02-06-2012, 11:40 AM
Competitive Advantages of Airtel
Strategic outsourcing:- Bharti Airtel was one of the earliest to enter India’s telecom market. One of the biggest challenges for the telecom players at that time was to build an optimum telecom network infrastructure to deliver reasonable quality of service at very low costs. To design such a network would require accurate forecasts of communication requirements. This in turn required extensive historical data which was not available. There was the risk of overspending on CapEx on the one hand and on the other hand, the risk of quality problems if the network was under-designed.
Sunil Mittal realized that forecasting and engineering expertise was not one of Airtel’s core competencies. So he decided to outsource it to equipment vendors. Airtel entered into service contracts with its network-equipment and IT network vendors, which involved payments for capacity utilization only, and no payment for the equipment. It was a bold and innovative decision, which changed the business model by converting capex to a variable cost.
This move had two benefits. First, it allowed airtel to focus on what it knew best: understanding customer needs and building a strong brand. Secondly, as the backbone of the entire worldwide telecom network moved from TDM to VoIP technology, Airtel could avoid writing off hundreds of millions of dollars of legacy equipment like its competitors. As a result, Airtel could achieve low-cost operations without sacrificing quality of service
Renting of Infrastructure:- Airtel developed a sustainable advantage through its excellent network of telecom towers. In many locations, newer entrants found it cheaper to rent Airtel’s existing infrastructure rather than setup new towers. This was usually because the limited market did not justify setting up additional towers. As a result, since newer entrants paid Airtel for using its infrastructure, Airtel could retain a cost advantage in those areas, by charging more from its competitors than its own costs.
Brand Value:-Airtel has created a competitive advantage for itself in form of Brand Name. It is 3rd most popular brand in India. This clearly gave Airtel a head start from competition and is not easy to copy.
Distribution Network:- Airtel has separate B2C and B2B distribution arms. Its B2C segment has vast coverage in India. It includes Airtel stores, Franchises, Online website, Telephone Customer center. It was among the first one to offer B2B CUG plans at discounted rate.
Industry Advantage:- Airtel was present in India when Indian telecom market was booming and other current players came later. So it effectively leveraged this factor to create an advantage for itself.
Value Added and Data Services:- Airtel has VAS deployed from the time when GSM/GPRS was technology which was used. It has evolved its VAS network to move to 3G. It also signed deals with leading VAS content providers like OnMobile, Comviva as service partner. Wide range of VAS services along with excellent infrastructure provides winning mix to provide VAS content to end customers with high QOS.
Network Effect:- Number of interactions between subscribers is NC2 where N is installed subscriber base. Now adding one more subscriber will have more impact on network with more subscribers. This factor thus helps large operator like Airtel.