FACULTY GUIDES Mr. NAVNEET SAXENA Mr. RAVI PRAKASH Ms.NAVLEEN KAUR
TELECOMMUNICATION INDUSTRY (TERM PAPER)
COURSE CODE : MIB 130
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TELECOMMUNICATION INDUSTRY (TERM PAPER) Introduction
Telecommunications industry deals with the activities and services of electronic systems for transmitting messages through cables, telephone, radio or television. The telecommunications industry has grown rapidly in size to provide essential services that facilitate a fundamental human need to communicate. Telecommunications play an increasingly important role in the world economy and the worldwide telecommunication industry's revenue was estimated to be $3.85 trillion in 2008. The service revenue of the global telecommunications industry was estimated to be $1.7 trillion in 2008, and is expected to touch $2.7 trillion by 2013. The telecommunications industry has grown rapidly in size to provide essential services that facilitate a fundamental human need to communicate. India is amongst the fastest growing telecommunications markets across the globe. The average monthly mobile subscriber growth over the past year has been 15-17 million customers. Currently, the mobile subscriber base is approximately 671 million (as of August 2010). The overall teledensity for India has already surpassed 60 percent and the market continues to exhibit unabated growth, with the successfully concluded auctions of the 3G and BWA spectrum, this growth is set to become even more aggressive. Indian telecom operators have very effectively worked with rest of the telecom ecosystem to enable India emerge as the country which offers the lowest mobile tariffs across the globe. All these achievements have helped India emerge as one of the most attractive investment destinations for all international players looking to win a share of the second largest mobile market in the world. These players can also look at leveraging on the successful low-cost model that India has pioneered. During the past year, several telecom players in India have made tremendous efforts to establish themselves on the global level through cross border mergers and acquisitions. These strategic alliances are a step towards the globalization of the Indian telecommunication industry.
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The credit for the growth witnessed by the sector has to be attributed to the well-defined regulatory provisions designed by the government. The government has been instrumental in making key policies to drive the rural growth which is expected to keep this bullish phase going strong over the next decade. Within the rural area, there is additional focus to enhance the penetration of broadband and data usage. The aim is to wirelessly connect villages and remote areas through broadband and provide access to basic facilities for health, education, banking and others. Telecommunications is the backbone of our future economy. International competitiveness increasingly depends on the development of a telecommunications infrastructure that is compatible with international standards"
ANALYSIS OF INTERNATIONAL BUSINESS EXPANSION STRATEGY OF 5 COMPANIES.
This is to certify that the Term Paper title TELECOMMUNICATION SECTOR is submitted by Bhagyashree Mudgal (MBA-IB),Varun Goel (MBA- 3C), Anamika Verma (MBA-IB), Rajat Deshlahra (MBA-3C) in the partial fulfillment of the requirement for the award of degree of MBA, AMITY University,is a bonafide carried out under our supervision and has not been submitted anywhere else for any other project. The report embodies result of original work and studies carried out by students themselves.
Date
PROJECT GUIDE: Mr. Navneet Saxena Mr. Ravi Prakash Ms. Navleen Kaur
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ACKNOWLEDGEMENT
The completion of this TERM PAPER brings with it a sense of satisfaction, but it is never complete without thanking those people who made it possible and whose constant support has crowned our efforts with success.
One cannot even imagine the power of the force that guides us all and neither can we succeed without acknowledging it.
We would also like to express our gratitude to our faculty for encouraging and inspiring us to carry out the project.
We would also like to thank our term paper guide Mr. Navneet Saxena, Mr. Ravi Prakash, Ms. Navleen Kaur for their expert guidance, encouragement and valuable suggestions at every step of the project.
BHAGYASHREE MUDGAL VARUN GOEL ANAMIKA VERMA RAJAT DESHLAHRA
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TABLE OF CONTENTS
SNO. SUBJECT COVERED PAGE NO. 1 Principles of global business management 6-22 2 Marketing management 23-34 3 Economic analysis 35-45 4 Quantitative aptitude for managers 46-53 5 OT & human resource management 54-56 6 Essential Information Technological Tools for Global Managers 57-59 7 Accounting For Managers 60-84
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PRINCIPLES OF GLOBAL BUSINESS MANAGEMENT
Vodafone Group Plc
Vodafone Group Plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers (behind China Mobile), with around 341 million proportionate subscribers as of November 2010. It operates networks in over 30 countries and has partner networks in over 40 additional countries.
Vodafone has its primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalization of approximately 93 billion as of 9 March 2011, making it the fourth-largest company on the London Stock Exchange. It has a secondary listing on NASDAQ.
Vodafone the worlds leading variety services communication base company, they have coverage to all the basic services required in the world of telecommunication like voice calls, internet services, text messaging, MMS and video messaging plus all the other data services. Company has the considerable existence in Europe, the Middle East, Africa, Asia Pacific and the United States of America throughout the companys subordinate actions, combined, connected activities and financing. The name Vodafone arrives from the voice Datafone, selected by the company to reproduce the prerequisite of voice and data services over the cellular phones.
In the year 2007, the world's largest telecom company in terms of revenue, Vodafone Plc (Vodafone) made a major foray into the Indian telecom market by acquiring a 52 percent stake in the Indian telecom company, Hutchison Essar Ltd (Hutchison Essar), through a deal with the Hong Kong-based Hutchison Telecommunication International Ltd. (HTIL). It was the biggest deal in the Indian telecom market. Vodafone's main motive in going in for the deal was its strategy of expanding into emerging and high growth markets like India. In 2007, India had emerged as the fastest growing telecom market in the world outpacing China. But it still had low penetration rates, making it the most lucrative market for global telecom companies.
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The deal, the biggest ever in the Indian telecom industry, came after the Indian government's (GoI) decision in 2006 to raise the limit on foreign direct investment (FDI) in the telecom sector from 49% to 74%. The deal was expected to infuse much-needed FDI into the sector to meet the government's targeted numbers of 500 million customers by 2010.
Industry and government circles welcomed the deal and said that it would give a big boost to the telecom sector. It would help not just by capital infusion into the sector, but also by bringing in Vodafone's experience in operating telecom networks.
Vodafone Expansion Strategy In India
The main motive behind Vodafone International expansion is to invest and make profit to move further. They want to grow the potential emerge of their market, bring new ideas and deliver it in different nations. Vodafone has five core strategic objectives which they want to achieve through International Strategy are the followings: 1. Revenue stimulation and cost reduction in Europe 2. Innovate and deliver on our customers total communications needs 3. Deliver strong growth in emerging markets 4. Actively manage our portfolio to maximize returns 5. Align capital structure and shareholder returns policy to strategy
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Analysing Its Stratergy In India India is the country in which Vodafone has recently emerged their market in; therefore this part of the report will focus on the reasons and objectives of Vodafone expansion in India market. The major reasons for Vodafone to make a move in the India market was that India, among the European investors, is believed to be a good investment despite political uncertainty, bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a huge potential for overseas investment and is vigorously encouraging the entrance of foreign players into the market. No company, of any size, aspiring to be a global player can, for long ignores this country which is expected to become one of the top three emerging economies. Success in India will depend on the correct estimation of the country's potential, underestimation of its difficulty or overestimation of its possibilities can lead to failure. While calculating, due consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the Indian system. Entering India's marketplace requires a well-designed plan backed by serious thought and careful research. India is an opportunity for long-term growth. India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. (These indicators are based on purchasing power parity.) India is also one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business. The Indian market is broadly varied. The country has 17 official languages, 6 major religions, and ethnic diversity as wide as all of Europe. As a result, tastes and preferences differ to the highest degree among sections of consumers. Therefore, it is wise for Vodafone to develop a good understanding of the Indian market and overall economy before taking the plunge. Need reference Research firms in India can provide the information to determine how, when and where to enter the market. There are also companies which can guide the foreign firm through the entry process from beginning to end, performing the necessary research, assisting with configuration of the project, helping develop Indian partners and financing, finding the land or ready premises, and pushing through the paperwork required. The Indian middle class is large and growing; wages are low; many workers are well educated and speak English along with the enormous number of the available workforce were major reasons for Vodafone to expand in India. In this opinion these were some major reasons which lead Vodafone to expand in India. Vodafone after completed the acquisition of Hutchison Essar in May 2007 and the company was formally renamed Vodafone Essar in July 2007 was granted for good in Indias market place.
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Vodafone is to be the leading telecommunication company in India, by making customers uses their mobile communications and making their life more fulfilled due to their experience; and by making mobile communications the primary means of personal communications. Vodafone has a strongly aim to help people find information, entertainment or assistance wherever they are. Over the past few years they have worked hard to build a company capable of delivering innovative and compelling mobile services to all customers throughout the world. Right now, they are introducing new mobile services that will make Vodafone an even more important part of customers' lives.
The Ameri cas In the United States, Vodafone owns 45% of Verizon Wireless, the country's largest mobile carrier after their merger with Alltel. The percentage of the customer base, and revenues of Verizon Wireless that Vodafone consolidates is slightly lower, since some Verizon Wireless subsidiaries have minority investors. (Hence the exact percentages that Vodafone and Verizon report vary from period to period: in June 2006 Vodafone reported that Verizon Wireless owned 98.6% of its customers at that date.) Before this joint venture was formed, Vodafone merged with AirTouch Communications of the U.S. in June 1999, and changed its name to Vodafone Airtouch plc. In September 1999, Vodafone Airtouch announced a $70-billion joint venture with Bell AtlanticCorp. Verizon Wireless was composed of Bell Atlantic's and Vodafone AirTouch's U.S. wireless assets, and began operations on 4 April 2000. However, Verizon Communications the company formed when Bell Atlantic and GTE merged on 30 June 2000 owns a majority of Verizon Wireless, and Vodafone's branding is not used, nor is the CDMA network compatible with GSM phones. This relationship has been quite profitable for Vodafone, but there have historically been three problems with it. The first is the above-mentioned incompatibility with the GSM 900/1800 MHz standard used by Vodafone's other networks, and the consequent difficulty of offering roaming between Vodafone's U.S. and other networks. The other two stem from the fact that Vodafone does not have management control over Verizon Wireless. Vodafone is thus unable to use the Vodafone brand for its U.S. operations, and (perhaps more importantly) has no control of dividend policy at Verizon Wireless, and is therefore entirely at the mercy of Verizon management with respect to cash flow from Verizon Wireless. Perhaps as a consequence of these reasons, Vodafone made a bid for the entirety of AT&T Wireless when that company was for sale in 2004. Had this bid been successful, Vodafone would presumably have sold its stake in Verizon Wireless, and then rebranded the resultant business as
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Vodafone. However, Cingular Wireless, at the time a joint venture of SBC Communications and BellSouth (both now part of AT&T), ultimately outbid Vodafone and took control of AT&T Wireless (the combined wireless carrier is now AT&T Mobility), and Vodafone's relationship with Verizon has continued. Early in 2006, Verizon re-iterated their desire to buy out the remaining 45% of stock of Verizon Wireless from Vodafone Group. Vodafone has also repeatedly indicated that it would be willing to buy out Verizon's stake. Verizon has announced that its 4G data network will be LTE, which is considered part of the GSM path and not the CDMA2000 path Verizon has been using; it has been suggested
this is to appease Vodafone, which uses GSM on its own networks.
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Bharti Airtel Limited
Bharti Airtel Ltd was incorporated on the 7th of July, 1995 as a Public Limited Company & one of the first companies to enter the Telecom Services business in India. As on date, Airtel provides mobile services in all the 22 telecom circles in India, Sri Lanka and Bangladesh. It was the first private operator to have an all India presence. Airtel provides Telemedia services (fixed line and broadband services through DSL) in 89 cities in India, DTH and IPTV services also. Sunil Bharti Mittal, the founder-chairman of Airtel, began his journey manufacturing spare parts for bicycles in the late 1970s. His strong entrepreneurial instincts gave him a unique flair for sensing new business opportunities. In the early years, Bharti Airtel Ltd established itself as a supplier of basic telecom equipment. Mr. Sunil Mittal jumped at the opportunity provided when the government opened up the sector and allowed private players to provide telecom services. Bharti Airtel Ltd accepted every opportunity provided by this new policy to evolve into India's largest telecommunications company and one of India's most respected brands. Airtel was launched in 1995 in Delhi and is today present in all of Indias 22 telecom circles. Airtel had gross revenues of Rs. 396,150 million1 (for year ended March 31, 2010-Audited) & a customer base of 131 Millon customers as of 31st March 2010.
Bharti Airtels International Business Expansion Strategy
BhartiAirtel's Strategy Africa BhartiAirtel announces strategic partnership to drive world class customer service across Africa, The East African region is set to benefit from a major partnership aimed at driving world class customer service across the African continent. BhartiAirtel, the owners and current operators of Zain mobile phone services announced her strategic partners in Lagos, Nigeria on Monday. Through the African Business Process Outsourcing (BPO) sector which promises to deliver economic growth to many countries across the continent, BhartiAirtel selected IBM ; Tech Mahindra and Spanco as partners to drive world class customer service across 16 African countries. An agreement is expected to be finalized soon.
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Under the agreement; BhartiAirtel, will outsource core customer service functions like call centres and back office as it prepares for significant growth in the region. The mobile telecommunications operator currently has over 40 million customers across its African operations and is targeting to achieve 100 million by 2013. The selection of world class partners like IBM, Tech Mahindra and Spanco will enable BhartiAirtels mobile customers to enjoy world class customer service with the partners introducing quality best practices based on their experiences of working with international organisations in the telecommunications, banking, finance, insurance and retail sectors. The widespread adoption of the BPO model by BhartiAirtel across its operations will also have tangible benefits for development of the sector in each country, create additional job opportunities and develop local talent. The partners will provide services in each market which will sustain and build skills, capabilities and resources. The outsourcing of customer service operations will play a key role in making BhartiAirtel competitive in Africa as it focuses on making mobile communications affordable and available to everyone across its 16 markets of operation. This is the second major partnership announcement from BhartiAirtel on the African subcontinent. In September this year, Bharti selected IBM to build and manage IT systems to power the mobile communications network across 16 African countries. According to a Deloitte report for the GSMA, the mobile communications industry association, less than 40 percent of Africans has access to a mobile phone. However, demand is growing at an average rate of 25 percent annually, and a 10 percent rise in mobile penetration could increase gross domestic product by 1.2 percent in developing markets. Bhartis vision is to replicate that success in Africa, not only for the benefit of its customers, but also to create an entire industry in Africa as a centre of BPO excellence. With its advantages of time zone location, multi-lingual fluency especially in English and French, operational cost and robust network infrastructure, Africa can grow as a world class off-shoring destination for global organisations. Currently over 4,000 people are employed in Africa supporting BhartiAirtels customer service operations. Going forward the number of people employed in managing BhartiAirtels customer service functions will increase as BhartiAirtel expands its network and customer base. BhartiAirtel has operations in Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia. BhartiAirtel Limited is a leading global telecommunications company with operations in 19 countries across Asia and Africa. The company offers mobile voice & data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions for enterprises and national & international long distance services to carriers. BhartiAirtel has been ranked among the six best performing technology companies in the world by BusinessWeek. BhartiAirtel had over 188million customers across its operations at the end of August 2010.
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Tech Mahindra is part of the US $7.1 billion Mahindra Group, in partnership with British Telecommunications plc (BT), the worlds leading communications service provider. Focused primarily on the telecommunications industry, Tech Mahindra is a leading global systems integrator and business transformation consulting organization. The company recently expanded its IT portfolio by acquiring the leading global business and information technology services company, Mahindra Satyam. Ogilvy Africa BV creates Team Airtel to provide integrated marketing solutions for Airtel across Africa
How It Advertised In Africa
BhartiAirtel Limited (Airtel) appointed Ogilvy Africa BV (Ogilvy Africa) as its marketing services partner for Africa. This follows the completion of Airtels acquisition of Zain Groups mobile operations in 15 countries across Africa. Ogilvy Africa, part of WPP, the world leader in marketing communications services, has set up a specialist Pan-African business unit, Team Airtel, which will be exclusively dedicated to Airtel across the continent with its existing network of offices, delivering integrated marketing services advertising, media buying, market research and public relations. Team Airtel will also include The Brand Union who will be responsible for brand migration, Millward Brown for market research, Hill & Knowlton & Ogilvy PR for all public relations across all markets. The appointment continues and extends Ogilvy Africas existing relationship with the network, which has previously been responsible for planning and media buying for Zain across Africa. Ogilvy Africa will partner with Airtel to guide its long-term brand building across the continent and will provide overall creative direction and media planning and buying for Airtels African businesses and executing campaigns in each of its markets on the continent.
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Aircel Group
The Aircel group is a joint venture between Maxis Communications Berhad of Malaysia and Apollo Hospital Enterprise Ltd of India, with Maxis Communications holding a majority stake of 74%. Aircel commenced operations in 1999 and became the leading mobile operator in Tamil Nadu within 18 months. In December 2003, it launched commercially in Chennai and quickly established itself as a market leader a position it has held since.
Aircel began its outward expansion in 2005 and met with unprecedented success in the Eastern frontier circles. It emerged a market leader in Assam and in the North Eastern provinces within 18 months of operations. Till today, the company gained a foothold in 17 circles including Chennai, Tamil Nadu, Assam, North East, Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala, Andhra Pradesh, Karnataka, Delhi, UP(West), UP(East) and Mumbai.
The Company has currently gained a momentum in the space of telecom in India post the allocation of additional spectrum by the Department of Telecom, Govt. of India for 13 new circles across India. These include Delhi (Metro), Mumbai (Metro), Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra & Goa, Rajasthan, Punjab, UP (West) and UP (East).
Aircel has won many awards and recognitions. Voice and Data gave Aircel the highest rating for overall customer satisfaction and network quality in 2006. Aircel emerged as the top mid-size utility company in Business worlds List of Best Mid-Size Companies in 2007. Additionally, Tele.net recognized Aircel as the best regional operator in 2008. With over 20 million happy customers in the country, Aircel the fast growing telecom company in India has revved up plans to become a full-fledged national operator by end of 2010.
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Aircel Expansion Strategy
Aircelexp Aircel is in an expansion overdrive. Can it emerge as a pan India mobile service company of substance? Aircel has remained a relatively small player which depends for over 57 per cent of its subscribers on just one state Tamil Nadu (including Chennai). With 18 million subscribers and a 6.41 per cent share (without including Reliance Communication) of the GSM mobile market, it is way behind big players like BhartiAirtel, Vodafone, BSNL and Idea Cellular in the pecking order. Aircel, on its part, is on overdrive these days. The company in the last few weeks has rolled out services in Delhi and Mumbai as well as Uttar Pradesh. It plans to roll out in the whole of Maharashtra soon and hopes to hit the 30-million subscriber mark by the end of the year. By that time, Aircel will be present in 17 circles across the country. And it means serious business. It has committed almost $2 billion over the next 18 months to augment its network capacity. Its target is double-digit market share in the next one or two year.
SPREADING WINGS
Maxis has invested in India and Indonesia because it estimates that in the next five years, over half a billion phone connections will be added in these two geographies. But how will Aircel catch up with far bigger rivals in India? Its market share is a quarter of market leader BhartiAirtel (32.5 per cent) and half of its nearest rival, Idea Cellular (14.92 per cent). Worse, in key markets like Delhi and Mumbai, where it recently launched, it will be the sixth or seventh mobile service operator. At least one of these markets, Delhi, is known to be saturated mobile penetration has hit 100 per cent. Aircel does not have a unique selling proposition. Aircel, of course, is aware of some of the challenges. But it does not believe it doesnt have a USP. Their fresh networks, simplified tariff plans, refreshing value additions and customer services are a powerful package in a market suffering from a lot of sameness.
TAG LINE OF AIRCEL
Its time to move on Aircel, of course, is aware of some of the challenges. But it does not believe it doesnt have a USP. Explaining the brand strategy, Das says: Price as we all know is a perishable differentiator, unless you have a disproportionate operating cost model. Our fresh networks, simplified tariff plans, refreshing value additions and customer services are a powerful package in a market suffering from a lot of sameness, service fatigue and brand agnostic offerings.
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Das says that increasingly customers will use Aircel as their second number, while youngsters will find it attractive as new-generation data users. Its data offering includes easy-to-use services like doctor on call, music downloads and recitals from the Bible or Quran. To ensure that the simplicity of the product gets communicated to the consumers, Das says Aircel has devised a very simple plan: Our launch across the national media has been predicated on simple refreshing communication in a cluttered everyday low price market. We continue to introduce commonsensical value-added services. Aircel executives are confident they will get new subscribers as well as pick up customers from existing service operators. They point out, for instance, that while the metros have nearly 100 per cent saturation figures according to the number of SIM cards sold, unique users are still 65-70 per cent of the population. So, there is still room for getting new subscribers. At the same time, the churn rate of about 3 per cent will help the company grab some more subscribers. Aircel is also hoping that number portability, which is expected to come by the end of the year, will help it get more numbers.
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Virgin Mobile
Virgin Mobile is a brand used by many mobile phone service providers across the globe; its headquarters are based in the United Kingdom. Virgin Mobile has local operations in Australia, Canada, France, India, South Africa, Greece, United Kingdom and the United States. It briefly also had operations in Singapore and Qatar. The international Virgin Mobile businesses each act as independent entities, usually in a partnership between Sir Richard Branson's Virgin Group and an existing phone company. Virgin Group licences the brand, and the partner phone company operates the network infrastructure.
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UNDERSTANDING VIRGINS BUSINESS MODEL: 1) With intensive competition and reducing voice tariffs, the profit margins for voice service are decreasing day by day. So, the future profit strategy is maximizing profit margins through data services and it is youth segment which provides maximum data service revenues. 2)Future projection of increasing young and working population of India as 65% of overall population by 2020. 3)Increased use of data services in future due to technological advancements. So, in mobile sector where all other players are trying to provide similar service to different customer segments, virgin is targeting specific segment with tailor made plans keeping its long term goals in mind
Virgin Expansion Strategy
Virgin Mobile India On March 1, 2008, Virgin launched the Mobile brand in India through a franchise arrangement with Tata Teleservices.[3] This is Virgins seventh launch globally and its largest. Virgin is primarily an MVNO company, and retail distribution is only a part of the overall strategy.
Strategy is to Win a 10% share of the urban youth market by Delivering imaginative solutions that offer Value for money & flexible tariffs that reflect their unique needs Innovative, game-changing value-added services Great handsets at great prices Personalized customer care
Whilst achieving a low operating cost per customer through Sharp focus on Indias top youth markets Fewer, stable propositions with low support and service costs Imaginative, eye-catching advertising & PR that gets youth talking A lean, enthusiastic team supported by simple processes
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Value for Money and Flexible Service Offerings
Virgin Mobile USA
In the USA, Sprint Nextel is the network. There is no roaming to other networks in the United States. On July 28, 2009, Sprint agreed to pay $483 million to purchase Virgin Mobile USA. The Federal Trade Commission later gave the go-ahead on the acquisition. Virgin Mobile USA was originally conceived as a joint venture between Virgin Group and Sprint, and uses Sprint's cellular bandwidth in the United States. Sprint retained the Virgin Mobile name after the deal closed. In June 2009 Virgin Mobile announced and started a pay-as-you go mobile data program called Broadband2Go in the United States, using Novatel Wireless hardware, and available exclusively through the Best Buy chain of stores originally, but now available at other retailers including RadioShack in the United States and The Source in Canada. It uses a small USB modem for internet connectivity.
In the summer of 2001, Virgin, a successful British brand began pursuing its plan to enter the U.S. mobile phone market One of Britains top 3 most recognized brands Already over 200 brand extensions Virgin was aware of the overcrowded cellular industry and decided to target a niche: Gen Yers who used fewer minutes than the typical wireless customer and whose purchase decisions are most easily influenced by trends
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Advertise in youth-oriented publications and television networks using a limited budget Use quirky, catchy advertisements Offer features appealing solely to the identified niche E.g. ring tones, text messaging, and real-time billing Sales-oriented pricing objectives Begin with sales maximization to gain U.S. recognition and move toward a more market- based strategy
Focus on the Right Value Proposition Target the Generation Y Redefine the value proposition with pay as you go, focusing on the right market. Concentrate on providing quality service and lower cost for first time buyers Avoid technology trends and all ideas about the coolest phone on the market. Focus on what the customers really want Ensure and maintain available network, form longterm relationship with network providers which will guarantee longterm service and trust. Invest in infastructure and competent customer service. Review value added propositions and make phone available and accessible on store shelves. Make phone another consumer electronic, instead of hi-tech very expensive and lock away.
T-Mobile T-Mobile International AG is a German-based holding company for Deutsche Telekom AG's various mobile communications subsidiaries outside Germany. Based in Bonn, Germany, its subsidiaries operate GSM and UMTS-based cellular networks in Europe, the United States, Puerto Rico and the US Virgin Islands. The company has financial stakes in mobile operators in both Central and Eastern Europe. The T-Mobile brand is present in ten European countries Austria, Croatia, Czech Republic, Hungary, Macedonia, Montenegro, the Netherlands, Poland, Slovakia and the United Kingdom as well as the US, Puerto Rico and the US Virgin Islands. Globally, T-Mobile International subsidiaries have a combined total of approximately 150 million subscribers, making the company the world's twelfth-largest mobile-phone service
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provider by subscribers and the third-largest multinational after the UK's Vodafone and Spain's Telefnica.
100% shareholding >50% shareholding
T-Mobile USA, Inc. is an American mobile-network operator, headquartered in Bellevue, Washington, that provides wireless voice, messaging and data services in the United States, Puerto Ricoand the U.S. Virgin Islands. The company is the fourth-largest wireless carrier in the U.S. market with 33.73 million customers and annual revenues of US$21.35 billion. As of 2011, J.D. Power and Associates, a global marketing-information-services firm, ranked the company highest among major wireless carriers for retail-store satisfaction four years consecutively and highest for wireless customer care two years consecutively. The company traces its roots to the 1994 establishment of VoiceStream Wireless PCS as a subsidiary of Western Wireless Corporation. Western Wireless spun off VoiceStream Wireless to shareholders on May 3, 1999, creating a public independent company, VoiceStream Wireless Corporation, that traded on the NASDAQ stock market under the ticker symbol VSTR. VoiceStream Wireless acquired Omnipoint Communications in February 2000 and Aerial
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Communications in May 2000. On June 1, 2001, Deutsche Telekom AG (DT) completed the acquisition of both VoiceStream Wireless Corporation for US$35 billion and Powertel, Inc. for US$24 billion. In July 2002, VoiceStream Wireless Corporation was renamed T-Mobile USA, Inc. which operates as the U.S. operating entity of T-Mobile International AG, the mobile- communications holding company and subsidiary of DT. On March 20, 2011, DT accepted a US$39 billion stock and cash purchase offer for the company from AT&T Inc. If completed, the acquisition would create the largest wireless carrier in the U.S., with nearly 130 million customers.
United Kingdom T-Mobile UK started life as Mercury One2One, the world's first GSM 1800 mobile network. It was originally operated by the now-defunct Mercury Communications. Later known simply as One 2 One, it was purchased by DT in 1999 and rebranded as T-Mobile in 2002. T-Mobile offers both pay-as-you-go and pay-monthly contract phones. The pay-monthly contracts consists of set amounts of minutes and 'flexible boosters' which allow the customer to change them month to month depending on their needs. T-Mobile launched their 3G UMTS services in the Autumn of 2003. In late 2007, it was confirmed that a merger of the high-speed 3G and HSDPA networks operated by T-Mobile UK and 3 (UK) was to take place starting January 2008. This will leave T- Mobile and 3 with the largest HSDPA mobile phone network in the country In 2009, France Telecom's Orange and DT, T-Mobile's parent, announced they were in advanced talks to merge their UK operations to create the largest mobile operator. In March 2010, the European Commission approved this merger on the condition that the combined company sell 25% of the spectrum it owns on the 1800 MHz radio band and amend a network sharing agreement with smaller rival . The merger was completed the following month, the new company's name later being announced as "Everything Everywhere". Orange and T-Mobile will continue as separate brands in the market for at least eighteen months, both run by the new parent company.In July 2011 T Hegazi was appointed as part time sales consultant for T Mobile by Richard Mobile, The UK general manager. Part of T job is to solve the puzzle of Mcdonalds wireless restaurants control over the network worldwide. Indeed several Mcdonalds wireless restaurants are experiencing network pressures that is slowing their wirless capabilities. T-Mobile UK's network is also used as the backbone network behind the Virgin Mobile virtual network.
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MARKETING MANAGEMENT
VODAFONES MARKETING STRATEGIES:
Main Strategies: 1. Market Penetration
Vodafones market infiltration strategy is to Improve through geographic development Achievement in terms of new customers. Retaining the existing customers. Increase the usage through modernism in expertise.
2. Market Development
In retail market industry Etisalat is consider as a best sample specially in the market of telecommunication who keep in mind spread out strategies, and makes its market on regular bases and by improving its value in new market by producing new channel. 3. Diversification Strategy
Under the Supervision of Arun Sarin (CEO), Vodafone again successfully gain its position to oppose worldwide forces in future. In term of market sector who sells products and services, and geographically the strategies of diversification feature can be characterized in the form of text book. In past i t was onl y a tel ecom company whi l e i n the f uture i t wi l l be the company whi ch can provi de i nternet, mobi l e, broadband and f i nanci al servi ces f aci l i t i es. More over In OECD whi ch i s the devel oped market Vodaf one have i ncrease ri si ng of market col l ect i on due t o i ts presence i n BRIC and i t i s conti nui ng to take hol d i n the next el even countri es.
Vodafones Marketing Strategies:
Vodafones new advertising campaign in India carried on with the same popular pug that has become a brand ambassador for Hutch. Where ever you go, our network follows was the previous slogan with the pug following the child wherever he goes. Now, with Hutchison Essar becoming part of the Vodafone Group, the new campaign had started with Vodafone Essar earmarking Rs. 2.5 billion on the transition from Hutch to Vodafone. The main message of the brand transition exercise: The new Vodafone is the
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same old Hutch. In the advertisement, the pug sees a new home when it returns after an outing and feels the change is better. The new catch phrase will be Make the most of now. Vodafone had tied up with Star India to run a complete roadblock of its fresh campaign on the entire network by unveiling the 24-hour nationwide rebranding campaign. Vodafone used all of the commercial airtime across all 13 channels in five languages (Hindi, Tamil, Bengali, Marathi and English) from 9 pm on 20 September to 9 pm on September 21. This exercise included TV commercials, transition bumpers and contest spots to promote the Vodafone Essar brand. Commercial spots had also been purchased on Sony. Conventionally awareness for a new brand takes some time to build. However, Vodafone wanted to achieve this task at the shortest possible time. Hence, Maxus and Star Network worked closely to address this challenge and came up with the idea wherein during the day of the launch a complete roadblock on the Star Network channels was conceptualized. Considering that the Star Network is the lead network in India, this was the most apt platform for Vodafone launch. This strategy helped not only in achieving build rapid brand awareness but also breaks the clutter during such an important launch in the most happening category telecom. This is a first of its kind mega media initiative in India by any brand. While the campaign was heavy on television, it also included all other media vehicles. The print campaign kicked off on 21 September, a day after the television splash. While the brand campaign had been addressing the transformation, the Company, on the other hand was swiftly preparing for a price war in the Indian telecom space. Indeed, it was preparing to provide mobile handsets to new subscribers at ultra-cheap prices, ranging from about $19 to $25. Vodafone Essar launched low priced cell phones in India under the Vodafone brand, and also co-branded handsets sourced from major global vendors. By bringing in millions of low-cost handsets from across the globe into India, Vodafone Essar distributed bundled handsets through its existing 400,000 distribution outlets. By flooding the market with its low-cost handsets, Vodafone also became a mass mobile phone brand like Nokia, Samsung, Motorola, and Sony Ericsson in addition to continuing as telecom services provider. Previously, similar handset-driven expansion strategies to grow subscriber bases were adopted by CDMA players, like RCOM and Tata Teleservices. Vodafone is the first GSM operator to follow suit. The Vodafone mission is to be the communications leader in an increasingly connected world enriching customers lives, helping individuals, businesses and communities be more connected by delivering their total communication needs. Vodafones logo is a representation of that belief The start of a new conversation, a trigger, a catalyst, a mark of true pioneering.
Vodafones advertising Strategies:
Advertising is probably one of the most frequently used vehicles for Rebranding, as it is fairly easy, flexible and quick to change. It is a powerful way of reaching a broad or targeted audience quickly and is effective at signalling a change in positioning, however real or broad that may be. There are many
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examples of where advertising has either repositioned or strengthened brands, other good examples of where advertising has built a new position for a brand or built a strong emotional link with the public are where companies have created a sort of soap opera out of their advertising. The Advertising agency of Hutch and now Vodafone, Ogilvy & Mather (O&M), had a two-fold task to achieve: announce the entry of Vodafone into India and highlight the metamorphosis of Hutch into Vodafone. O&M realised that they had a fantastic property in the Hutch pug, which they had been using for about five years. Therefore, to show the transition from Hutch to Vodafone, O&M launched a rather direct, thematic ad showing the trademark pug in a garden, moving out of a pink coloured kennel which symbolised Hutch making his way into a red one that is the Vodafone colour. A more energetic, chirpier version of the You and I tune associated with Hutch was played towards the end, and it concludes with Change is good. Hutch is now Vodafone. O&M has also rolled out four Commercials featuring Hutchs animated boy and girl, introducing the new brands logo to consumers. The four creatives which were of five seconds each included the duo peeping over a wall to see the logo; parasailing with the logo flying high behind them; releasing a rocket bomb wherein the explosion reveals the logo; and lastly, drawing curtains aside to show the logo. Four other ads with the pug did the rounds of telly screens. These five and 10 second spots cast the dog in situations where he, literally, saw red, using the colour as a visual mnemonic to remember the brand by. The pug was shown in a red basket, popping up from a red cart, drying himself on a red mat, and hiding in a red blanket. Each of these made use of the Hutch is now Vodafone tagline. The print ads, in all major languages in several leading dailies, were kept unbelievably simple: a still shot of the pug inside a red kennel. The same creative was used in outdoor hoardings as well, in all the 16 circles in which Vodafone now operates. It wasnt easy integrating Vodafone with Hutch; the latter, as is known, is a subtle, understated brand, while globally, Vodafone represents high energy, dynamism and young vitality all represented by its bright red speech mark logo. And so they put in elements such as a more energetic tune and feel to the ads. A few advertisements include: Hutch is now Vodafone: If you watch any of the star channels or tuned into 20-20 world cup, you would have seen this ad. On 11 February 2007, Vodafone agreed to acquire the controlling interest of 67% held by Cheung Kong Holdings in Hutch-Essar for US$11.1 billion and now had to rebrand itself so it has decided to run a new ad series which piggy banked on Hutchs dog mascot and the theme Change is Good. This required nearly 250 crores of spending by Vodafone but they have successfully painted the town red. An interesting part of this campaign was on the opening day roadblock where they made a deal with Star India so that besides them no other commercials were aired (apart from in-channel promos) on the Star Indias channels for 24 hours. Vodafone Valentine Day Special Ads: Vodafone had released a simple and sweet ad for musical greetings targeted at couples during the valentine week the feature of this campaign is its simplicity and believability and is quite well received. It uses the positioning Make the most of now enjoy the video
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Vodafone Chota Credit Ink Ad: This new ad had come as refreshing change and more so that this ad takes a very refreshing look at school and at fountain pens. This ad creates a wonderfully subtle message which really puts the point of chota (small) credit across.
Vodafone ZooZoos A Successful Marketing Strategy
ZooZoo, the new brand ambassador of Vodafone, has created a furore in the advertising industry. Zoozoos have been successful in giving Vodafone a makeover and establishing maximum brand presence. I consider it to be a perfect example of a well-laid out marketing strategy for the following reasons: Vodafone chose the Indian Premier League 2 (IPL-2) as a platform to launch their advertisement, which proved to be a great marketing strategy. Cricket is considered to be a religion in India, and Zoozooz captured attention of nearly two billion people during the IPL. People eagerly waited for breaks between matches to see more stories about Zoozoo. Zoozoos are small pseudo-animated characters with big egg-shaped head, round belly but extremely thin arms and legs. It was a fresh and innovative concept and Vodafone wonderfully promoted their services by creating different stories featuring Zoozoos. The charm of the Zoozoo was itself a great self-marketing strategy and they were instant success among masses. Within few days, Zoozooz created a huge audience for them, giving a boost to the Vodafone brand. People were already in awe of those cute and lovable characters, but the curiosity heightened when Vodafone disclosed that Zoozooz were not animated, rather humans were playing those characters. People were even more hungry to know about their favorite Zoozooz. In the second phase, after the release of these ads, Vodafone promoted these characters on social media sites, which was another wise decision. Zoozoo fan clubs are there on social networking sites like Facebook, YouTube, Orkut, Twitter, and many more, where they have a huge followings. Now Vodafone has announced to launch the Zoozoo goodies like zoozoo toys, zoozoo mugs, zoozoo keychains, zoozoo t-shirts, etc. Zoozooz have themselves become a brand and it will be interesting to see how Vodafone uses this concept in future to promote their services.
Vodafone delights Vodafone launched schemes such as Vodafone delights & Thank You Card for their existing customer, emphasizing that it not only focuses on pre sales but also post sales servicing, ensuring customer satisfaction. Proving that a satisfied customer is stays longer with you.
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SWOT Analysis Strengths Expanded environmental collection with strong cellular and telecommunications business in the Europe, Middle East, Africa Asia Pacific and somehow to the US. A group of strong Network transportation. Strong presence in rising markets like India. Strong in Cities Weaknesses A Negative revisit on chattels (ROA) under the execute and strong competitors like AT&T, BT Group, Deutsche Telecom. The American business is not as strong as the European/having a break of the world operations of 80% of their business is producing in Europe. Does not have Network in the countryside. Opportunities Should rely on decreasing cost and increase Income. Most of the venture in Hutchison Essar in India. Needs to investigate and improvement of the new mobile technologies Good Tax free offers and plans. Threats Very high competitive and strong market to face. Still insulate at the back of most of the competitors in the US. Very high incursion rates in the key European markets. European Union directive on cross-border usage of the cellular phones.
PEST Analysis Political: The UK is governed by the British government and constitutional monarchy with Elizabeth II as head of state, Parliament is the legislature of the United Kingdom; housed in the Palace of Westminster, it is the ultimate legislative authority in the UK, according to the doctrine of parliamentary sovereignty. English law governs England and Wales. The consumer is covered by many act including Sale of Goods Act 1979, Health and safety act, Trade Description Act. and Supply and Sale of Goods Act. The UK Mobile network is governed by Ofcom (Office of communications); which is an independent regulator and competition authority for the
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communication industries in the United Kingdom and the network licenses are auctioned by the government. Economic: The UK economy is the fifth largest economy of the world in terms of exchange rates; its the second largest in Europe after Germany. The service sector of the United Kingdom is dominated by financial services, especially in banking and insurance. London is the world's largest financial centre with the London Stock Exchange, the London International Financial Futures and Options Exchange, and the Lloyd's of London insurance market all based in The City. The British economy has in recent years seen the longest period of sustained economic growth for more than 150 years, The UK economy has grown every quarter since 1992. It is one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remain relatively low. Although disposable income has started to fall due to inflation and the crisis concerning subprime mortgage financial crisis of 2007, this means that there will be less spending on luxury goods in the future. Social: There is currently an anti-social movement against mobile phone due to thugs using mobile phone to film violent attacks and beating of innocent members of the public and the heath risks concerned with the uses of mobile phones and cancer risks. The UK population has a population of over 60 million, although the population demographic is aging this means that Vodafone has to market to market to the aging market. Technological: Britain used to be in the forefront of technological advances with such pioneers as Isambard Kingdom Brunel and an industry based on industry. Now it has changed mostly into the service sector.
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Worldwide opponent Orange T-Mobile International Telefonica02 Europe
Indian challengers Airtel Reliance BSNL
Area of operations Products promoted by the Group include Vodafone live!, Vodafone Mobile Connect USB Modem, Vodafone Connect to Friends, Vodafone Passport, Vodafone Freedom Packs, Vodafone at Home, Vodafone 710 and Amobee Media Systems. Between June and August 2009, Vodafone suspended roaming charges within 35 different countries, allowing their customers to take their standard UK price plan abroad. In October 2009, it launched Vodafone 360, a new internet service for the mobile, PC and Mac. On 15 February 2010 Vodafone launched world's cheapest mobile phone known as Vodafone 150, will sell for below $15 (10) and is aimed at the developing world. It will initially be launched in India, Turkey and eight African countries including Lesotho, Kenya and Ghana.
Handsets wide range of handsets covers all our customer segments and price points and is available in a variety of designs 66 new models released in the 2010 financial year. 23 exclusive handsets launched. Smartphones A handset offering advanced capabilities including access to email and the internet. 24% of handset sales in Europe. All leading brands represented including iPhone in 14 countries. Launched two tailor-made Vodafone 360 handsets: Samsung H1 and Samsung M1. Vodafone branded handsets Enabling millions of people in emerging markets to share the benefits of mobile technology.
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Low cost combined with high-end features, such as touch screen and mobile internet capability. Voi ce & messaging servi ces
Voice services incorporate revenue for national, international and roaming calls. SMS services include text messages as well as multiple media, such as pictures, music, sound, video and text The core functionality and use of handsets continues to be voice and text messaging services. Many different tariffs and propositions are available, targeted at different customer segments, and include a range of unlimited usage offers which have been particularly appealing to customers. Data servi ces Offers a number of products and services to enhance customers access to data services including access to the internet, email, music, games and television. Fixed servi ces We offer fixed voice and fixed broadband solutions to our customers total communications needs. Fixed line services available in 13 countries in addition to Gateway. 5.6m fixed broadband customers, up 1m. Vodafone DSL Router launched in six countries.
Vodafones Marketing Mix:
A longer term marketing strategy is underpinned by careful planning and a successful marketing mix. The marketing mix is a combination of many features that can be represented by the four Ps. product - features and benefits of a good or service place - where the good or service can be bought price - the cost of a good or service Promotion - how customers are made aware of a good or service.
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Product: A product with many different features provides customers with opportunities to chat, play, games, send and receive pictures, change ring tones, receive information about travel and sporting events, obtain billing information - and soon view video clips and send video messages. Vodafone live! Provides on-the-move information services.
Place: Vodafone UK operates over 300 of its own stores. It also sells through independent retailers e.g. Carphone Warehouse. Customers are able to see and handle products they are considering buying. People are on hand to ensure customers needs are matched with the right product and to explain the different options available. Price: Vodafone wants to make its services accessible to as many people as possible: from the young, through apprentices and high powered business executives, to the more mature users. It offers various pricing structures to suit different customer groups. Monthly price plans are available as well as prepay options. Phone users can top up their phone on line. Vodafone UK gives NECTAR reward points for every 1 spent on calls, text messages, picture messages and ring tones.
Promotion: Vodafone works with icons such as David Beckham to communicate its brand values. Advertising on TV, on billboards, in magazines and in other media outlets reaches large audiences and spreads the brand image and the message very effectively. This is known as above the line promotion. Stores have special offers, promotions and point of sale posters to attract those inside the stores to buy. Vodafones stores, its products and its staff all project the brand image. Vodafone actively develops good public relations by sending press releases to national newspapers and magazines to explain new products and ideas.
Brand Image: David Beckham is more than a footballer. He is also regarded as a fashion icon, a caring family man and a nice guy: an overall image that attracted Vodafone to him.
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Beckhams popularity with football fans comes largely from his England team captaincy. As a footballer, he is well regarded around the world. Other young men who might aspire to his success and style also tend to identify with him. He appeals to many females because of his reputation as a fashion and lifestyle icon. He is also married to a female icon in her own right. Vodafones sponsorship of the Manchester United team appeals to a broad section of the global football/sports audience, whereas aspects of Beckhams broader image have grown to appeal to a much wider section of society. That suits Vodafone, who needs to appeal to different segments of the market. Beckhams healthy lifestyle allied to his talent suggests an energy and a controlled passion for life; an image that Vodafone would also like to project for itself. On a football field, Beckham is innovative, creative, exciting; characteristics that Vodafone aspires to. Beckham the family man comes across as caring and empathetic; Vodafone wants people to appreciate that it too understands and cares about what people want and need. Beckham is generally seen as dependable; Vodafone wants to communicate a similar image. The synergy is clear.
The campaign
Beckham is supporting the campaign to promote Vodafone live! in the UK and in other markets. The UK campaign shows Beckham doing everyday things: a happy, relaxed, competent shopper sending pictures and accepting a message to remember to buy eggs. At the same time he is also clearly demonstrating what Vodafone live! can do. The TV campaign has been a huge success. Many people have seen it and can recall the adverts. The campaign captured the imagination of the press, and many newspapers covered stories about Beckhams sponsorship deal. Slogans such as Send it like Beckham help to further promote the Vodafone message. Beckhams image is also used on a variety of other customer communications including in-store posters, billboards, in the companys magazines and catalogues and in leaflets mailed to customers.
Market Research
High profile campaigns are a gamble. The campaigns impact has to justify the time, money and effort spent on it. The marketing team must evaluate the campaigns success. Vodafone UK has asked people across different sectors of society about the campaign, and has analysed their responses. Individuals were asked what they could remember about the campaigns. This is known in the marketing industry as recall.
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Another exercise assessed the effectiveness of the poster depicting Beckham being reminded to buy some eggs. People in the survey are shown different Vodafone posters and asked to say which of them they recall in relation to Vodafone live! Clearly, the Beckham poster is far and away the one that is best recalled. Other data has been used to assess the success of the Beckham promotion. Findings from UK Brand Tracking data reveal that the TV campaign has increased awareness of Vodafone with above average efficiency as measured by the Awareness Index, primarily because of the Beckham scenes. People are able to recall and describe the advertisements without prompting. The Beckham campaign has also helped to support Vodafones drive for brand migration. Vodafone can help to fulfill its aim to grow successfully by acquiring local companies in markets that Vodafone would like to enter. A good example of this is Vodafones purchase of J-Phone in Japan. The initial strategy was to use a dual J-Phone Vodafone logo alongside the powerful image of Beckham to emphasize the relationship between the two companies. The final transition removed the J-Phone logo altogether to a sole focus on Vodafone (Vodafone KK). This strategy warmed J-Phones customers to the idea of a global brand replacing a local brand. David Beckham is a popular figure in Japan and helped to smooth the way for the substitution of the global brand in place of the local one.
Competitive Position Vodafone has three key attributes which strongly differentiate it from its competitors: its scale in technology, which allows network and IT savings through consolidation and centralisation of core activities; its strong presence in the enterprise market, among large corporates as well as small and medium sized businesses; and its brand, recently rated in the top ten leading global brands.
Vodafone has competitive advantage because of the following reasons: Vodafone has a significant global presence, with equity interests in over 30 countries and over 40 partner networks worldwide. Vodafone is organised in three geographic regions Europe, Africa and Central Europe; Asia Pacific and Middle East; and Verizon Wireless in the US. VAS (value added service) - Number of schemes they have. Especially the add on plans. This is separate from the main plan. It is a major source of revenue for the company. They have plans like Chota Recharge, etc which gives them an edge over other. Technological Advantage Vodafone has installed SAP technology. SAP is delivering mobile capabilities such as mobile asset management, mobile sales for handhelds, mobile service for handhelds, mobile time, mobile
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travel, mobile & immobile warehouse management, and mobile direct store delivery. These capabilities of SAP Mobile Business establish new ways to interact with enterprise systems and empower new user communities to participate in collaborative business processes, resulting in increased customer satisfaction, profitability, and competitive advantage.
Cost Advantage - Obtaining these licenses has reduced capital spending by over 60%, operating costs by 40% and staff numbers from 3,200 to 1,700. Overall, the company has refocused and become clear about its direction, strategy, values and brand. They have the ability to execute; empowered by strong local and global channel partners and systems integrators. The company's revenues in India stood at 2.68 billion pound, while from the entire Asia-Pacific region revenues were at 5.81 billion pound for the fiscal 2009.
Continuous Improvement Vodafone as a brand keeps on improving and coming up with new plans. It adjusts according to market need. Brings up innovative plans which give them a competitive advantage.
Vodafone Operating Countries Vodafone's partners and affiliates
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Economics Analysis
BSNL Added 3.0 Million Users & has a Total of 78.1 Million Users
Vodafone Added 3.12 Million Users & has a Total of 121.16 Million Users IDEA Added 2.8 Million Users & has a Total of 78.8 Million Users Aircel has Added 1.2 Million Users & has a Total of 48.7 Million Users Loop Added 19,250 & has a Total of 3.0 Million Users MTNL Added 37,110 & has a Total of 5.09 Million Users S Tel Added 2,01,396 & has a Total of 2.06 Million Users Uninor Added 2.44 Million Users Total of 16.19 Million Users Videocon Added 1.12 Million Users & has a Total of 6.74 Million Users
78.1 121.16 78.8 48.7 3 5.09 2.06 16.19 6.74 Sales BSNL vodafone Idea AIRCEL loop Mtnl S Tel Unisor Videocon
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Overall ranking for Vodafone?
RANK Retailers 1 2 2 12 3 16 4 6 5 4
Interpretation- This data shows that the overall performance of Vodafone in retailers is good with 40% respondent COMPETITION OVERVIEW Major Players There are three types of players in telecom services: State owned companies (BSNL and MTNL) Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications) overall ranking of vodafone 1 5% 2 30% 3 40% 4 15% 5 10% 1 2 3 4 5
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MERGERS & ACQUISITIONS
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Challenges And Opportunities An attractive trade and investment policy and lucrative incentives for foreign collaborations have made India one of the worlds most attractive markets for the telecom equipment suppliers and service providers. No industrial license required for setting up manufacturing units for telecom equipment. 100% Foreign Direct Investment (FDI) is allowed through automatic route for manufacturing of telecom equipments. Payments for royalty, lump-sum fee for transfer of technology and payments for use of trademark/brand name on the automatic route. Foreign equity of 74% (49 % under automatic route) permitted for telecom services - basic, cellular mobile, paging, value added services, NLD, ILD, ISPs - and global mobile personal communications by satellite. Full repatriability of dividend income and capital invested in the telecom sector Opportunities India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom sector: An expanding Indian economy with increased focus on the services sector Population mix moving favourably towards a younger age profile Urbanization with increasing incomes Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. Inflow of FDI into Indians telecom sector during April 2000 to Feb. 2010 was about Rs 405,460 million. Also, more than 8 per cent of the approved FDI in the country is related to the telecom sector.
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Evaluate Its Market Entry Strategy In India
During the research of the Vodafone motivation for International expansion and the reason to why they decided to operate in India, it was discovered that the market entry mode used by Vodafone to enter the Indian market was through joint venture. In order to become a joint venture Vodafone purchased a controlling stake of 67% in Hutchison Essar for 11.1 billion . The reason why Vodafone chose to enter the Indian market through joint venture was because it is easier for them to integrate into an existing business that already knows the culture and how the country does business. From, Vodafones five core strategic objectives the major one which strongly associates towards the Indian market entry mode is to deliver strong growth in emerging markets. The reason being is that with the latest purchase of Hutchison Essar in India Vodafone has increased their presence in emerging markets, therefore Vodafone has a market penetration of 14% and the population of India being over 1.1 billion and by doing this India provides Vodafone with a good opportunity for a future growth.
The threat of the entry of new competitors -The threat of new entry competitors in this industry is low as there are high capital Requirements, this present a significant barrier to entry, network licenses went up for auction, only the most financially fit and liquid mobile phone operators could acquire licences, additional new competitor may not bring extra production capacity, nor does their entry hold consumer cost down.
Government controls the mobile licenses; deregulation would pose a significant threat to existing mobile phone operators, but this is currently not even being considered. Barriers Vodafone faced From drawing out the points mentioned above Vodafone will be facing in India are the culture difference and economic factors such as, the supply and demand as well considering the laws and regulations. Vodafone will also have to take into account other major competitors that are already well- known in India such as Airtel. In the UK which is a developed country the vast majority of population can afford to purchase new phones whereas in India Due to low income and employment, not everyone can afford to purchase luxury goods. Therefore Vodafone realizes that even if the population cannot purchase their products yet, they will be able to purchase Vodafone products in the near future.
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The alternative is that if Vodafone waits for a few years there will be more people will be employed due to how fast the Indian economy is growing therefore the number of people with higher incomes should increase and they will be able to purchase Vodafone products. Also another alternative Vodafone could have used than Joint venture would be franchising this is because on the international level Vodafone is a well-known and established company which company in India may want to get their management skills and assets. The advantage of this method is that Vodafone will increase their exposure in India and when they use forward integration it will help to become their own retailer within the country.
The Economies of Scale are Moderate - Mobile phone manufacturers did enjoy great economies of scale in production, marketing and R&D, which allowed the three major producers to dominate the industry and sustain a competitive advantage. India is the fastest growing telecommunications market across the globe. The urban teledensity has already breached the 100 percent mark5. Rural India, which has nearly 27.76 percent teledensity as of August 2010, has shown impressive growth over the past6.India has achieved such aggressive growth primarily through urban areas, which account for only 30 percent of the total population. Rural India, which accounts for 70 percent of the population, holds immense potential and remains relatively untapped. This makes the Indian telecommunications sector one of the most attractive investment destinations for global players7. Recent reports revealed that during the first two months of this financial year, Indias telecommunication sector attracted almost USD 891 million in FDI, the highest amongst all sectors. On the other hand, during the same period last year, the sector attracted USD 612 million worth of FDI8. Overall, this sector has attracted FDI of about USD 9.98 billion (from April 2000) as of June.
The regulations governing Foreign Direct Investments have gone through different phases of transition to ensure market attractiveness for globally recognized players along with safeguarding the interests of the Indian counterparts. The well-defined regulatory policy has been the fundamental reason for the inflow of huge international investments into the Indian telecommunication sector.
Friendly government policies Indian government has been taking various initiatives to transform India as a global manufacturing hub. A case-in-point is Sriperumbudur in Tamil Nadu. It is Indias leading initiative to become a global telecom manufacturing hub. Due to the governments progressive policy, Sriperumbudur is reported to be today producing more mobile phones than Shenzhen in southern China. This is not a small achievement, considering Shenzhen makes one out of eight handsets sold anywhere in the world.
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The government is promoting SEZ units in Sriperumbudur which need to be supported with suitable tax breaks, world-class public infrastructure such as expressways, railway links and an airport, and private amenities, including hotels, apartments, shopping malls and entertainment sites. After the tax breaks announced on the mobile accessories in budget 2010-11, both Indian and international component manufacturers have begun work in Sriperumbudur to make parts and components for the cell phone industry. Approximately 20,000 people are estimated to be working in the area. Globally, it has been proved that SEZ model has supported manufacturing industry. The governments have encouraged a strong R&D infrastructure to facilitate the growth in this sector. They have introduced special fiscal measures, tax breaks and incentives such as subsidies, easy credit, and use of bilateral trade to attract foreign investment and provide boost to the domestic manufacturing industry. Indian government has also been promoting its export sector by establishing special economic zones (SEZs), which led exports grow by 33 percent in 2008-2009 as compared to just 4 percent elsewhere in India. Thus, in recent times SEZs has been one of the primary drivers for Indias increasing manufacturing capability11. Indian government has been facilitating more and more telecom specific SEZs to promote India as a hub for telecom manufacturing. Moreover, it has also allowed 100 percent FDI in manufacturing sector under automatic route. This has resulted in foreign players investing more than INR 450 billion as FDI in Indian telecom sector in last 10 years. Going forward, looking at the large geographical diversity and spread of India, India may adopt the phased and planned expansion strategy. Private SEZs in strategic locations will foster an enabling environment for global and domestic manufacturing majors to set up plants. High quality infrastructure at SEZs will further provide the necessary push which the telecom equipment manufacturing majors require.
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QUANTITATIVE APTITUDE
Research Methodologies
Research objective-: To analyze the AIRCEL market in Ghaziabad & collecting retailers feedback on it.
Research design-: The method of data collection is doing survey from telecom retailers of Noida, by a questionnaire. It is a statistical study required for quick results. The research environment was the field setting as the method of study was analyzing the data collected by conducting a survey. Aircel, the GSM mobile operators subscriber base has now crossed 50 million subscribers Aircel added 1.2 million subscribers in November 2010 and its Total subscriber base at the end of November 2010 was 48.7 Million
Sampling Process-:
Target market-: The target population was the telecom retailers of Noida region which is choose sector wise. Type of the sample is the Random sample is taken for the collection of the primary data.
Sampling procedure-: Sample size- 40 Instrumental used- : Questionnaire Primary data-: Data is collected through survey of retail stores of telecom by filling a questionnaire. Secondary data-: Through Internet, magazine, newspapers.
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Questi onai re
1) How would you rate following operator in network? a) Aircel 1______2 ______3______4______5______
b) Airtel 1______2_______3______4______5______
c) Vodafone 1______2_______3______4______5______
d) Reliance 1______2_______3______4______5_______
d) Idea 1______2______3_______4______5______
2) How would you rate following operator in trade communication (dealer scheme etc)? a) Aircel 1______2 ______3______4______5______
b) Airtel 1______2_______3______4______5______
c) Vodafone 1______2_______3______4______5______
d) Reliance 1______2_______3______4______5_______
d) Idea 1______2______3_______4______5______
3) How many customer queries you get on daily basis for Aircel? a) 1-5 b) 5-10 c) 10-15 d) 15-20 e) more than 20
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4) How would you rate following operator in claim settlement?
a) Aircel 1______2 ______3______4______5______
b) Airtel 1______2_______3______4______5______
c) Vodafone 1______2_______3______4______5______
d) Reliance 1______2_______3______4______5_______
d) Idea 1______2______3_______4______5______
5) How would you rate Aircel in distribution service (FOS visit etc) a) 1 b) 2 c) 3 d) 4 e) 5
6) How would you rate following operator for customers/dealers problem resolution?
a) Aircel 1______2 ______3______4______5______
b) Airtel 1______2_______3______4______5______
c) Vodafone 1______2_______3______4______5______
d) Reliance 1______2_______3______4______5______
d) Idea 1______2______3_______4______5_____
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7) Number of sim connection sold last one month? a) Aircel __________
b) Vodafone __________
c) Airtel __________
d) Reliance __________
e) Idea __________
8) What is the average activation time taken by distributor to activate a new customer? a. Aircel __________
b. Vodafone __________
c. Airtel __________
d. Reliance __________
e. Idea __________
9) Any suggestion you would like to give for Aircel?
_____________________________________________________________________________________ ___________________________________________________________ 10) Give overall ranking for Aircel? a)- 1 b)- 2 c)- 3 d)- 4 e)- 5
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NETWORK
Sample size -: 40 retailers
Interpretation-: This data shows that Airtel is having first rank in network as it has rating of 4.93 on the rating scale of 5, and Aircel has got the 4 position with a rating of 3.79 on the rating scale of 5.
As its a new company so network has been a big problem but still the company is trying its best to solve the problem. The tower are been installed at a rapid speed.
As compared to its competitors aircel stands 4 th in the network (airtel, voda, idea, reliance gsm).
Its not going to take long when the network of Aircel limited will be giving the competition to the No. 1 network in Delhi & NCR i.e. Airtel. The reason being that its about to install 1200 tower in Delhi & NCR within 3 months. 0 1 2 3 4 5 AIRCEL VODA AIRTEL REL IDEA 3.79 4.71 4.93 3.16 3.81
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How would you rate following operator in trade communication (dealer scheme etc)?
3.4 3.5 3.6 3.7 3.8 3.9 4 AIRCEL VODA AIRTEL REL IDEA 3.61 3.8 3.72 3.98 3.67
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TRADE COMMUNICATION Sample size -: 40 retailers
Interpretation-: This data shows that Reliance GSM is having first rank in trade communication as it has rating of 3.98 on the rating scale of 5, and Aircel has got the 5 position with a rating of 3.61 on the rating scale of 5.
Retailers schemes are not lucrative from new brand prospective Retailers want some more claim schemes like Reliance GSM,Airtel If some good scheme provided to them they can give good business
No. of sim connection sold last one month?
AIRCEL 314 VODAFONE 439 AIRTEL 586 RELIANCE 502 IDEA 251
Sim sold in last month aircel 15% vodafone 21% airtel 28% reliance 24% idea 12% aircel vodafone airtel reliance idea
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RECOMMENDATIONS
1. There lies a good opportunity to work with retailers or a mediator between Aircel & retailers and find the retailers thinking about these operator 2. Airtel is the market leader in telecom sector and Aircel is having 4 th position in these operator.. 3. Respondents feel that the areas where Aircel should improve are Network and claim settlement. 4. Aircel should improve its network as network coverage has emerged as the prime problem after data analysis. 5. Sign board of Aircel should be distributed to each retailers 6. FOS visit should be on daily basis 7. Salesmen should be trained regarding offers & scheme 8. Margin to dealer should be increased in comparison to other telecom operator 9. SIM activation time should be reduced 10. E-TOP UP number should be provided to those retailers who are interesting to selling Aircel sim. 11. As per the data analysis the glow sign board is not properly distributed. Its very important for any company to do its branding properly because it might just make the retailers totally not interested in selling the product. Company should also order the distributors to keep a check that the posters are properly distributed in the market because it is seen that pop are not distributed properly even though the company is providing distributors with enough pop. Aircel, the GSM mobile operators subscriber base has now crossed 50 million subscribers Aircel added 1.2 million subscribers in November 2010 and its Total subscriber base at the end of November 2010 was 48.7 Million.
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HUMAN RESOURCE MANAGEMENT Learning and capability development Global programmes continue to develop high potential employees.
We are committed to helping people reach their full potential through ongoing training and development. In our most recent people survey 71% of employees rated their opportunities to develop their skills and Knowledge as good or very good. Inspire, our global leadership development programme, is in its second year. The programme focuses on identifying and developing potential future leaders from within the Group. The programme builds commercial capability and leadership skills through an 18 month fast-track approach. 67 managers from 19 countries participated in the programme during the 2009 calendar year and 51 have started on the 2010 calendar year course. Of the managers who have completed the programme, 40% have been promoted to a more senior role.
Performance, reward and recognition Extension of reward differentiation based on individual performance.
Replacement of UK defined benefits pension scheme with enhanced defined contribution scheme.
We reward employees based on their performance, potential and contribution to the success of the business and we aim to provide competitive and fair rates of pay and benefits in every country where we operate. Global short- and long-term incentive plans are offered to Leadership and management levels and paid according to individual and company performance. In response to global economic conditions a pay freeze policy was introduced to the senior leadership team in the 2010 financial year. Most operating companies did however award bonuses through global or local plans, with greater emphasis on rewarding strong business and individual performance. In January 2010 we confirmed the closure of our UK defined benefit pension scheme for future accruals on 31 March 2010. All UK based employees were invited to join a new, enhanced defined contribution pension scheme, which we believe is now highly competitive in the local market as well as more sustainable longer-term
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Talent and resourcing
Regular reviews of peoples performance and potential. Graduate recruitment programmes in almost all operating countries. Continued focus on increasing diversity and inclusion: 14% of senior leaders, two Executive Committee members and three operating company CEOs are female; and 26 nationalities are represented in senior leadership roles During the 2010 financial year we increased our focus on driving high performance and building a strong base of talented leaders and employees. All managers are encouraged to hold regular performance discussions with their direct reports. Annual performance dialogues are mandatory to enable each employee to receive a performance and potential rating which is the basis for development planning and reward decisions. Quarterly departmental and operating company talent reviews have been introduced, alongside annual development boards. For most senior leadership roles, the Executive Committee review succession and key appointments each month. They want to attract the best and brightest graduates to work in all of their operating companies. A globally consistent graduate recruitment programme has been introduced with a target of 230 top graduate hires across the Group during the 2010 calendar year. We have also partnered with seven leading MBA schools to hire top MBA graduates to join them and progress to key management and leadership roles. We aim to create a working culture that is inclusive to all and believe that having a diverse workforce helps to meet the different needs of our customers across the globe. We do not condone unfair treatment of any kind and offer equal opportunities for all aspects of employment and advancement regardless of race, nationality, sex, age, marital status, sexual orientation, disability or religious or political belief. This also applies to agency workers, self employed persons and contract workers who work for Vodafone. In the latest people survey 87% of employees agreed that people in Vodafone are treated fairly, regardless of their gender, background, age or belief. The main focus of our diversity strategy has been on gender with actions taken to provide inclusive working policies and to increase inclusive behavior amongst managers. Compared to the 2009 financial year there has been a slight increase in the percentage of women in senior roles, up from 13% to 14%. There will be continued efforts to increase the proportion of women in senior leadership roles during the 2010 financial year. More recently we have extended our diversity strategy to focus on diversity of nationality, industry background and technical experience.26 nationalities are represented in the senior leadership of the Group.
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Employment policies and employee relations
We aim to be recognized as an employer of choice. We strive to maintain high standards and good employee relations
Our employment policies are developed to reflect local legal, cultural and employment requirements. We aim to be recognized as an employer of choice and therefore seek to maintain high standards and good employee relations wherever we operate. Our business principles set out our ethical standards and we have recently developed a code of conduct that defines what employees need to do to live up to our business principles. New and existing employees will receive communication and training on the code of conduct during the 2011 financial year.
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INFORMATION TECHNOLOGY
Various studies have credited broadband as a catalyst for economic and social development of a country. Availability of broadband services at affordable price levels contribute to higher GDP growth rates1, provide for a larger and more qualified labor force, and make that labor pool more efficient. It has been proven that the multiplier impact of broadband growth on GDP is significantly higher than mobile telephony growth. The successful auction of 3G and BWA spectrum has laid a good foundation for a push towards achieving pan India broadband infrastructure; which will lead us to the dream of providing Broadband for all. This vision demands a synergetic push across technologies (DSL, Fiber, Cable, and wireless), amongst telecom operators (public and private) and across the broadband value chain (device manufacturers, service providers, content providers & regulators); so as to provide this universal service to residents living anywhere in the country (urban or rural) and to the match the customer expectations across all segments (Enterprise, Government and Retail).
Growth effects of ICTs: Percentage point increase in GDP per capita for every ten percentage point increase in ICT penetration
The entry level tariff for broadband services has come down drastically from INR 1,500 per month in 2004 to INR 200 a month in 2007, which is still higher than most countries. The ICT Development Index report of the International Telecommunications Union (ITU) indicates that the Broadband rates are higher at 7.7 percent of GNI as compared to the price basket for mobile telephony which stands at 2.2 percent. High Cost of PC and other access devices
Availability broadband services at the right places
Although 70 percent of Indian population lives in rural areas; broadband facility is limited to metros and major cities. Availability of broadband is critical for development of rural areas as much as it is for the urban areas. Out of total 10.08 million broadband subscribers6, mere 5 percent are rural subscribers. The low broadband penetration in rural areas is attributed to unavailability of transmission media connectivity up to village level. Due to high initial investment and expected low returns, operators are hesitant to invest in small cities/ villages or remote areas. Considering the enormous power of broadband, it is essential to concentrate on availability of the broadband to every citizen.
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E-Banking & E-Commerce: Broadband is also useful for various utility services like online banking, bill payment, rail ticket booking, online application fi ling and trading. It allows job seekers to effectively search for employment opportunities. New content creation and distribution systems have enabled millions of people to distribute their contributions online with least expenditure. There are significant financial as well as social benefits of online shopping. It helps ensure the cheapest deal and also helps to save time when using price comparisons on the web. Broadband services in rural and remote areas can also be a very cheap and effective medium for providing banking services to the unbanked population of India and further the financial inclusion agenda of the Government
3G/BWA spectrum auction India is poised to see both 3G and BWA services before the close of 2010, BWA services like WiMax (or LTE) has an opportunity of reaching out to the rural masses in a cost-effective manner. WiMax and 3G will help in delivering the governments target of achieving 100 million broadband subscribers by 2014. Wireless Broadband technologies by leveraging (or sharing) the existing wire line infrastructure (available to the public and private operators) can immensely contribute to the broadband proliferation in the country.
Low cost tablet PC Indian government (Ministry of HRD) has unveiled a prototype tablet computer that would sell for an affordable INR 1,500 or USD 3510. This highly affordable touch-screen device would in times to come, play a critical role in providing high-quality consumer broadband experience across the country. The tablet also comes with a solar-power option that could make it more feasible for rural areas. The Linux- based Tablet PC features most of the basic functions one might expect in a Tablet: Web browser, multimedia player, PDF reader, Wi-Fi, and video conferencing ability.
The rural push To support the broadband infrastructure roll-out in the rural areas, the Department of Telecommunications (DoT) 11 has also proposed to offer a slew of freebies at the panchayat level. This includes giving three broadband connections to every gram panchayat free of charge for three years along with free installation of computer and printer; three telephone connections and one cable TV connection without any charge. The incentives will cost about INR 2,000 crore, which will be funded through the Universal Services Obligation Fund.
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VODAFONE: AIRCEL: T-MOBILE: AIRTEL: VIRGIN:
Conclusion Broadband is the much needed catalyst to bring about the socio-economic growth in the country. India, therefore, needs a National Broadband Plan encompassing initiatives across various ministries which would provide a platform for provision of quality broadband services across the country. It would take a holistic view covering various aspects like customer requirements (demand drivers), customer segment (urban as well as rural), technologies (wire line as well as wireless); nature and type of CPE; regulatory aspects. The regulators as well as the government and the industry players across the value chain need to join hands so as to provide the best possible support to this national vision of Broadband for All
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Financial Analysis
BHARTI AIRTEL LTD
Balance sheet Horizontal analysis Horizontal analysis vertical analysis vertical analysis Mar ' 11 Mar ' 10 inc/dec inc/dec(%) Mar'11 Mar'10 sources of funds Owner's fund
Ratios Mar ' 11 Mar ' 10 Per share ratios Adjusted EPS (Rs) 20.12 22.4 Adjusted cash EPS (Rs) 32.27 33.19 Reported EPS (Rs) 20.32 24.82 Reported cash EPS (Rs) 32.46 35.61 Dividend per share 1 1 Operating profit per share (Rs) 35.29 36.65 Book value (excl rev res) per share (Rs) 115.42 96.24 Book value (incl rev res) per share (Rs.) 115.43 96.25 Net operating income per share (Rs) 100.11 93.77 Free reserves per share (Rs) 103.84 84.64 Profitability ratios Operating margin (%) 35.25 39.08 Gross profit margin (%) 24.22 28.15 Net profit margin (%) 20.21 26.36 Adjusted cash margin (%) 32.1 35.25 Adjusted return on net worth (%) 17.43 23.27
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Reported return on net worth (%) 17.6 25.79 Return on long term funds (%) 16.89 24.36 Leverage ratios Long term debt / Equity 0.2 0.11 Total debt/equity 0.27 0.13 Owners fund as % of total source 78.65 87.88 Fixed assets turnover ratio 0.82 0.87 Liquidity ratios Current ratio 0.82 0.71 Current ratio (inc. st loans) 0.7 0.68 Quick ratio 0.77 0.71 Inventory turnover ratio 1,105.11 1,307.05 Payout ratios Dividend payout ratio (net profit) 5.7 4.71 Dividend payout ratio (cash profit) 3.56 3.28 Earning retention ratio 94.25 94.78 Cash earnings retention ratio 96.41 96.48 Coverage ratios
Adjusted cash flow time total debt 0.97 0.39 Financial charges coverage ratio 45.69 49.64 Fin. charges cov.ratio (post tax) 42.55 48.73 Component ratios Material cost component (% earnings) 0.66 0.78 Selling cost Component 8.36 6.75 Exports as percent of total sales 4.77 5.03 Import comp. in raw mat. consumed - - Long term assets / total Assets 0.76 0.81 Bonus component in equity capital (%) 82.49 82.49
Mar ' 11 Mar ' 10 Per share ratios Adjusted EPS (Rs) 1.95 2.14 Adjusted cash EPS (Rs) 1.98 2.16 Reported EPS (Rs) 1.95 2.23 Reported cash EPS (Rs) 1.98 2.26 Dividend per share 0.1 0.2 Operating profit per share (Rs) 2.68 2.86 Book value (excl rev res) per share (Rs) 35.48 32.41 Book value (incl rev res) per share (Rs.) 35.48 32.41 Net operating income per share (Rs) 6.9 7.58 Free reserves per share (Rs) - 27.08
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Profitability ratios Operating margin (%) 38.83 37.75 Gross profit margin (%) 38.46 37.43 Net profit margin (%) 23.52 24.77 Adjusted cash margin (%) 23.83 24.01 Adjusted return on net worth (%) 5.49 6.59 Reported return on net worth (%) 5.49 6.88 Return on long term funds (%) 7.11 8.26 Leverage ratios Long term debt / Equity 0.59 0.59 Total debt/equity 0.59 0.62 Owners fund as % of total source 62.5 61.61 Fixed assets turnover ratio 11.71 12.24 Liquidity ratios Current ratio 2.58 1.23 Current ratio (inc. st loans) 2.58 1.19 Quick ratio 1.23 1.23 Inventory turnover ratio 0.16 878.2
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Payout ratios Dividend payout ratio (net profit) 5.96 10.44 Dividend payout ratio (cash profit) 5.88 10.33 Earning retention ratio 94.04 89.1 Cash earnings retention ratio 94.12 89.22 Coverage ratios Adjusted cash flow time total debt 10.78 9.33 Financial charges coverage ratio 3.24 3.02 Fin. charges cov.ratio (post tax) 2.57 2.59 Component ratios Material cost component (% earnings) 0.44 2.9 Selling cost Component - 0.77 Exports as percent of total sales 0.28 1.37 Import comp. in raw mat. consumed - - Long term assets / total Assets 0.09 0.56
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Bonus component in equity capital (%) 60.45 64.85
VIRGIN MOBILE Balance sheet Horizontal Horizontal Vertical vertical Mar ' 11 Mar ' 10 INC/DEC INC/DEC(%) mar'11 mar'10 Sources of funds Owner's fund
Less : accumulated depreciation 9,807.13 7,907.34 1,899.79 19.37 42.85 43.96961 Net block 19,131.62 14,927.06 4,204.56 21.98 83.59 83.00351
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Capital work-in- progress 3,594.05 462.58 3,131.47 87.13 15.70 2.572225 Investments 2,572.81 2,755.13 -182.32 -7.09 11.24 15.32019 Net current assets Current assets, loans & advances 3,906.64 4,290.41 -383.77 -9.82 17.07 23.85728 Less : current liabilities & provisions 6,316.96 4,451.52 1,865.44 29.53 27.60 24.75315 Total net current assets -2,410.32 -161.12 -2,249.20 93.32 -10.53 -0.89592 Miscellaneous expenses not written - -
Total 22,888.16 17,983.65 4,904.51 21.43 100.00 100 Notes: Book value of unquoted investments 2,572.81 2,755.13 -182.32 -7.086415 11.24079 15.32019 Market value of quoted investments - -
Contingent liabilities 3,409.89 1,960.75 1,449.14 42.498145 14.89805 10.90296 Number of equity sharesoutstanding (Lacs) 33032.72 32998.38 34.34 0.1039575 144.3223 183.491
Profit loss account
Mar ' 11 Mar ' 10 Horizontal Horizontal Vertical Vertical Income
Mar ' 11 Mar ' 10 Per share ratios Adjusted EPS (Rs) 2.31 2.52 Adjusted cash EPS (Rs) 8.28 7.22 Reported EPS (Rs) 2.56 3.19 Reported cash EPS (Rs) 8.53 7.89 Dividend per share - - Operating profit per share (Rs) 10.95 9.83 Book value (excl rev res) per share (Rs) 37.18 34.59 Book value (incl rev res) per share (Rs.) 37.18 34.59 Net operating income per 46.42 35.91
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share (Rs) Free reserves per share (Rs) 27.13 24.53 Profitability ratios Operating margin (%) 23.59 27.37 Gross profit margin (%) 12.35 15.84 Net profit margin (%) 5.48 8.71 Adjusted cash margin (%) 17.75 19.72 Adjusted return on net worth (%) 6.2 7.29 Reported return on net worth (%) 6.87 9.23 Return on long term funds (%) 8.12 10.76 Leverage ratios Long term debt / Equity 0.72 0.57 Total debt/equity 0.85 0.57 Owners fund as % of total source 53.77 63.61 Fixed assets turnover ratio 0.7 0.61 Liquidity ratios Current ratio 0.61 0.96 Current ratio (inc. st loans) 0.48 0.96 Quick ratio 0.51 0.86 Inventory turnover ratio 293.64 253.76
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Payout ratios Dividend payout ratio (net profit) - - Dividend payout ratio (cash profit) - - Earning retention ratio 100 100 Cash earnings retention ratio 100 100 Coverage ratios Adjusted cash flow time total debt 3.86 2.74 Financial charges coverage ratio 4.13 3.54 Fin. charges cov.ratio (post tax) 4.15 3.65 Component ratios Material cost component (% earnings) - - Selling cost Component 2.5 3.43 Exports as percent of total sales 0.72 0.6 Import comp. in raw mat. consumed - - Long term assets / total Assets 0.82 0.77