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AMITY UNIVERSITY
UTTAR PRADESH
AMITY BUSINESS SCHOOL
SUBJECT: BPSM
COMPANY: BHARTI AIRTEL LTD.
SUBMITTED TO: SUBMITTED BY:
DR. HIMANI SHARMA HIMANSHU AGARWAL (108H38)
GROUP 6
MBA (GEN) CLASS OF 2010
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BHARTI AIRTEL
Established: July 07, 1995, as a Public Limited Company
Proportionate Revenue: Rs. 369,615 million (year ended March 31, 2009-Audited)
Shares in Issue: 1,898,239,796 as at March 31, 2009
Listings: Bombay Stock Exchange (BSE), Mumbai
National Stock Exchange (NSE), New Delhi
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. Bharti Airtel Limited
is Asias leading integrated telecom services provider with operations in India and Sri Lanka,
with an aggregate of 100 million customers. Bharti Airtel Limited has been voted as India's most
innovative company, in a survey conducted by The Wall Street Journal.
Airtel comes to you from Bharti Airtel Limited, Indias largest integrated and the first private
telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its
inception has been at the forefront of technology and has steered the course of the telecom sector
in the country with its world class products and services. The businesses at Bharti Airtel have
been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel
Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed
wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia
Services business offers broadband & telephone services in 95 cities and has recently launched
India's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services provide
end-to-end telecom solutions to corporate customers and national & international long distanceservices to carriers. All these services are provided under the Airtel brand. Airtels high-speed
optic fibre network currently spans over 101,337 Rkms covering all the major cities in the
country. The company has two international landing stations in Chennai that connects two
submarine cable systems - i2i to Singapore and SEA-ME-WE-4 to Europe.
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Bharti Airtel has a 24% market share of the Indian mobile market, with nearly 94 million
cellphone customers and over 2.7 million landline subscribers over 95 cities. Its landline
business, which combines fixed-line telephony, Internet and IPTV services, is one of the most
profitable segments, with fiscal fourth-quarter and annual profit margins of 42.1% and 42.4%. It
accounts for about 9% of Bharti's total earnings and the average revenue per user here is Rs
1,071 per month, which is three times higher than that for its mobile users.
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IS BHARTI PREPARED FOR THE BIGGEST OVERSEAS
CORPORATE DEAL EVER IN INDIA?
Bharti Airtel announced in May that it had begun tie-up talks with MTN Group of South Africa.The two companies agreed to discuss the proposal exclusively until July 31 which was initially
extended upto August 31 and now has been further delayed till September 31.
Under the terms announced in May, Bharti Airtel is to acquire 49 percent shareholding in MTN,
and MTN to acquire a 36 percent economic interest in Bharti Airtel. Together the two companies
will have US$20 billion in revenue and 200 million customers, Bharti Airtel said in May. The
negotiations are aimed at working out a formula that will help both companies keep their
identities after the alliance, according to informed sources.
This is second time that Bharti Airtel has been in alliance talks with MTN. The company, which
has Singapore Telecommunications as a key shareholder, said last year that earlier talks fell
through after disagreement on the structuring of the deal, particularly MTN's insistence that
Bharti Airtel should be a subsidiary company of MTN after the deal.
Bharti Airtel did not give a reason for the extension of the deal which initially began in 2008.
The structure and the terms of the potential transaction may be adjusted to reflect further
discussions between the parties, it said in a filing to the Bombay Stock Exchange. Under the
arrangement by the two companies, Bharti Airtel will have substantial and governance rights in
MTN, enabling it to fully consolidate the accounts of MTN. Bharti Airtel will be the primary
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vehicle for the expansion of both Bharti Airtel and MTN in Asia, while MTN will focus on
expansion in Africa and the Middle East.
The Indian service provider has benefited from the boom in the mobile services market in India.
For the quarter ended June 30, revenue was 99.4 billion Indian rupees (US$2 billion at the
exchange rate on the last day of the quarter), up by 17 percent from revenue in the same quarter
in the previous year. Profits in the quarter grew by 24 percent to 25 billion rupees.
Inspite of the inspiring figures and consent from both the sides, the deal, which was first
cancelled, now has been further delayed. Talks on the $23 billion deal between the two telecom
players, has been delayed for the second time and has been now extended to September 30, 2009
from the earlier assigned date of August 31, 2009. A stumbling block for the deal could be the
concerted effort by some shareholders of MTN to seek a more sweetened deal.
Sunil Bharti Mittal, chairman and managing director of Bharti Airtel and Phuthuma Nhleko,
group president and CEO of MTN met Salman Khurshid, minister for corporate affairs in the last
week of August, 2009 at the ministers minority affairs office in the capital.
Though it was purely a courtesy call, there are indications that the close-door meeting was a
bid to push the much-delayed deal between the two-telecom giants. Earlier Mittal and Nhelko
also met finance minister Pranab Mukherjee for the same concern.
Conclusion:
The deal is considered to the largest deal ever successfully undertaken in India ($23Billion). The
net worth of Bharti Airtel and the creditability both give an easy go the deal. Large numbers of
banks are eager to fund the deal and investors are looking forward for this merger. Not much
data and figures are reveled in the market yet. The procrastination of the deal has become the
major issue for the investors who are in a perplexed situation understanding the potential of the
deal.
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OTHER STRATEGIC ALLIANCES OF BHARTI AIRTEL
LTD.
ALCATEL-LUCENT
Bharti Airtel entered into a joint venture with Franco-American telecom gear maker Alcatel-
Lucent to manage its landline and broadband business, expanding its tested strategy of
outsourcing technology functions to focus more on marketing and sales.
Bharti is minority partner in the 26:74 joint venture, and will invest Rs 2,500 crore into the new
entity over five years till 2014. In about 40 countries, Alcatel-Lucent has carried out the
transformation of fixed line networks to make them Internet Protocol-based and also next
generation network-enabled. Bharti Airtel is expecting same kind of service from Alcatel
Lucent.
Bharti has made outsourcing a key plank of its business strategy, and has signed billion-dollar
deals with network vendors such as Ericsson, Nokia and Siemens, which manage, build and
operate its mobile network. It pioneered the network outsourcing model in 2004 by awarding
IBM a 10-year, $750-million contract, whose scope is now worth $2.5 billion. Another billion-
dollar pact exists with six BPOs, which collectively handle Bharti's customer services for a 10-
year period. However, this is the first time that the company is forming a JV to handle a core
business instead of outsourcing it to a third party.
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The reason of this Joint Venture is the complicated nature of the fixed line and broadband
business compared with mobile telephony. The average time a call centre executive spends with
a broadband customer is about 8 minutes. However, according to some industry analysts, a
possible reason for Bharti to take the JV route may be because Alcatel-Lucent has an existing
contract with Reliance Communications to manage its network based on the CDMA technology.
Bharti will not transfer any of its material assets to the JV, which will have 4,000 employees,
some of whom will be transferred from Bharti Airtel.
BOOKMYSHOW.COM
Bookmyshow (Network18 venture) partnered with Airtel and their applications are now
available on Airtel Live. Airtel customers can book tickets on the Airtel WAP site
live.airtelworld.com/AirTel Live on all GPRS enabled handsets. Airtel customers can also call
5432191 that would be directed to the Bookmyshow call center for tele-booking and home
delivery, for any cinema/Play theatre/concert venue covering any show time.
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MICROSOFT
Airtel moved beyond its two year old exclusive alliance with Blackberry, which apparently has
not been as successful as was expected at the time of launch in India despite the hype around it.
Blackberry was viewed primarily as e-mail access device and did well in India, Microsoft-based
mobiles were expected to take enterprise mobility into a new realm with offerings like MSOffice suite etc. Microsofts Windows platform offer about 18,000 applications and had 6.5 lakh
developers worldwide, a range that no other product offered.
HCL
Bharti's Airtel Broadband & Telephone Services entered into a tie up with HCL to push high-
speed Internet for home users. People buying Airtel's landline connection are now able to opt for
a PC on instalments, with some initial payment, and connect to broadband.
Airtel entered into this deal within days of a joint initiative by Intel and Reliance, under which
people buying a PC from Intel's dealers will be offered Reliance Mobile service and an LG
handset to connect with high-speed Internet wirelessly.
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AEROMOBILE TO OFFER IN-FLIGHT CELL CONNECTIVITY
Bharti Airtel partnered with UK based in-flight solutions company AeroMobile to offer on-flight
cell-phone connectivity to its customers. This will enable customers to make and receive calls on
their mobiles on select international airlines. Bharti will be the first Indian telecom company to
offer this facility to its customers. Aero currently has agreements with several global carriers
such as Emirates, Qantas, Malaysia Airlines and Turkish Airlines.
An outgoing call will cost Rs 188 per minute, while an incoming call will be charged Rs 24 per
minute. Passengers will be charged Rs 41 for an outgoing SMS while incoming SMSes will be
free. The partnership will enable Airtel post-paid customers to use their mobile phones on-board
flights, on especially equipped aircraft. This service is offered without any additional
subscription charges and only requires Airtel customers to activate their international roaming
service
IFFCO
Airtel entered into a strategic tie up with the Indian Farmers' Fertiliser Co-operative Limited
(IFFCO) and formed a new joint venture company called IFFCO Kisan Sanchar Limited (IKSL).
This joint venture company will harness the power of telecom to empower the rural farmer by
giving him access of vital market information at his fingertips. IKSL will offer products andservices, especially designed for farmers, through IFFCO societies in villages across the state.
On offer will be affordable mobile handsets bundled with Airtel mobile connections. The
farmers will also get access to a unique VAS platform that will broadcast five free voice
messages on mandi prices, farming techniques, weather forecasts, dairy farming, animal
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husbandry, among others on a daily basis. In addition, farmers will be able to call a dedicated
helpline manned by experts from various fields, to get answers to their specific queries
OUTSOURCING PACT WITH IBM
Bharti Airtel on Wednesday has strategic outsourcing agreement with IBM to further enhance its
customer service experience for its top-end platinum customers through process and technology
innovation. The six-year Q3 contract for outsourcing contact services to IBM's Managed
Business Process Services (MBPS) unit would involve augmentation of Airtel's sales, customer
service, and back office capabilities.
IBM MBPS combines IBM's deep industry and process expertise with innovative technologies
and a talented employee force to offer client's repeatable processes and assets that can improve
process productivity and deliver cost savings and reduced risk. IBM Daksh Business process
Services, a wholly-owned subsidiary of IBM Corporation, would provide a suite of services
covering both voice and back office in areas such as customer service, collections, customer
retention and the like to Airtel Platinum customers from its centres. IBM Daksh expects to have
over 700 employees in the first year focused on providing services in over 11 languages to elite
Airtel customers across the country, it said.
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ANDHRA PRADESH SSC BOARD
Airtel did a tie up with Andhra Pradesh SSC board to provide SSC results to its customers on
their mobile phones. This is the second year in succession that airtel has tied up with the board to
provide such service to its subscribers in the state. To view the result, airtel and magic customersshould send the sms keyword "exam" followed by a space and the candidate's "hall ticket
number" and send it to "444". The result displayed will include the name of the candidate, his
hall ticket number, break-up of marks of all the subjects and the total marks obtained.
INDIATIMES 8888 - EASY MUSIC CARDS
In endeavour to make mobile telephony grow beyond the realms of voice, Airtel is constantly
innovating and introducing new products which are focused on entertainment and are user
friendly. Airtel Easy Music Cards will be available in the denominations of Rs 30 & Rs 50.
While the Rs 30 Ringtone card allows a customer to download 3 monotones; the Rs 50 value
added service (VAS) Combo card offers a plethora of content to choose from across items like
monotones, truetones, polytones, wallpapers, games, video clips and more. The Rs.50 VAS
Combo card has the advantage of the balance in the VAS Wallet being carried forward, and has
validity for 30 days. Customers also have a choice to go for exclusive Kannada and Hindi tones.
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All that a customer needs to do is buy the Airtel Easy Music Card, and feed the chosen category
and the 16-digit secret code by an SMS to 8888, immediately the content will be downloaded
onto the mobile. In case of Rs.50 VAS Combo card, registering for the service can be done by
simply sending the 16 digit secret code to 8888, post which the customer can SMS his choicest
codes to 8888 to download content.
Entertainment on mobile phones has grown beyond imagination, with people looking for a
variety of content on their very own handsets. 8888, Indias largest mobile VAS player tied up
with Airtel, Indias leading operator, to supplement the entertainment channel on mobile phones.
Mobile content in regional languages is a fundamental part of our consumer strategy.
JEEVAN BLOOD BANK
Airtel made a toll-free SMS facility available to its customers to enable them to be aware of
stocks at the Jeevan Blood Bank. It strengthened its tie-up through the new facility as part of the
Airtel Cares for Everyone (ACE) project. This is a first-of-its kind initiative, wherein people can
source information on blood within minutes and access the real time stock of tested blood
components from Jeevan Blood Bank 24 hours a day.
A customer has to type and SMS it to 9600097000 (for example, Blood B+ or Blood AB+). "He
or she will get a response within a minute. It would contain information on quantity of readily
available tested blood components of the group required. It's toll-free for all Airtel customers.
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WAL-MART INDIA
In November, 2006, Wal-Mart Stores, Inc (Wal-Mart), the world's largest retailer, and Bharti
Enterprises Ltd. (Bharti), a leading business group in India, signed a Memorandum of
Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint
venture marked the entry of Wal-Mart into the Indian retailing industry.
The joint venture with equal stakes will operate in areas where the government allows foreign
investment in retail like cash-and-carry and logistics. The retail shops will be owned by Bharti
Enterprises under the Wal-Mart franchise. The idea is to give Indians the lowest price everyday.
Many analysts opined that both the parties in the venture had their own strengths and would
complement each other. Wal-Mart's logistics skill and Bharti's execution capability will create a
potent force in the Indian market.
This franchise strategy with Bharti was a deviation from Wal-Mart's usual way of entering
countries. This was because the policy restrictions on foreign direct investment (FDI) in the
Indian retail sector. As part of the agreement, Bharti was expected to pay a royalty between 2
percent and 3 percent of sales to Wal-Mart for using the latter's brand name. The Bharti-Wal-
Mart joint venture was expected to open its stores in India from August 2007.
Bharti-Wal-Mart venture would make an initial investment of US$ 100 million, which could
further increase to US$ 1.46 billion. The retail industry in India is estimated at about US$ 300
billion and is expected to grow to US$ 427 billion in 2010 and US$ 637 billion in 2015.
Moreover, only 3 percent of the Indian retail industry was in the organized sector. Foreign
retailers were keen to enter India's rapidly growing retail market. However, the government had
permitted retailers of single brand products to own a majority stake in a joint venture with a local
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partner (with prior government permission). Retailers of multi-brands were only permitted to
operate through franchises and licencees, or a cash-and-carry wholesale model.
Pantaloon Retail, the retail arm of the Future Group was expected to give stiff competition as it
had a first-mover advantage. A few Indian retailers felt that the entry of foreign retail giants like
Wal-Mart, Carrefour SA and Tesco Plc (Tesco) would result in Indian retailers learning some of
the best international practices in retailing. However, analysts noted that the success of the joint
venture would depend on how successful Wal-Mart is in building a cost efficient supply chain
and sourcing network so that the cost savings are passed on the end consumer through its
trademark "every day low price" strategy.