Paper type: Essay Pages: 10 (2323 words)
AirtelIntroductionAirtel Plc is a leading mobile telecommunications service company with a presence in many countries across the globe. Thus, this report evaluates the business focus of Airtel Plc, assessing the geopolitical, economic and legal challenges viz-a-vis the company’s internationalization strategy, with special focus on entry into new markets.History and DevelopmentAirtel Plc has its roots in Bharti Telecom Limited founded in 1986 by Sunil Bharti Mittal, the company was the first in India to offer push button telephones, when the rest of the country was still using rotary phones.
The first partnership they had was with Siemens AG of Germany, and they started making push-button landlines in India It began operations in Delhi in the year 1995 as Bharti Tele-Ventures. The service was extended to various other states by various acquisitions and partnerships. Being 4th largest mobile operator in the world with a subscriber base of over 250 million, Airtel launched “Hello Tunes”, a caller ring back tone service (CRBT), in July 2004 becoming the first operator in India to do so.
In 2009, Airtel launched its first international mobile network in Sri Lanka. In June 2010, Bharti Airtel acquired the African business of Zain Telecom for $10.7 billion making it the largest ever acquisition by an Indian telecom firm. In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Sky cell Communications, in Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises went public in 2002. In 2003, the cellular phone operations were re-branded under the single Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005, Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice services all across India.Business Focus and MarketToday, Airtel Plc is one of the largest telecommunications companies providing a wide range of services to both consumer and enterprise customers. The telecommunication services provider offers Mobile, to customers and is an industry leader in IOT delivering cloud, security and carrier services to enterprise customers. Airtel operates in 100 countries including popular destinations like the U.S., UK, Canada, Australia, Switzerland, Thailand, It has a commercial presence in over 20 countries and is in partnership with networks in over 15 more. Across the world, the company has almost 356.7 million customers. Airtel now employ over 25,000 people across India (Airtel Annual Report, 2018). Based on its annual reports, the firm is aware that the world is undergoing a rapid digital transformation. It acknowledges that new technologies including smartphones, cloud computing, artificial intelligence and robotic process automation are enabling companies to connect with customers directly, proactively offering personalized solutions, while simplifying and automating operational processes and improving the efficiency of all commercial and technological decisions. It adds that digitalization is a key operational theme for the telecoms industry, which has a significant proportion of costs that can be automated, while also having unrivalled insight into customer usage trends (Airtel Annual Report, 2018).In view of these, the company claims to have made further progress this year on our ambition to be a converged communications leader in all of our European markets, a mobile data leader in Africa and India, and an Enterprise leader internationally. Adding that, These strategically strong positions will enhance our ability to achieve our purpose as a Group ” which is to connect everybody to live a better today and build a better tomorrow (Airtel Annual Report, 2018). The firm is adamant that it aims to differentiate itself from competitors through continued investments in superior network infrastructure, leveraging the benefits of our global scale, international brand and delivering an excellent customer experience.Geopolitical, Economic and Legal ChallengesThe global economy has undergone a significant shift since the financial crisis in 2008, with a seeming rise in protectionism across many countries. However, recovery observable in a number of advanced economies and global output has been increasing at a faster rate from 2014 (EY, 2014). Moreover, operating environments vary significantly between regions, driving divergent industry performance. In Europe, for example, operators are facing a mix of intensifying competition and difficulty in replicating services across borders, reducing companies’ ability to capture economies of scale. One of the clearest impacts of these constraints is that Europe ” having led the world in the adoption of 2G mobile ” has now slipped behind other developed regions in the migration to 4G networks (EY, 2014).In Africa and other parts of the developing world, intense competition, diseases such as Ebola, political instability (example Cameroon, Central African Republic, some parts of Nigeria) and a host of other political challenges is also affecting the growth and penetration of telecommunication services.Despite this somber background, Airtel Plc and other European telco stocks have still outperformed those of other regions since mid-2013, mainly due to investors’ anticipation of large-scale M&A within the region. However, over a longer timeframe European operators’ shares have significantly underperformed their counterparts in other developed regions, largely as a result of macroeconomic headwinds and an uncertain regulatory landscape, coupled with the perceived risks of low profitability on wireless and enterprise services (EY, 2014).There are of course worries for the business on the whole. As a multi-national corporation, Airtel moves a lot of people, data and currency between the various different operating groups, a proposition Jeffrey would like to see continue, though as a national business, in or out of the Union is irrelevant (Davies, 2018). Another legal issues that Airtel must adjust to is data protection. As was much anticipated, on 25th May 2018 the GDPR, the new European regulation for the protection of personal data of European citizens, effectively came into effect. Many companies and professionals started to feel the pressure as the date drew close but implementation came off without any major incident. Somehow yes, firstly from a conceptual and cultural point of view. Internationalization StrategyFrom its early days, Airtel has never shied away from its aggressive pursuit of expansion across international borders. The company’s growth and expansion into a global superpower in the telecommunication landscape has been underscored by shrew acquisition business in different markets. This trend is set to continue in the present times as the firm sees this strategy as key to its ambitions. In line with this Airtel has revealed that, a key development in its growth is the announcement Airtel’s global network portfolio includes ownership of SMW4 submarine cable system connecting Chennai and Mumbai to Singapore and Europe, India Middle East & Western Europe (IMEWE), Unity, EIG (Europe India Gateway) which will transform Airtel into Europe’s leading next generation infrastructure owner and a truly converged challenger to dominant incumbents (Airtel Annual Report, 2018).A careful examination of the company’s expansion strategy reveals that all of its major footprints in the world were made through acquisitions and mergers. And where it fails to find a suitable company to acquire or merge with, Airtel strikes a partnership deal. Acquisitions and mergers enable businesses to gain market share (growth) over their competitors, in addition to local content, knowledge and cultural identity. Mergers and acquisitions (M&A) provide a business with a potentially bigger market share and it opens the business up to a more diversified market. In these days it is the most commonly use methods for the growth of companies. Merger and Acquisition (M&A) basically makes a business bigger, increase its production and gives it more financial stength to become stronger against their competitor on the same market.The benefits of mergers and acquisitions notwithstanding, it has not been smooth sailing for Airtel Plc. This is exemplified by its offloading Japanese operation – this is the second time in just six months that Airtel have given up and chosen to sell one of their operations having spent a great deal of time and effort trying to make that operation a success. There are many reasons why Airtel have chosen to sell off Airtel in Japan, including technological reasons, marketing reasons, cultural issues, among others. But the most important issue appears to be the fact that Airtel in Japan was not able to ensure that a large mobile business – in one of the world’s largest mobile markets – was the success that Airtel’s management and shareholders had dreamed of (Strand Consult, n.d.).In the same vein, Nigeria is another market where Airtel gave up and sold their business after having to write off millions of Euro in investments. The cause in Sweden was very simple. Tele2 chose to switch to a discount concept, reduced their subsidizing handsets and instead focused on selling cheap voice minutes and SMS. The results were nothing short of remarkable. In the period Q4 2002 to Q2 2005 Tele2’s margin went from 53% to 44% – despite a price drop of over 60% and their MOU increased by 25% in 2005. Airtel Nigeria stuck to and remained focused on their classic Airtel concept and their margin fell over the same period of time from 39% to 14% and their MOU only increased by 7% in 2005. The result – just like in Japan – Airtel chose to sell off their business and leave Nigeria (Strand Consult, n.d.).RecommendationsIn view of the above issues and many others, the following recommendations are put forward. Airtel must focus on pursuing the fresh avenues of growth opportunity now opening up, not only must they change their business models ” a process that many have started ” but they must also adapt to new roles across a growing number of industry value chains. For example, as Telco’s have moved into cloud service delivery stretching across enterprise ICT services, many have seized the opportunity to play a key role in providing infrastructure-as-a-service (IaaS) solutions. But from there they can also go on to realize higher value by doing more, such as aggregating services from IT specialists as a cloud broker or acting as a channel partner for software-as-a-service (SaaS) vendors. In such scenarios, existing partnering arrangements will need to be revisited as new forms of cooperation emerge. Also, the company needs to seize innovation opportunities and defend their legacy market positions which will require them to overhaul their siloed organizational structures for more flexibility and agility. While Airtel has moved in recent years from network-centric to customer-facing structures in Europe, with some huge and new digital and app-focused business units, they essentially remain highly complex, multi-local organizations with a mixture of product- and geography-oriented business units. Simplifying and streamlining these structures while driving new forms of interaction within organizations will be vital if Airtel is to cope with a range of escalating trends. These include the need to develop and launch new service propositions more quickly as technology cycles shorten, proving more responsive in the face of disruptive competition from smaller, more agile innovators, and creating the flexibility to interact with customers, partners and suppliers in new ways. Effective and committed leadership will be vital in overcoming entrenched and siloed attitudes that is prevalent in global businesses. As such, matrix structures can be adapted to enable collaboration at various levels, whether in terms of customer segments, business functions, geography or products. For example, greater collaboration between enterprise and wholesale sales teams can help operators become more nimble as delineations between different customer types start to blur. At the same time, a launch and learn mindset may help operators expand their product mixes at a time when the pace of service innovation across ICT is quickening.Telecommunication companies like Airtel have a clear competitive advantage in the sphere big-data management compared to other players due to their established roles in the industry along with their customer base, wide network and assets. Ironically, their front seat advantage is also a challenge as the volume and diversity makes it difficult to make any meaningful use of such vast data such as creating value within or outside the confines of the business.The challenges with big-data notwithstanding, Airtel, as well as many other industry players are exploring ways of putting it to good use. But early attempts at making use of the vast data has already revealed many high-end challenges, including poor staff orientation to the usefulness of the data, nonexistent support from top management resulting from apparent lack of understanding of big-data usability and the historically fragmented sources of data during collection.Another significant challenge facing Airtel is their apparent inability to proactively anticipate and deal with evolving customer needs and expectations. It is only natural that as a service provider, steps will be taken to grow portfolio with additional services and capturing new markets. However, such actions should not alienate existing customers. Every effort must be made to ensure that the needs of customers are being met. The pursuit of profitable growth must be aligned with the satisfaction of customer needs so that users can be guaranteed of an appropriate and delightful experience. If Airtel fails to do this, it is not only the immediate adoption rate for new services that is at stake. The company’s long-term brand affinity with customers is also under threat, with large technology companies now consistently outscoring telecoms in global brand surveys while fleet-footed OTT players continue to redefine customer expectations in new ways.To close the gaps between what customers, want and what telecoms provide, operators need to focus their attention on those elements of the offering that are pivotal to successful customer engagement ” including the regular bill. While consumers want more choice, they also want to understand what they are buying ” and with today’s telecoms services these two objectives are often at odds.To bring them back into alignment and drive service take-up, operators need to balance simplicity and flexibility of tariff options as a gateway to new user experiences and assess customers’ propensity to aggregate different services from a single provider to maximize up-sell. Sensitivity to local market factors remains vital due to differences in data consumption and pricing models and exposure to competing brand affinities from market to market.
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AirtelIntroductionAirtel Plc is a leading mobile telecommunications service company with a presence. (2019, Aug 20). Retrieved from https://studymoose.com/airtelintroductionairtel-plc-is-a-leading-mobile-telecommunications-service-company-with-a-presence-essay