A TERM PROJECT

ON

SUPPLY CHAIN PRACTICES IN BHARTI AIRTEL: GENERIC AND VIZAG LEVEL

Under the guidance of

Prof. Ravi Shankar

Submitted by

Indrajit Banerjee

Regd No. 1226109116

MBA (IB) - 2009-11

1 | P a g e

BACKGROUND

The very mention of the words- “telecom”, “telephones” etc instantly evokes the images (in the

psyche of the bygone generation of India) of “big machines (land-line telephones) where one

would take few minutes to dial a phone number, symbols of prestige (land-line telephones)

normally kept in drawing rooms of the elite and the nouveau riche of the society, the problematic

yet nostalgic trunk calls, non-existence of mobile phones…”

Indian telecom sector got an impetus when in 1984, Mr. Satyanarayan Gangaram Pitroda,

(better known as Mr. Sam Pitroda) was invited to India by the then Prime Minister Indira

Gandhi. He started the Center for Development of Telematics (C-DOT), an autonomous telecom

R&D organization. In 1987, as the advisor to Mrs. Gandhi's successor, Rajiv Gandhi, he was

responsible for shaping India's foreign and domestic telecommunications policies.

Later he became the founder and first chairman of India’s Telecom Commission.

He is largely considered to be responsible for the telecommunication revolution in India and

specifically, the ubiquitous, yellow-signed Public Call Offices (PCO) that quickly brought cheap

and easy domestic and international public telephones all over the country.

In the late 1980s, under the leadership of Rajiv Gandhi, many public sector organizations were

set up like the Department of Telecommunications (DoT) , VSNL and MTNL.

The demand for telephones was incessantly increasing. It was during this period that the Dr. P.V.

Narasimha Rao led government introduced the national telecommunications policy [NTP] in

1994 which brought changes in the following areas: ownership, service and regulation of

telecommunications infrastructure. Successful joint ventures were forged between state owned

telecom companies and international players. But still complete ownership of facilities was

restricted only to the government owned organizations. Foreign firms were eligible to 49% of the

total stake. The multi-nationals were just involved in technology transfer, and not policy making

Soon, the World Bank and ITU had advised the Indian Government to liberalize long distance

services in order to release the monopoly of the state owned DoT and VSNL; and to enable

competition in the long distance carrier business which would help reduce tariff's and better the

economy of the country. The Rao run government instead liberalized the local services, taking

2 | P a g e

the opposite political parties into confidence and assuring foreign involvement in the long

distance business after 5 years. The country was divided into 20 telecommunication circles for

basic telephony and 18 circles for mobile services. These circles were divided into category A, B

and C depending on the value of the revenue in each circle. The government threw open the bids

to one private company per circle along with government owned DoT per circle. For cellular

service two service providers were allowed per circle and a 15 years license was given to each

provider. During all these improvements, the government did face oppositions from ITI, DoT,

MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. The

government threw open the bids to one private company per circle along with government owned

DoT per circle. For cellular service two service providers were allowed per circle and a 15 years

license was given to each provider. During all these improvements, the government did face

oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep

away from all the hurdles.

In this tumultuous regime of policy measures, Bharti Tele-Ventures was incorporated on July 7,

1995 as a company with limited liability under the Companies Act, for promoting

telecommunications services. It launched mobile services in New Delhi with the name of

‘Airtel’.

Bharti Tele-Ventures received certificate for commencement of business on January 18, 1996.

The Company was initially formed as a wholly-owned subsidiary of Bharti Telecom Limited.

In 1997, Telecom Regulatory Authority of India (TRAI) was established to ensure that in the fast

emerging ‘global information society’, proper ground work and supervision is done to maintain

affordability and ease among the consumers in availing the telecommunication tools (land-line,

mobile, broadband etc). This ensured non-interference of the Union Government in decisions

pertaining to the telecom sector.

Seizing this opportunity, Airtel quickly expanded itself to cover more regions like Himachal

Pradesh, Madhya Pradesh, Karnataka, Andhra Pradesh and Chennai within just 4 years.

The Airtel vision statement aims to be globally admired for telecom services by incessantly

focusing on providing customer delight. Airtel carefully analysed the mind set of Indians (then

the ambitious middle class, and the richer business class) and focused on its core strength of

providing quality connectivity and plethora of value-added services by outsourcing customer

3 | P a g e

care services to IBM Daksh, technological solutions to Infosys, network equipment to Ericsson,

Siemens, Alcatel etc.

BHARTI AIRTEL : THE PRESENT

Supply chain management in telecom sector is involves evolving a set of policies and practices

some of which are similar to and some are different from the normal supply chain practices in an

FMCG sector.

SIMILAR- Both involve choosing partners who can be mutually beneficial in the long term. The

activities like outsourcing, enhancing system wide operational efficiency by adopting IT tools,

latest techniques of inventory management etc

DIFFERENT- Normal supply chain practices in FMCG sectors, retailing etc focuses on

decreasing the system wide inventory costs. But in the supply chain this is almost irrelevant

because inventory is non-existent here (no physical inventory, data banks etc are there, which are

inventory generated in the process of providing services)

Here, let us analyse the supply chain philosophy and practices of Airtel at two levels- generic i.e.

concerning the company as a whole and specific, concerning the distribution system practiced in

Visakhapatnam.

Before delving deep into the supply chain practices at the generic level, let us understand the

philosophy of Airtel towards supply chain management.

As per Airtel- “Bharti Airtel understands the importance of partners to remain competitive in a

dynamic business environment. As a step in that direction, the Supply Chain (SCM) function has

been created with a mandate to develop partner relationships to maximize mutual opportunities

for growth and profitability. The SCM organization has a central core team of supply chain

subject matter experts and execution teams operating under different business divisions across

the country. “

4 | P a g e

“At the center of Bharti Airtel's Supply Chain Philosophy is partnership and collaboration. The Supply

Chain characteristics have therefore been defined using the same approach, shown in the table below.”

Supply Chain Characteristics Bharti Airtel approach

Number & Structure Fewer; Clustered  

Procurement personnel Limited  

Outsourcing Strategic  

Nature of Interactions Cooperative, positive-sum  

Relationship focus Mutually-beneficial  

Relationship focus Performance  

Contract length Long-term  

Pricing practices Target costing  

Price Changes Downward  

Quality Designed-in  

Delivery Smaller Quantities (JIT)  

Inventory buffers Minimized, eliminated  

Communication Extensive; multi-level  

Communication Collaborative; two-way  

Role in development Substantial  

Production flexibility High  

5 | P a g e

Technology sharing Extensive  

Dedicated investments Substantial  

Mutual commitment High  

Governance Self-governing  

Future Expectations Considerable  

Thus this policy statement clearly suggests that Airtel emphasizes a lot on selecting and

developing supply chain partners so that the objectives of providing efficient services at

competitive prices to the customers. This approach of careful selection of the supply chain

members and integrating their activities assumes greater importance in the highly-competitive

cellular services market in India, where focus is both on expanding the customer base as well as

retaining the customers.

There are numerous product groups which are derived from various suppliers from around the

world.

Product Group Definition

ElectronicsItems related to Electronics technology and used for Network

e.g. Decoder, DSLAM etc. 

Site Infrastructure EquipmentItem related to setting up the Site Infrastructure e.g. Canopy,

Shelter, Tower, Batteries, Power supply etc. 

6 | P a g e

IT EquipmentItems related to Information Technology e.g. Desktops, Servers

etc 

Site Expenses Items/ consumables required to run the site  

Services Type of services. e.g. IT services, surveying, etc  

AMC Types of annual maintenance contracts  

Trenching Works Types of Services required for trenching  

Out Door EquipmentItems required for the operations connectivity between sites or

locations. e.g. OFC, Copper cables, Duct category, etc. 

Admin ItemsItems related for office operations. e.g. Fax, Photocopier,

consumer durable, Papers, Envelops etc 

Customer Premise

Equipments (CPE)

Items bought for specifically CPE usage e.g. Blackberry, DXC,

Telephone Instruments, etc 

Leased Line Lease line related  

Marketing ItemsItems related to Sales Promotion Activity e.g. Apparels, caps,

gifts, etc 

Office InfrastructureItems related to Furniture and Storage. e.g. Modular cabins,

chairs, racks, etc. 

Printing Items related to Printing e.g. Digital Printing, Manuals etc.  

S&D ItemsItem related to S&D domain e.g. Recharge Coupons, SIM Cards

etc. are in this category 

Tools & Hardware Items related to Tools & Hardware, as used for operations. e.g.  

7 | P a g e

cutters, fasteners, etc.

VAS Items related to Value Added Services  

Satellite Link Items related to VSAT

Partners

Network

Equipment

Mobile Services Nokia Siemens, Ericsson, Huawei

Telemedia & Long Distance

Services

Nokia Siemens, Juniper, Cisco, Alcatel Lucent,

ECI, Tellabs

Information Technology IBM

Call Centre OperationsIBM Daksh, Hinduja TMT, Teleperformance,

Mphasis, Firstsource & Aegis

Equity Partner {Strategic} Singtel

Some of the detailed supply chain outsourcing decisions, partners of Airtel and the reasons are-

1) India - Ericsson said inked a contract worth US$1.3 billion with Bharti Airtel in March

2010.

The Swedish company will provide second-generation (2G) radio base stations to boost

the quality of phone calls and speed of data access, allowing the network to switch to

third-generation (3G) services later.

8 | P a g e

The telecommunications giant plans to expand and upgrade Airtel's network in 15 of

India's 22 licensed jurisdictions, allowing its users to enjoy enhanced voice quality and

faster data access.

2) Bharti Tele-Ventures Limited (BTVL) and IBM India today launched (in 2005)

‘Managed Services’ under their ‘Joint Go-To-Market’ program that both the companies

signed a year ago. The initial offering portfolio will include Managed Hosting Services &

Business Resiliency and Continuity Services to enterprise customers in India. The

agreement between Bharti and IBM is a first-of-its-kind, where a telecommunications

leader and a leading Information Technology company have come together to address the

Information & Communications Technology (ICT) market in India. They will jointly

deliver end-to-end managed services, including connectivity, at client locations around

the country.

The Joint-Go-To-Market initiative would enable clients to achieve continuous access to

their enterprise information and critical business processes without having to increase/add

infrastructure requirements. While Bharti will provide the telecommunications

infrastructure and lead the sales engagements, IBM Global Services will provide the IT

infrastructure and technology management services to clients. 

Managed hosting and business resiliency & continuity services are targeted primarily at

the Banking, Financial Services & Insurance (BFSI), Manufacturing and the government

segments, which constitute a significant part of the Indian ICT services market. Under

managed hosting services, the alliance will not only host and manage the data &

application for enterprises but also provide them with end-to-end connectivity for the

same. Companies will also be able to safeguard themselves against any unforeseen

disasters by getting back up of critical business data and applications through the

business resiliency and continuity services. Both the offerings would enable companies to

conduct what is termed business@ease by not only entrusting their entire ICT

9 | P a g e

requirements to Bharti and IBM and focus on areas of their core competence but also

benefit from the convenience of working with a single point of contact for managed

services and connectivity.

3) There was an agreement signed between IBM Daksh and Bharti Airtel in 2008 where in,

IBM’s managed business services unit IBM Daksh would provide voice and back- office

services including customer service, collections, and customer retention from its centers

to Airtel.

4) In 2008 there was a joint venture between Airtel and Alcatel. Under the Joint Venture,

Alcatel-Lucent will design, plan, deploy, optimize and manage Bharti Airtel’s broadband

and telephone network across India. A new legal entity is being formed which will be

managed and controlled by Alcatel-Lucent. This is the first Managed Services partnership

for broadband and telephone services in India

5) In 2008, there was another agreement between Infosys and Airtel where by Infosys

Technologies Limited (Infosys) would deliver superior customer experience to the

customers of Airtel digital TV, it’s Direct-To-Home (DTH) TV service. As part of its

Digital Convergence Platform, Infosys will provide a suite of products including devices,

application servers and interactive applications that will focus on providing an enhanced

digital lifestyle to Airtel digital TV customers.

6) There was also another agreement with Asklaila, India’s first local information service,

enabling Airtel customers to get up-to-date information about their city, free of cost,

through Asklaila’s extensive city information database. The Asklaila-powered ‘Airtel city

search’ is accessible across six cities, including Delhi, Mumbai, Chennai, Hyderabad,

Kolkata and Bangalore.

7) The latest in its outsourcing kitty is the managed services outsourcing pact

with Comviva.

As per this new arrangement Comviva will manage the infrastructure for Airtel’s value

added services including SMS, ringtones and multimedia messaging. As per Airtel this is

first of its kind deal in the.world.Comviva will manage more than 2,000 nodes -–

including SMSCs (short message service centers), MMSCs (multimedia messaging

10 | P a g e

service centers), and IVR (interactive vocie response) servers — that deliver Airtel’s

mobile value-added services, and report to Airtel through a series of “stringent” service

level agreements (SLAs).

Through these innovative outsourcing decisions and other supply chain practices (discussed

below) Airtel today has 136,620,401 GSM mobile and 3,153,080 Telemedia Customers in India

and Rs. 122,308 million (ended June 30, 2010-Audited) in proportionate revenues.

 

INVENTORY MANAGEMENT

Airtel implemented Oracle Communications Order Management and Inventory Management in

2007 for streamlining business operations as well as for efficient service delivery. The key

features of Oracle Communications Inventory Management include enabling the tracking of all

physical resources ranging from access media to physical equipment to asset locations and

addresses and supporting end-customer services and network technologies with a variety of

number and name resources.

This implementation expanded Airtel’s existing usage of Oracle Communications Order

Management and Inventory Management for its optical/SDH services. Airtel has now integrated

Oracle communications solutions with Oracle Financials and CRM to reduce the project’s total

cost of ownership and deliver state-of-the-art customer service.

Airtel implemented Oracle Communications suite of solutions for its flexibility, scalability and

rich functionality i.e. in this phase of tremendous growth of Airtel, Oracle Communications

offering has helped transform Airtel into both a cost leader and a premier provider of

communication services.

11 | P a g e

E-TIZE PROGRAMME

In a bid to make its operations more efficient and cost effective, Bharti Airtel undertook a major

internal IT programme called “e-tize” in 2008 in order to revamp its processes and systems

through the use of technology. The project was being implemented by IBM through 30 software

applications from various vendors including Oracle, Veri Sign and SAP.

E-tize was a drive for defining and cultivating an e-culture within Airtel. The program made

invaluable contribution to the reduction of both operating and capital expenses incurred by the

company. More than 250 processes were automated under this project. Bharti Airtel also

witnessed a decrease in its overall real estate costs with infrastructure requirements coming

down.

Automations done under the e-tize program resulted in lesser rework due to overall error

reduction, which in turn improved employee productivity. For example, applications like

Dispatch Requisition Automation led to a 50 per cent decrease in rework required and therefore

the time required for approvals or follow-ups diminished significantly for the company.

The Important achievements

1) Removing gaps

The e-tize program led to an improvement in the productivity through the reduction in the overall

cycle time via re-engineered processes, removal of existing gaps and elimination of the non-

value adding steps. This was made possible due to the establishment of a central repository for

all organisational as well as functional information. This also resulted in savings due to lower

search costs associated with the activity.

Processes, which were highly complex, totally paper-based and involved multiple parties were

automated. For example, the Supply Chain Management (SCM) transformation, where close to

40 processes were automated, completely changed the way Bharti Airtel works with its suppliers.

2) Online works

12 | P a g e

The company enabled capabilities like Reverse Auction, Online bidding and Online negotiations

with its suppliers to make it a transparent choice of the best bid.

Applications like payroll integration with the system used by the outsourced processor resulted

in savings of approximately 20 per cent in the payout made to the supplier.

Thus Airtel saw an increase in its revenues due to lower time to market, reduction in payable

days and increased working capital availability.

RURAL REACH

The mobile revolution is spreading fast in rural India. With the mobile penetration still

abysmally low, there are plethora of opportunities for the providers of cellular services to tap this

hitherto unexplored market.

In a bid to achieve this, Airtel planned (in 2008) to implement firm steps. It planned to focus on

livelihood generation, and improvement in educational and healthcare facilities in this region.

A sample of the numerous problems faced by the rural consumers are-

They need to go to another nearby village to even charge a mobile handset, and pay Rs.

20 to use a battery to recharge the phone for the simple reason that neither village has

electricity.

They feel uncomfortable talking to Airtel’s customer care executives – because they

speak in English, or just because the phone is being answered by a woman.

They have to travel 15km to top-up their account because of distribution problems.

They find the IVRS menu confusing, and end up buying products by accidentally

activating services that they did not need.

Even to operate telecom towers the operators, because of lack of rural electrification,

need to transfer diesel 30 km twice a day.

13 | P a g e

Airtel came up with some solutions by removing certain gaps in the supply chain management in

the rural areas. Some of the measures which are still being implemented are-

Airtel is investing in a hub-and-spoke model, so that wherever there is a matchbox

being sold, the company will have a presence. They’re planning to cover 2 million

outlets.

Make it easy to recharge, using smaller recharge denominations of Rs. 5 and Rs. 10.

It started a joint venture with IFFCO, IFFCO Kisan Sanchar Ltd (IKSL) that will harness

the power of telecom to add value to the farm sector and empower the rural farmer by

giving him access to vital information, which will enhance his livelihood and quality of

life. IKSL will offer products and services, specifically designed for farmers, through

IFFCO societies in villages across the country. On offer are affordable mobile handsets

bundled with Airtel mobile connection and customized value added services.

This was an innovative method to penetrate the rural market by innovative distribution

method.

Airtel opened up numerous Airtel Service Centre (ASC), which is an ideal combination

of distribution and service to reach out to rural customers and an important step in Airtel's

objective of expanding its presence in the rural areas of various states like Maharashtra,

Andhra Pradesh, Karnataka etc.

ASCs are Multi Brand Outlets (MBOs) located in an easy accessible location, preferably

in the main market in a village that attracts high footfalls. This new initiative is based on

meticulous consumer research and insight which highlights different behavioral patterns

of a customer in rural / smaller towns and villages.Thus emphasizing Airtel focus on a

dominant rural strategy to strengthen the 4A’s in mobile communication, i.e.

– Availability, Affordability, Awareness and Acceptability. 

Primary Objectives of setting up ASCs:

One-stop shop for information about the entire gamut of Airtel products and

services

14 | P a g e

Helps in removing barriers towards availing mobile communication

Handling customers queries and complaints

Reducing rural calls per customer

This unique rural model of distribution and service has been developed on the basis of

multiple Consumer Studies, which reflect that rural consumers are hesitant to speak with

machines and most rural people are not comfortable speaking with the call centre

executives – these customers prefer to be served in the local dialect, by a local

representative.

Services available to rural customers in an ASC are:

Sale of connections

Exchange of damaged or lost SIM cards

Best value recharge and offers of the day

Educating and subscribing to relevant value added services

Specific Sales & Distribution strategies of Bharti Airtel Ltd 

(in Vizag)

Airtel has put into place a pretty decent distribution network to cater to the ever expanding base

of consumers in one of the most important Tier 3 cities of India.

The observations and analysis done here reflect my experience of doing internship from 21 st

April to 21st June, 2010.

It uses second and third degree distribution network. 

15 | P a g e

AIRTEL

UDs RSs

Second degree distribution network:

Airtel makes invoice of SIMs, PEFs (Pre-Paid Enrollment Form), GSM Pay Phones, RCVs

(Recharge vouchers) of various denominations chiefly Rs.10, Rs 30 and Rs. 60 and gives them to

only Urban Distributors and Rural Super Distributors.

Easy balance (i.e. recharge through mobiles of retailers) is also transferred to only Urban

Distributors (UDs) and Rural Supers (RS).

Urban distributors distribute the above items to the respective retailers according to the demand

and transfer easy balance to retailer through FOS (Field officer Sales) SIM. Therefore, this setup

of distribution is Second Degree and it is more suitable for catering to the need of urban areas

which have good road and transportation facilities.

Third degree distribution network:

RS distributes the above said items to Rural Distributors known as RDs and transfers easy

balance into SIMs of Rural Distributors. Rural Distributors then distribute them among the

retailers according to the demand and transfer easy balance to retailer through FOS SIM from

16 | P a g e

SECOND DEGREE

RDs

FOSsFOSs

THIRD DEGREE

easy balance of Distributor SIM. This three level distribution is used to reach to sub urban and

rural areas which are emerging markets.

Advantages of second and Third distribution networks-

Second degree distribution is suitable for urban areas because there is high population density

and the customer demand is also substantial and that’s why quick availability of product and

services are required.

As the UD gets items directly from the company so products, services and promotion materials

can be made available to retailers in shorter period of time. This ensures timely communication

of promotions and advertisements to the customers.

Three degree distribution is suitable for catering to rural areas because of the lesser population

density and large spread of retailers in these regions which necessitate more penetrative efforts in

distribution.

Urban Distributors:

These are known as UD and are located at District HQ i.e. Visakhapatnam.

Functions-

1) They distribute the products, easy balance (referring to the balance of the SIMs used for easy

recharge), services and promotion material to the retailers in designated urban areas of a district

2) They are responsible for smooth attainment of target of SIM activations and recharge amount

without encroaching into other distributors’ territories. This is an constraint imposed upon them.

3) They distribute SIM, RCV, Easy Recharge, GSM Pay Phones, Lapu SIM, FOS SIM,

replacement SIM (for contingency situations if the retailers lose SIMs) according to the retailers

17 | P a g e

and other requirement within their territory only.

4) Activate customer SIMs within its territory after proper checking of POI (Points Of

Interaction) and error free PEF (pre paid enrollment form).

They need to collect all PEFs and re-documents from retailers and send it to respective Circle

Head Quarter.

5) They need to distribute the promotional materials among the retailers according to the

allocation of TM/ZSM (Territory manager/Zonal Sales Manager), received from company.

6) They have to maintain the health report of the distributors, secondary details regarding

retailers and SIM activation details. These reports have to be shared with TM.

7) They have to circulate communication from the company properly to the retailers and the

grievances of retailers to TM/ZSM. 

Specific examples (data obtained during my internship in Airtel,

Vizag)

Number of SIMs sold in April, 2010 (OLD Town Area)

18 | P a g e

Number of SIMs sold in May, 2010 (OLD Town Area)

19 | P a g e

1) In the month of April, Airtel was the market leader as far as selling of new SIMs are

concerned with a very comfortable lead over its next rival Vodafone.

2) But this situation turned on its head during the month of May, where Vodafone overtook

Airtel by a very, very large margin.

Comments and the main causes for this change are-

1) The local distributor of Vodafone introduced a tempting offer- “upon a purchase of a SIM

card worth Rs 10, the subscriber would get Rs 35 as talk time”

Along with this, the said distributor also encouraged target-selling of SIMs by the

selected retailers, who were given gifts (expensive pens, free SIMs etc)

2) The various complaints of the retailers (explained below). Even though this region has

the largest number of retailers (of various kinds e.g. cell points, kirana shops, general pan

shops etc), due to the various complaints of the retailers the sale of SIMs decreased as the

retailers started harboring a feeling of disenchantment towards Airtel, and hence they

were not indulging in word-of-mouth promotion of the various schemes and impeccable

services of Airtel.

Even they were not trying to convert the un-decided new subscribers into Airtel

customers.

Shop Details Complaint(s)

Sri Srinivasa Pan Shop Earlier new SIMs gave 100 A2A free minutes, now this scheme has

20 | P a g e

Maharanipeta

Visakhapatnam-2

Ph- 9849064721

been stopped by the distributor.

Sri Rama Communication

Kotha Jalaripeta

Visakhapatnam-1

Ph-9866029221

The supply of new SIMs stopped even though sales are satisfactory.

Balaji Kirana

Ph- 9849500807

Distributor is not coming daily, also not properly explaining the

various schemes, and giving very less time to the retailer.

Require new SIMs but not provided.

Network failure complaints come from customers.

Friends Net

A.V.N College Down

The Distributor (Satish) is not delivering cards in time.

The shop is new so showing step motherly attitude.

Sri Sai Srinivas Mobile

Shoppee

AVN College Down, 33

Shops

# 26-15-65, Near Purna

Market

Visakhapatnam-1

The Distributor (Satish) is not supplying cards properly.

Mobile Gallery Customer Care Service is unsatisfactory as it is responding after

21 | P a g e

Ph- 9949006507continuous calling for about 15 days or so.

Free minutes are also not provided.

Singapore Collections

Ph- 9849622917

Activation problem of new SIMs.

Customers complain that these are disconnected after 10-15 days

even though the documents provided are genuine.

Star Enterprises

Ph- 9490074786

The agent of existing distributor (Pranati Enterprises) is not

delivering cards properly, also delay in giving the margin money.

Ganesh Electronics

Ph- 9866114660

Customer demands Rs 500 in easy recharge but as it is unavailable

so loss for them.

New local agent is not behaving respectfully, hence not keeping

Airtel recharge cards and easy recharges for 2 weeks.

Sri RajNavin Netlooks

Ph- 9299606701

New local distributor is not coming regularly even after repeated

requests.

Yelamma Devi Rice

Stores

Ph- 9701489362

Require new pamphlets.

New SIMs not available.

Sai Durga Pan Shop

Ph- 3200690

Local distributor is not coming so cards etc have to be purchased

from Purna Market.

Srinivasa Kirana and

General Stores

Ph- 9866118603

Only expired SIMs are present, local distributor is not giving new

SIMs.

He is not providing satisfactory service.

Madhava Medical and

General Stores

Mobile phone lost but the distributor (Pranati Enterprises) is not

giving new demo number.

22 | P a g e

Ph- 9030325755 SIM replacement problem is there, the local agent is giving after 10

days.

S.K. Electrical &

Hardware

Kotha Jalaripeta

Ph- 9849075605

Customers often complain of the network problem in the region.

Number of SIMs sold in April, 2010 (MVP Colony)

23 | P a g e

Number of SIMs sold in May, 2010 (MVP Colony)

1) The highest number of SIMs sold were of Airtel, closely followed by Vodafone and other

players like Idea, Reliance GSM, etc were very closely following the leaders.

2) In the month of May, the sale of Airtel SIMs decreased. Still it was the leader, as the sell

of other SIMs also decreased.

24 | P a g e

The reasons for these were-

A) There were very less instances of retailers having complaints on Airtel’s products and

services here. The reasons were- good relationships between the distributor and the

retailers, frequent visits of concerned distributors here along with office-boys (they

enjoyed very good rapport with the retailers and also ensured that the banners, posters

and pamphlets depicting the various schemes of Airtel are adequately stocked up

with them)

But, there were some very fundamental fallacies pointed out by the retailers which the

Airtel authorities (mainly the distributors) are falling prey to.

These were- the increasing amount of complacency and over-confidence in them due

to the high brand name acquired by Airtel (Airtel distributors, customer care

representatives, even officials dwell under the belief that Airtel has created such

brand name that new subscribers would automatically choose Airtel, thus there is a

peculiar behavioral change on the part of them resulting in stopping of gift-system by

distributors, lowering of the standard of clarifications by the customer care

representatives, lower investment in promotional tools like- increased banners,

posters, etc.)

These comments were positive criticisms from dedicated retailers of Airtel and hence

pointed out a very fast emerging but disturbing trend in Airtel.

GENERAL ANALYSIS

A) The distributors in particular and the company in general have to drastically focus on

improving the services (to the retailers).

25 | P a g e

This is because the business of mobile services is very heavily dependent upon the

“service” aspect, where even a week’s complacency or delay on the part of the

distributors, customer care executive(s) or other concerned company officials can give

golden opportunities to the dealers of other mobile operators to convince the retailers

(who sell the SIMs of various companies) , lure them with attractive service offers or

gifts (upon selling pre-determined number of SIMs), ensure that the retailers indulge in

sufficient word-of-mouth promotion of the products and services of their concerned

mobile companies and ultimately sell the products of the later companies.

B) Good relationship with the retailers ensures that the intrinsic value that is created in the

minds of the retailers do not erase immediately.

This is evident in the region of MVP, where although sell of new SIMs of Airtel has

decreased but still Airtel retains the top-spot.

The Working

All retailers’ Lapu SIMs (a SIM provided to the retailers by the company at free of cost for

providing easy recharge service. Only regular retailers have this facility. This SIM has a memory

of 128 kb and is specially designed for easy recharge purposes) falling under the particular beat

is mapped with corresponding FOS of that beat and FOS SIM is mapped to the distributor (UD)

SIM. Distributors use distributor SIM to transfer and distribute Easy Balance to mapped FOS.

FOS uses FOS SIM to transfer the easy balance to mapped retailer’s Lapu SIM.UD gets certain

percentage discount on their billing to company. From which certain percentage discount they

26 | P a g e

have to give on their secondary sales to the retailer. Thus Urban distributor works with certain

percentage margin on all its sales.

Rural Super:

These are known as RS and are mainly located at district headquarters. They distribute the

products, easy balance, services and promotion materials to its rural distributors only.

Under one Rural Super there can be maximum 12 RDs and they can have maximum turnover of

Rs 1 crore. They get certain percentage discount on the amount of their billing to company. From

which certain percentage discount they have to give on their secondary sale to the RDs. Thus RS

works with certain percentage margin on all their sales.

Roles of Rural Super:

They need to distribute SIMs, RCVs, Easy Recharges, PEFs, GSM Pay Phones,

replacement SIM etc. , according to the RDs’ requirement within their territory only.

They need to collect all PEFs and Re-documents from RDs and send to respective Circle

Head Quarter.

27 | P a g e

They need to distribute promotional materials among the RDs according to the

allocations made by TM/ZSM

They need to maintain required stock of RCVs and Easy Recharge for 7 days secondary.

They need to collect money for invoices to RDs on schedule date and arrange the supply

of items of the invoices to RDs.

Rural Distributors:

These are known as RD and can be located at blocks and towns. For every population of 5000

people there has to be a rural distributor.

They distribute the products, services and promotion material in designated territory and are

responsible for smooth attainment of target of SIM activation and recharge without encroaching

into other distributor’s territories. They get certain percentage discount from RS on their billing

to Rural Super. They cannot get invoice from company directly. From which certain percentage

discount they have to give on their secondary sales to the retailer. Thus rural distributor works

with certain percentage margin on all its sales.

The RDs of Ankapalli and Bheemunipatnam (both sub-urban areas) as well as that of the approx.

300 villages within the Visakhapatnam Metropolitan Region are doing a commendable job in

pushing Airtel products like RCVs, coin boxes (Bheemunipatnam has infact one of the largest

numbers of coin boxes in the whole of Andhra Pradesh circle).

Even during my internship in Airtel, I was deputed to bring retailer complaints from

Bheemunipatnam and sell coin boxes here, during which I had interactions with the RDs here.

Field officer sales (FOS)

FOSs are the manpower of UDs and RDs, who on behalf of them sell the SIM, RCVs, Easy

balance etc. to retailers under his assigned beat. These are the only manpower of the distributors

who work in the market.

28 | P a g e

These are the frontline sales people. The FOSs deputed in MVP Colony, Daba Gardens (both

high revenue earning areas for Airtel in Vizag) have very good relationships with the retailers

here. They have successfully convinced the retailers of these regions to shift to ‘easy recharge’

system of recharging from the archaic system of recharging through recharge cards, thus

eliminating the use of paper-based cards and hence saving a lot of money (spent on transaction

costs) of the company and also aiding the retailers to understand the importance of technology in

the modern age.

Roles of FOS:

FOS is responsible for the secondary sales under his assigned beat.

FOS is responsible for collecting PEFs, money against billing by retailer and distribution

of promotion material among retailers in consultation with TM.

He needs to circulate communication from the company properly to Retailers regarding

schemes, new offers, incentives etc.

BULL-WHIP EFFECT

It is often observed (in the analysis of Old Town and Daba Gardens) that to increase the

customer base the distributors engage in offering promotions and discounts at certain times. This

accentuates the practice of ‘forward buying’ in the retailers, which implies that retailers purchase

large number if SIMs during distributors’ discount and promotion time and order relatively small

quantities at other time periods.

The result is- inventory of SIMs (at the distributors) which then gets expired and result in loss for

the company as a whole.

29 | P a g e

MODERN DISTRIBUTION CHANNEL

Apart from this framework of traditional distribution channel of Airtel in Vizag, there is a

modern distribution channel which consists of:

30 | P a g e

1) The Mobile Store

Name Address Contact

No.

Dabagardens-Vizag Shop No:A 3, Ground Floor, Pawan Arcade, Door No:48-18-2/7, Opp.

John Players, Daba Gardens, Vizag - 530020 

0891-

6635433

Ramnagar-Vizag 10-40-14, G Floor, Balaji ArcadeNear Care Hospital, Waltair mainroad

Ram Nagar, Vizag - 506001 

0891-

6636012

Sriharipuram D. No. 64 - 1 - 19/1/2/3Yarada Park, Gullalapalem, Sriharipuram, Vizag -

530024 

0891-

6464912

DOCOMO

Sriripuram SiS

Surya Manor, Ground Floor, Opp. HSBC Call Center, Siripuram

Junction, Vizag - 530003 

0891-

6451005

All these mobile stores sell mobiles and also provide Start Up Kits (SUKs), recharge vouchers

and top-up options of various cellular operators (the last one in Siripuram keeps only Tata

Docomo products and services)

These normally cater to the upscale shoppers in the said areas.

2) The Mobile Bazaar

Address: Mobile Bazaar, Vizag with Big Bazaar 

GV Manor, Beside Sangam Sharat Theatre Station Road Dwarkanagar, Vishakapatnam 533016 

This mobile store, along with selling mobile phones of different companies (both new and

second-hand), also sell SUKs, RCVs and top-ups of different mobile operators.

3) Airtel Relationship Centres

31 | P a g e

These are the different ARCs in Vizag. These facilitate in getting new Airtel connection,

subscription to any of the value added services, payment of bills or getting a new handset

Name and Address of showroom Parking Timing Weekly off

Coastal Communications

8351waltair palace pedda waltair junction

opp subiksha super market vizag 533002

Yes 10:00:00 AM-

8:00:00 PM

Sunday

GRACE Communications

8132610 Main Raod, Gajuwaka, Vizag

530016 Vizag

No 10:00:00 AM-

8:00:00 PM

Sunday

Lobby Vizag

Vinayaghar Apts HNo: 101813 Opp:

HSBC Bank CBM Compound Visakhapatnam

530015 Vizag

Yes 9:00:00 AM-

8:00:00 PM

Sunday

SIM Communications

KSR Mansion Opp Rythu Bazar Near Eenadu

Office- Seethammadhara Visakhapatnam

530013 Vizag

Yes 9:00:00 AM-

8:00:00 PM

Sunday

Among these ARCs, the ones situated in CBM Compound and Gajuwaka attract lot of foot falls

and also substantial sales take place here.

The important thing to take notice is that these ARCs are well-spaced (geographically) and also

located strategically.

Gajuwaka- Gajuwaka became a municipality in 1990 and was mixed in Greater

Visakhapatnam Municipal Corporation (GVMC) in 2005, now it is 5th zone in GVMC.

32 | P a g e

Gajuwaka is the fastest growing part of Visakhapatnam city. It was a small village almost

up to 1970s. With the construction of Vizag Steel Plant its growth started at a rapid pace.

CBM Compound- This region is a thriving business centre of Visakhapatnam City

having HSBC office, numerous retail outlets (apparels, food courts etc), hub office of

Airtel (Andhra Pradesh circle) etc.

Peda Waltair and Seethamadhara- Peda Waltair is a residential zone, thus the ARC

here cater to the inhabitants of this region. Seethamadhara is a busy market place where

the common Vizagites shop (medicine stores, kirana stores etc)

4) Airtel Exclusive Outlets

These offer all the products and services of Airtel (with respect to Andhra Pradesh circle) i.e.

SUKs, RCVs, top-ups, value-added services, bill payment options for post-paid customers etc.

These outlets serve as a good distribution channel for customers who desire latest products,

services, and customized services all under one roof.

33 | P a g e

REFERENCES

1) www.economictimes.indiatimes.com

2) www.airtel.in

3) www.coai.com

4) www.trai.com

5) www.cdg.org

6) www.telecomabc.com

7) www.talkinfo.com

8) Personal interactions with various distributors and retailers of Airtel in Vizag during my

internship.

34 | P a g e

35 | P a g e