Santosh Kumar

A THESIS ON A STUDY ON THE MARKET SHARE OF AIRTEL CELLULAR IN KANPUR . A report submitted in the partial fulfillment of The requirements of THE MBA PROGRAM (THE CLASS OF 2010)

Under the guidance of Mr. V.N. Chaudhary (Faculty guide) BY Santosh kumar maurya MBA (3rd sem) 8NBKR018 University id 0801216298

PREFACE

A project provides the most natural condition under which students can learn and get success in solving the problems of their day-to-day activities. It helps a student to learn, to improvise, to intent, to experiment, to find knowledge in all possible ways and to translate that knowledge into action. It is a scientific method of imparting knowledge based on principles of practical experiences and creative activities. With the growth of rapid industrialization, the need of management is felt everywhere. Management, in the modern times primarily means handling men, machine, money and material in the most optimum manner. To introduce this practical aspect of management education a Project Research Report is obligatory requirement for the partial fulfillment of M.B.A. degree at ICFAI National college Kanpur. Our project was “A study on the market share of Airtel market share in Kanpur”.

ACKNOWLEDGEMENT

At the very out set, I would like to express my deep sense of gratitude to Mr. V.N. Choudhary, was kind enough to help me and by his continuous guidance I could gather versatile information and knowledge about different aspects of the project. I am also grateful to him as he has always been a source of strength and motivation for all of us. I would like to express my deep gratitude to Mr. Choudhary who provided me with the opportunity to undergo the summer training in the organization of such high repute, and guided us at every step. I would also like to thank my faculty members, friends and family members for all their unconditional support.

(Prashant Srivastava) MBA III Semester University ID. 0801216298

TABLE OF CONTENT 1. PREFACE

2. ACKNOWLEDGEMENT 3. SOAP & DETERGENT INDUSTRY PROFILE 4. COMPANY PROFILE 5. PRODUCT PROFILE 6. INTRODUCTION TO TOPIC 7. RESEARCH – AN OVERVIEW 8. RESEARCH METHODOLOGY 9. ANALYSIS & INTERPRETATION OF DATA. 10.FINDINGS 11.SUGGESTIONS 12.LIMITATIONS OF STUDY 13.SWOT ANALYSIS 14.CONCLUSION 15.QUESTIONNAIRE

INDUSTRY OVERVIEW

Telecom infrastructure in India has brought Indian telecom industry in an enviable position, as it is second amongst the emerging nations of Asia. Indian telecom sector ranks as the fifth largest world over. Bharti Airtel is India's leading provider of GSM-based mobile services with 96.7mn subscribers at the end of April 30, 2009. In fact, in May, the company crossed 100mn subscribers totally, including fixed line subscribers. The company is an integrated telecom solutions provider, offering mobile, landline,broadband internet (telemedia), enterprise data, national and international long distance services. Bharti has also launched DTH and IPTV services and aims to become an integrated entertainment company with a presence across all three 'screens of contact' with the consumer, namely mobile, personal computer and television. Despite of stiff competition from players like Vodafone, Reliance Communication, BSNL and Idea among others, Bharti Airtel has a market share of almost 33% in mobile segment. At present, around 60% of Airtel's customer additions come from rural areas. It has already set up 14,000 Airtel Service Centres in rural areas and planning to have 1

lakh such centres across the country by March, 2010. "The Indian telecom sector, seen as providing the most affordable services in the world, has grown by leaps and bounds in the last decade. This remarkable journey to 100 million customers is a testament to the vision and commitment of a company that benchmarks itself with the best in the world. There are 9 major players in the market. The market is dominated by Airtel and Hutch (now Vodafone) and BSNL over the last 3 yrs, but even for players like BPL, MTNL and Spice the share is growing. There have been various promotional strategies implemented by the major cellular service Indian market given the current rapid pace of subscriber acquisition by operators remains the keydriver for Bharti Airtel and this deal, if it fructifies, will undoubtedly achieve the telco's global ambitionsto a large extent, given that it will give the company a presence in 21 more markets apart from India.

Competitive Landscap Population growth, particularly households with children, drives demand in the consumer sector, while economic growth drives demand in the commercial sector. The profitability of individual companies depends on

efficient operations and effective sales and marketing. Large companies have scale advantages in purchasing, manufacturing, distribution, and marketing. Small companies can compete effectively by offering specialized products, providing superior customer service, or serving a local market. The industry is capital-intensive: average annual revenue per worker is over $700,000. The industry is about evenly split between the consumer and commercial segments. Both segments are highly competitive, with large companies spending millions to maintain market share.

Cellular Service Providers (CSP's) : The leading GSM services providers in the Indian telecom industry 2007 are Hutchison or hutch Airtel, Idea Telecom, Tata, and Reliance. These include both pre-paid and post paid mobile phone cards and services providers. The leading CDMA providers are still Reliance communications and Tata Indicom with Airtel and Touchtel just entering the market. Bharti Airtel has expressed its intentions to expand globally, either organically (Sri Lanka) or through acquisitions. The telco has participated in auctions for bidding for telecom licenses in various

countries like Kenya, but eventually lost out to global competition. Thus, given this experience, attempting to grow its international business organically through bidding for licenses may be a time-consuming and difficult process. Consequently, acquisitive growth is the other option that Bharti has at its disposal. Indian market given the current rapid pace of subscriber acquisition by operators remains the key driver for Bharti Airtel and this deal, if it fructifies, will undoubtedly achieve the telco's global ambition. The impact of this race for consumer share has meant a near collapse in billing rates , making india one of the cheapest telecom market in the world.

INTRODUCTION The growth of the telecom sector in the country has been very impressive. While making recommendations on third generation (3G) mobile technology, the challenge before the Authority was to make the benefits of technology more widely available to people. Mobile

phones mainly addressing the voice-centric needs are spreading fast. This growth became possible in an environment where supply of telecom services was not constrained based on predetermined demand. The Authority’s policy to encourage competition, a levelplaying field, and to maintain a technologically neutral stance had a significant role in this growth. The unmet demand was huge and therefore there has not been a situation of glut in supplies in telecom sector. There is no sign of slowing down. The subscriber base is growing by approximately 5 million every month. By end-2007, India would have crossed 200 million phone subscribers. Future growth of wireless services is critically dependent upon the availability of adequate spectrum. 2. The Authority is committed to the view that the consumers must get the benefit of new technology and variety of services. It also believes that the telecom service providers should have the flexibility to choose from the range of technologies available and the regulatory policies must not restrict the choice of the operator. Therefore, the Authority considered it appropriate to offer its recommendations both on 3G technology and on broadband wireless access (BWA) systems at the same time. It would also ensure that the spectrum issues are considered in a holistic manner and piecemeal or ad-hoc solutions do not find place in future planning. The Authority has also made suggestions on the wider issue management of spectrum, which is now a scarce resource in the country. The future growth in telecom would

largely depend on the way we manage our spectrum. 3. Most respondents have been very generous with their time and participation during our consultation process. Each participant emphasized the need for a longer-term vision and planning. In making these recommendations, the Authority has given due importance to principle of transparency, efficiency, certainty in matter of allocation, pricing of spectrum and subscriber’s affordability. Our effort has been to remain as close as possible to the reality of the environment which alone can ensure time-bound implementation. The Hon’ble Authority would appreciate that the new consumers who are entering the category come from a diverse spectrum, ranging from a first time rural consumer, whose primary need is to stay connected at affordable costs, to the discerning urban metro youth who looks at a mobile phone as a powerful tool to connect to the world, to blog, to chat and so on. Today mobile phones are used by a cross section of the society due to the affordable tariffs – it is important that each and every kind of customer’s requirement is appropriately met. New segments in the retail market keep evolving be it a self-employed customer, trader, housewife, student or senior citizen. With this background, we are of the view that the existing cap of 25 is adequate and needs to be continued so that simple tariffs can be made available to the customer in a transparent fashion.

Presently, there are various service segments like wireline and wireless. In the wireless area itself, there are further divisions of prepaid, postpaid and fixed wireless. Each of these service segmenSts demands different customizations to meet varying needs of customers. Traditionally, when the cap was imposed each service was license specific but with the broadening of the license (UASL) all service segments are offered under Single licens As per our view, the existing cap of 25 tariff plan on the basis of a license would be incorrect since it will reduce the options available with multi-service operators who provide services in all segments. Thus, we are of the view that while, the present cap of 25 tariff plans should be retained so that operators have the flexibility to offer tariff options to meet the customer’s varying needs. However, keeping in view the different services being offered by an operator under the same licence, the cap of 25 should now be service specific i.e. wireline, wireless and Broadband rather than licence specific. The Hon’ble Authority would appreciate that any cap should not serve as a disadvantage to operators who are providing multi-service products in different service segments under the same licence.

Review of literature Those researches are basically describing the factors comparison between telecome companies in the share market. These researches that I have found gives the

idea about the

market share of

telecome companies ,but these are separate research. I will combine all these researches and will present a report that will contain all the relevant matter. I will make this research more specific by considering all the factors other than the factors that these researches are focusing on.

RESEARCH AND OVERVIEW

Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic research for pertinent information on a specific topic. In fact, Research is an art of scientific investigation. The Advanced Learner’s Dictionary Of Current English lays down the meaning of research as “ A careful investigation or inquiry especially through search for new facts in any branch of knowledge. ” Research can be defined as “ logical and systematized application of the fundamentals of science to the general and overall questions of a study, and scientific techniques which provide precise tools, and specific procedures and technical, rather than philosophical means for getting and ordering the data prior to their logical and manipulation.” Research represents “ a systematic method of exploring actual persons and groups, focused primarily on their experience within their social worlds, inclusive of social attitudes and values, the mode of analysis of these experiences which permit stating proposition in the form.” In short, search for knowledge through objective and systematic method of finding solution to a problem is research. OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Though each research study has its own specific purpose, we may think of research objectives as falling into a number of following broad groupings: 1. To gain familiarity with a phenomenon or to achieve new insights into it 2. (Studies with this object in view are termed as exploratory research studies). 3. To portray accurately the characteristics of a particular Individual, situation or a group (studies with this object in view are known as descriptive research Studies). 4. To determine the frequency with which something occurs or with which it is associated with something else (studies with this object in view are known as diagnostic research studies). 5. To test a hypothesis of a causal relationship between variables (such studies are known as Hypothesis-testing research studies). RESEARCH PROCESS

Research process consists of a number of closely related activities. Various steps involved in a research process are not mutually Excolusive nor they are separate and distinct. Researcher has to be constantly anticipating at each step in the research process the requirements of the subsequent steps. However, the following order concerning various steps provides a useful procedural guideline regarding the research process. 1. Formulate the research problem. 2. Determine the research design. 3. Determine the data collection methods and forms. 4. Design data collection forms. 5. Design sample and collect data. 6. Analyze and interpret the data. 7. Prepare the final research report.

SAMPLING DESIGN

Once the problem of research is decided, the next area of immediate concern is the adoption of research design. The researcher will decide how the information will be collected? There are two important sources of collection of information. 1. CENSUS 2. SAMPLE In case the data is to be collected from each member of the population of interest, it is known as the census survey. If, data are to be collected from each member of the population of interest, it is known as the Sample survey.

Advantages of Sampling

1. Sampling can save time and money. A sample study is usually less expensive than a census study and produces results at a relatively faster speed. 2. Sampling may enable more accurate measurement for a sample study, and is generally conducted by trained and experienced investigators. 3. Sampling remains the only way when the population contains infinitely many members. 4. Sampling remains the only choice when the test involves the destruction of the item under study. 5. Sampling study usually enables to estimate the sampling errors and thus

assists

in

obtaining

characteristics of the population.

STEPS IN SAMPLING DESIGN

information

concerning

some

While developing a sampling design, primary attention was paid to the following points 1. Type of Universe The first step in developing any sampling design is to clearly define the set of objects, called the universe, to be studied. The universe can be finite or infinite. In finite universe the number of items is certain, but in case of an infinite universe the number of items is infinite The population of a city, number of workers in a factory are the examples of a finite universe.

The number of stars in the sky, listeners of a specific radio programme etc are examples of infinite universe. • In this research work, while studying the consumer satisfaction, the entire Kanpur city, is taken as the Universe. The universe is finite in nature.

1. Sampling Unit: A decision has to be taken concerning a sampling unit before selecting a sample. Sampling unit may be geographical one such as state, district, village etc. or a construction unit such as house, flat,

etc. or it may be social unit such as a family, club, school, etc. or it may be an individual.

• Here in this research work since, main aim was to study the consumer satisfaction of AIRTEL CELLULAR as a result of which mostly CUSTOMER from various areas of the city were surveyed and data was collected from them, so we can say that sampling unit is individual . 1. Source list: It is also known as a sampling frame from which sample is to be drawn. It contains the names of all items of a universe (in case of finite universe only.) Such a list should be comprehensive, correct, reliable and appropriate. It is extremely important for the source list to be as representative of the population as possible. Here in this research work, individuals from various areas of the city were surveyed and the data was collected from them.

2. Size of Sample This refers to the number of items to be selected from the universe to constitute a sample. The size of sample should neither be excessively large, nor too small. It should be optimum an optimum sample is one,

which fulfills the requirements of efficiency, representative ness, reliability, and flexibility.

• Here in this research work, from the various areas of the city mentioned above, 100 customers were intrviewed which consisted of youth and other, and a survey was conducted on them . 1. Parameters of interest In determining the sample design, one must consider the question of the specific population parameters, which are of interest. For instance, we may be interested in estimating the proportion of persons with some characteristics in the population, or we may be interested in knowing some average or the other measure concerning the population. 2. Budgetary Constraints Cost considerations, from practical point of view, have a major impact upon decisions relating to not only the size of the sample but also to the type of sample. Since we were also, suffering from the budgetary constraints both in terms of money and time, as a result it was not possible to conduct the survey on the entire universe. As a result we selected those Areas which were within our reach. 3. Sampling Technique

Finally, decision is to be made about the technique to be used in selecting the items for the sample. Obviously, that technique must be chosen for which has a small sampling error, for a given sample size and for a given cost.

• Here, in this research work area wise sampling is done A non probability method of sampling is used. Since, Quota sampling is widely used for conducting consumer surveys as a result of which Quota sampling technique was adopted.

ANALYSIS AND INTERPRATION OF DATA

Exhibit 1: Bharti Airtel subscriber base break-up (April 2009) Circle category Subscriber base (Mn) % contribution

Metros

12.4

12.9

'A' circle

36.2

37.4

'B' circle

31.9

33.0

'C' circle

16.2

16.7

Total SubscriberBase 96.7

100.0

About MTN Group: MTN Group is a South Africa-based communication service provider offering cellular-based services and business solutions. MTN has operations in 21 countries across Africa and the Middle East and is one of the largest emerging market mobile operators globally. The company at the end of March 31, 2009 had a total of 98.2mn mobile subscribers (refer Exhibit 2 for details). MTN Group divides its operations into three major regions - South & East Africa (SEA), West and Central Africa (WECA) and Middle East and North Africa (MENA), with a majority of its subscribers, revenues and profits coming from the WECA region.

Exhibit 2: MTN subscriber base break-up (March 2009)

Country

Subscriber base (Mn)

% contribution to

total South Africa

17.4

17.7

Uganda

4.0

4.1

Mascom - Botswana

1.0

1.0

Rwanda

1.3

1.4

Swaziland

0.5

0.6

Zambia

0.8

0.8

Exhibit 4:Bharti Airtel - Cash Outflow Cash outflow for purchase of 36% stake in MTN

(US $mn) 6,807.6

Cash inflow on part payment of 36% post-transaction economic interest by MTN

2,900.0

Total Cash Outflow

3,907.6

Exhibit 5: Bharti Airtel - Equity dilution

(Shares, mn)

Current Equity Share Capital

1,898.2

Dilution to MTN Group on account of GDR issue

336.4

Additional shares to MTN Group for post-transaction 36% economic interest

731.3

Total shares post-deal

2,966.0

Dilution (%)

56.3

LIMITATIONS 1.

While conducting the survey the biggest problem faced was the

very wide and vast geographical area of the city and resources were limited. Hence the respondents of some localities could not be covered. 2.

Another problem was that some people were suspicious about the

survey and they refused to disclose their identity and answering the questions. 3.

The biasness and hesitation of the respondents in giving the

answers to

certain questions.

4.

Few respondents were not available at the time of taking the

feedback. 5.

Time and money constraint was the limiting factor for the research.

1. The sample was taken from only 50 respondents which may not be the true representative of whole Customers perception.

2. It may not be possible that all responses are correct.

FINDINGS From the above study it can be concluded that airtel being large giant global telecommunication company has continue to do its best in the field of telecom .Keeping its race on the same track,it is further moving ahead to takeover other company working in same field. Assuming that the deal does eventually go through and consolidation is effective from 2HFY2010 with a 49% stake, the revenues of the combined entity will cross US $13bn in FY2010 and US $19.4bn in

FY2011, while EBITDA will cross US $5bn in FY2010 and US $7.7bn in FY2011. Net Profit on the other hand is estimated to touch US $2.7bn in FY2010 and US $3.7bn in FY2011, with full consolidation expected in that year. As is the case with any large acquisition, in the event of Bharti being able to acquire MTN, it will have to undergo some amount of initial 'pain' in the form of significant debt being taken on and equity dilution before realising the potential 'gains' from such an acquisition. The integration of the acquisition is likely to be a key challenge for Bharti, given the significant size of MTN and its operations across diverse geographies, which could also lead to regulatory issues.

REFERENCES www.pdfcoke.com www.google.com www.wikipedia.com

QUESTIONNAIRE PERSONAL DETAILS NAME OF CUSTOMER: AGE: (1) Which of the following telecom company would you like to prefer to use. (a)Airtel (b)BSNL (c)Reliance (d)Vodafone (2) In comparison to other telecom company, the best Feature in Airtel cellular is its (a)

network coverage (b) cheap rate

(c) Poularity (d) nothing (e) all the above

(3)According to you which one of the following telecom company provides you the extensive customer care services . (a) Reliance (b) Vodafone (c) BSNL (d) Airtel (4)In which of the following telecom company would you like to invest in share of (a)BSNL (b) Airtel (c) Vodafone (d) None of them (5) While in opting for cellular company ,you always look on its (a) Popularity (b) brand ambassador (c) its services (d) none of them (6)In postpaid SIM , which one of the following are performing better according to you (a)BSNL (b) Airtel (c)Aircel (d)Vodafone (7) Should the telecom industry be (a) Totally privatized (b) Totally undertaken by the government (c) public and private both sector (8) Why do you use prefer prepaid SIM over postpaid SIM. (A) Because of its low cost (b) no billing (c) easy to use (d) all of them (9) One of the main drawback of post paid SIM card you think is

(a) Security deposit (b) long term contract (c) unexpected bill amount (d) One cannot change it frequently (e) all of them