Bharti Airtel Rural Strategy

Topics: Bharti Airtel, Bharti Enterprises, BSE Sensex Pages: 6 (1161 words) Published: January 10, 2011
CLUE Case Study

Bharti Airtel Rural Strategy
Connected Life Experiences on the Move

COMPANY PROFILE Bharti Airtel Limited is one of Asia’s leading integrated telecom services providers with operations in 19 countries across Asia and Africa. The company is structured into four strategic business units: mobile, telemedia, enterprise, and digital TV. The mobile business offers services in India, Sri Lanka, and Bangladesh. COMPANY HISTORY Bharti Airtel was established as Bharti TeleVentures Limited in 1985. This telecommunication company is a joint stock holding enterprise headquartered in New Delhi. Bharti Airtel, commonly called “Airtel,” is among largest mobile service operators with a subscriber base of nearly 75 million.

Bharti Airtel was faced with the challenge of profitably serving the rural areas of India. It is an extremely daunting task due to a variety of factors: rural users’ low incomes, a widely dispersed population, and a less than ideal public infrastructure (i.e., roads, electricity, etc.). Specifically, Bharti Airtel had to address the following conditions: ●

The incomes of Indian rural residents are significantly lower than urban residents. The average revenue per user (ARPU) for rural residents was typically less than US$2 per month.

Besides deploying a scalable network, Bharti Airtel also needed to establish a cost-effective marketing, sales, and distribution channel to provide service promotion and customer support.

Counter to these challenges were the significant opportunity that the Indian rural market represented and Bharti Airtel’s unique ability to address it. ●

The future growth of the Indian mobile market is expected to be driven by rural customers, which account for about 70 percent of the country’s total population (1.1 billion people) with a teledensity of only 18.5 percent as of September 2009. Indian urban mobile penetration is already over 100 percent.

Rural dwellers place a high value on communications. Contacting urban/overseas relatives and friends often requires a long and sometimes treacherous trip to the nearest town to reach a payphone.

Various studies (e.g., fishermen in the Indian state of Kerala and grain producers in Niger) have shown that increased mobile service penetration in rural areas could have tremendous socio-economic benefits for the rural population.

With its strong presence in the relatively untapped rural market (over 27 percent market share as of September 2009), Bharti Airtel is well-placed to continue growth with its focus on under-penetrated Indian regions with new revenue streams such 3G-enabled data services and pay-TV.

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To extend its reach in India’s rural markets, Bharti Airtel is focusing on innovative initiatives, including efficient infrastructure deployments, expanding its distribution network via partnerships, and customized content and tariffs. ●

Bharti Airtel has launched microfinancing agreements in collaboration with Nokia and SKS Micro-finance. Under these partnerships, Bharti provides subsidized tariffs and subscriber identity module (SIM) cards to rural users, Nokia provides subsidized handsets, and SKS offers microfinancing.

To expand coverage into rural regions, Bharti Airtel is sharing passive infrastructure services with Vodafone (42 percent ownership) and Idea (16 percent ownership) through its joint venture, Indus Towers. Sharing the infrastructure cost and usage between multiple operators has helped Bharti Airtel to reduce its operating and capital expenses.

Bharti Airtel also formed a joint venture with the Indian Farmers Fertilizer Cooperative Limited (IFFCO). Its joint venture, IFFCO Kisan Sanchar, uses IFFCO’s wide rural presence (present in 80 percent of Indian...
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