 operator with a
Uganda
market share of 38%.

Airtel Zambia is the

Airtel
Zambia market leader with 69%
Zambia
market share.

Airtel operates in the

Channel Islands under
Airtel Jersey
Channel Islands† : Jersey the brand name Airtel–
and
Guernsey Vodafone through an
Guernsey
agreement with
Vodafone.

Jersey and Guernsey are British Crown Dependencies. They are not independent
countries. Therefore, Airtel's countries of operation is considered to be 20.
1.9 Telemedia

Airtel Broadband Blocking TPB

Under the Telemedia segment, Airtel provides broadband internet access through DSL,
internet leased lines as well as MPLS (multiprotocol label switching) solutions, as well
as IPTV and fixed line telephone services. Until 18 September 2004, Bharti provided
fixed line telephony and broadband services under the Touchtel brand. Bharti now
provides all telecom services including fixed line services under a common brand airtel.
As of September 2012, Airtel provides Telemedia services to 3.3 million customers in 87
cities. As on 30 November 2012, Airtel had 1.39 million broadband subscribers.

Airtel Broadband provides broadband and IPTV services. Airtel provides both capped as

well as unlimited download plans. However, Airtel's unlimited plans are subject to free
usage policy (FUP), which reduces speed after the customer crosses a certain data usage
limit. In some plans, Airtel provides only 256kbit/s beyond FUP, which is lower than the
TRAI specified limit of half the subscriber's original speed. The maximum speed
available for home users is 16Mbit/s.

In May 2012, Airtel Broadband and some other Indian ISPs temporarily blocked file
sharing websites such as vimeo.com megavideo.com, thepiratebay.se etc. with out giving
any legal information to the customers.

Digital television

Main article: Airtel digital TV

The Digital TV business provides Direct-to-Home (DTH) TV services across India under
the brand name Airtel digital TV. It started services on 9 October 2008 and had about 7.9
million customers at the end of December 2012.

Enterprise

The Enterprise business provides end-to-end telecom solutions to corporate customers

and national and international long-distance services to telcos through its nationwide
fibre optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP
and international bandwidth access through the gateways and landing stations. It has two
sections under it.

Mobile data service

The different services under mobile data are BlackBerry services, a web-enabled mobile
email solution working on 'Push Technology', USB modem that helps in getting instant
access to Internet and corporate applications, Airtel Data Card that gives the liberty to
access the internet anytime, Easy Mail is a platform that provides access to
personal/corporate e-mails independent of handset operating system and application
services that shorten the queues at the billing section, off-load the pressure on the billing
staff and bring convenience to the user.

Enterprise business solutions

There are two kind of solutions offered by Airtel. One is GPRS Based Solutions like
mobile applications tools for enterprise, TrackMate, automatic meter reading solutions
etc. and the other is SMS Based Solutions like interactive sms, bulk sms, inbound call
center solutions.