International Expansion of Bharti Airtel Limited

International Expansion of Bharti Airtel Limited

Group 9

Vishesh Agarwal A006

Harpreet Bedi A008

Parth Bhimani A012

Sumit Jha A029

Kunwar Kaushik A036

Sindhura Remella A051

Introduction

In the years 2009-10, Bharti Airtel embarked on an ambitious journey into the global telecom space. Their strategy was to focus on the emerging markets of Asia and Africa as part of the long term vision of becoming one of the top 3 telecom operators in the world by 2015. Africa, with a population of a billion plus and a tele-density of less than 30% was expected to be the future growth engine.

Bharti Airtel acquired Zain Africa BV’s operations in 15 countries having 42 million customers for an enterprise value of USD 10.7 bn. Along with expansion in Africa, they also wanted to strengthen their presence in the south-Asian region, as a result of which they entered the Bangladesh market by acquiring a majority stake in Warid Telecom.

Strategy for Internationalization

Objective: To replicate Bharti's low-cost operational model so successful in India across 16 diverse African countries (including Nigeria, Kenya, Ghana and Congo), Bangladesh and Sri Lanka.

The strategy adopted: Drop tariffs, expand the market and make money through economies of scale one that has worked well in India.

Kohli, CEO of Bharti Airtel's international business, outsourced key operations the telecom network, IT and call centres to leading vendors like IBM, Ericsson and Nokia Siemens, among others, just as Bharti had done in India.

Organization Structure

According to Mr. Sunil Bharti Mittal, Bharti Airtel has always adopted transformational business models that have set the industry benchmark. As they moved into the next phase of their growth journey, the new organization structure marked a major step towards building an organization of the future. Customers are at the core of their business and with the new structure they were proactively creating an integrated customer centric organization.

Some structural changes as part of Internationalization strategy were:

1. The Group Chairman and Managing Director became responsible for providing strategic direction, leadership and governance, leading transformational initiatives, international strategic alliances besides effective management of the Company with a focus on enhancing Bharti’s global image.
2.  The CEO (International) & Joint Managing Director based in Nairobi, Kenya became responsible for overall business performance, management and expansion of the international operations. He was also responsible for driving people agenda, customer satisfaction, outsourcing initiatives and the internal control metrics for the international operations
3.  The CEO (India & South Asia) headed the India and South Asia operations and was responsible for overall business performance in this region. He was also responsible for driving people agenda, customer satisfaction, ensuring success of outsourcing initiatives and improvements in the internal control metrics for India and South Asia operations.
4. The transformed organization structure had two distinct Customer Business Units (CBU) with clear focus on B2C (Business to Customer) and B2B (Business to Business) segments.
5. Bharti Airtel’s B2C business unit comprehensively serviced the retail consumers, homes and small offices, by combining the erstwhile business units - Mobile, Telemedia, Digital TV, and other emerging businesses (like M-commerce, M-health, M-advertising etc.). The B2C organization consisted of Consumer Business and Market Operations.
6. The Consumer Business group lead the overall B2C strategy and focused on customer experience, product and service innovation (including data, VAS, new products/services), and build an ecosystem around the B2C services. K Srinivasan led this vertical as the President, Consumer Business.
7. Market Operations group lead the ‘go-to-market’ strategy. This vertical took products and services to customers in South Asia with speed and efficiency. Market Operations complemented the Consumer Business by building a robust ‘go-to-market’ ecosystem and leveraging Bharti Airtel’s vast distribution reach. Market Operations in India & South Asia were divided in three regions, each headed by an Operations Director: the North, East & Bangladesh operations headed by Ajai Puri; South & Sri Lanka operations headed by Vineet Taneja; and operations in West were headed by Raghunath Mandava (along with National Distribution portfolio).

The OLD and NEW Organization Structure can be summarized in the following figures.

1. Fig 1: OLD Org Structure
2. Fig 2: NEW Org Structure

(In reference to the changes in June’2011)

(Fig 1)

[pic 1]

(Fig 2)[pic 2]

Organization Culture

The company was presented with cultural challenges during mergers and acquisitions.

Africa represented diverse cultures with many of the countries having minimal infrastructural resources. Further, Airtel had to function in fifteen different countries, each of which came with its own different regulatory requirements and geopolitical risks. Similar was the case with Sri Lanka and Bangladesh.

Airtel did not bring about significant changes to its core culture, but took some steps to smooth the cultural differences, which can be summarized as:

1. Shifting nearly a third of the 6,500 African employees of Zain whose African assets Bharti bought for $9 billion to these new partners.
2. Employees feared they would lose their jobs. So, Bharti offered them a package they could not refuse: Everyone would be transferred on existing terms and conditions; and they had the option to come back into the Bharti fold within two years.
3. Most ex-Zain employees have been put through a rigorous retraining programme, imbibing the Bharti way.
4. Unveiled a new identity – a shared worldwide vision across its operations in 19 countries in Asia and Africa.
5. It was decided that the Airtel logo and colors would be there in all countries, and there was a great degree of synchronization of the retail, corporate and brand identity. The brand architecture was to remain the same across all circles.

Management Composition

Key to our success there will lie in our ability to drive seamless knowledge and best practice sharing between Africa and South Asia. I am confident the Airtel Africa Leadership Team will be able to transport the successful business model to the new environment. We are also keen on replicating our phenomenally successful relationships with our partners in the new markets. . Said Sunil Bharti Mittal in his statement in the annual report of 2009-10.