Topic1-AmartyaGhosh

Page7of18 originofthemtytmodelfromairtel we have been

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Unformatted text preview: has been set to enter emerging markets through this strategy. For an established player it would be suspected that it would raise cash for its Capex or may even raise money for an acquisition – both global and local. Page 7 of 18 Origin of the MTYT Model from AirTel We have been citing the example of AirTel to build the premises of this unique model. In order to understand these premises we will be trying to map the events of Bharti AirTel leading to global acquisitions. Graph 1: Mobile Customers and Customer Adds Graph 2: Market Share Variation Page 8 of 18 Declining Growth Rates Graph 3: Growth Rates of Customer Adds and Overall Customer Base The history of Bharti AirTel can be split into three phases: Pre – 2000, 2000-2007 and 2008+. Period Key Events • Pre-2000 SingTel acquires strategic equity stake • Aftermath AirTel begins domestic acquisition of players to expand domestic reach • • • 2000-2007 Entry of CDMA players Launch Continuously Launch of free incoming calls • AirTel market leader • • Increase of Market Share of life time increasing market share validity • Temporarily arresting the declining customer add growth rate products • • Saturation of urban markets • Continuously Expansion in Sri Lanka declining market • Overseas share • 2008+ Continuously declining growth • AirTel declared 100 Merger talks between MTN and AirTel rates in customer adds • Eyes on new markets: Rural and million • subscriber mark and wanted next Acquisitions: Warid Telecom, Zain Telecom and Seychelles Telecom 100 million Table 1: AirTel Timeline Page 9 of 18 Thus we can infer the following premises of the MTYT Theory in the Telecom space: 1. The telecom player starts out as an independent entity and sells its stake to a foreign player. The equity is in the form of strategic equity with complete freedom given to the player to take decisions in the Indian market. This equips the player to dominate the market through: o Technological breakthrough o Acquiring other market players o Market expansion through organic routes o Innovative product portfolio 2. If the growth strategy succeeds then there comes a period of dominance where the player establishes itself as one of the market leaders. The player will also have a Pan-India license or should be present in most of the Indian circles (20+). 3. After the peak, the company would experience stagnation with little room for expansion in the domestic markets. The Indian telecom market got crowded with 13-14 players in each circle and with tough domestic M&A laws; it became obvious to search for other emerging markets. Identifying the New MTYT Players Today, the Indian market is saturated and other emerging markets like Africa appear to be the likely markets where more growth can be seen. Thus the period of dominance will be short lived and after gaining a good amount of market share the player will shift focus to other emerging markets. The peri...
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This document was uploaded on 01/14/2014.

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