Airtel Business Model Stgy
Business and Management
Submitted By jeekgeek
Bharti Airtel, in 1995, won govt tender to launch mobile telecom services in Delhi Initial investment was high
Spectrum License, Towers, Telecom networks, supports systems Funded through debt – this meant high charges for subscribers 2002 – Running out of money + New entrants
Shifted focus from ARPU to:
A. Gross Revenue and Profit B. Operating Efficiency C. Capital Productivity
Potential market then expanded to entire Indian population
Cost reduction targeted by way of outsourcing
Economies of scale ; converted fixed costs and capital expenditures into variable operating expenses. IT services, n/w equipment, apps, distribution.
Rural market penetration – partnership with SKS Microfinance and IFFCO.
Competitor collaboration – Shared passive infrastructure through Indus Towers – aids expansion of operations
RESULTS OF BHARTI AIRTEL’S INNOVATIVE BUSINESS MODEL:
Most affordable mobile service world over 200 million subscribers targeted by 2012 (but have already reached 221 mill) Increased operating margins: From 2.25% in ‘03 to 28.3% in ’08.
Revenue growth of 43% from ‘04 to ‘08. 27% RoCE, $2.04B EBIT, Cash reserves of $963M, zero debt in ‘09 despite ARPU of only $5.95
INNOVATIONS IN INDIA
TYPES OF INNOVATION:
1. Change Business Dynamics
2. Synthesize Technologies
3. Create New Technologies
AIRTEL BUSINESS MODEL – DEFINITION 1 – PETER DRUCKER
Who is your customer? What does the customer value? How to deliver value at an appropriate cost?
The entire Indian population
Value for Money
Use existing, penetrative distribution channels of unrelated players
AIRTEL BUSINESS MODEL – DEFINITION 2 – CLAY CHRISTENSEN
Customer Value Proposition
• Least dropped calls and best value added services at least...