Case Code : CLOM003
Publication date : 2009
Subject : Operations
Industry : Telecom
Length : 05 Pages
Price : Rs. 100
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Cost optimization, productivity, employee productivity, employee efficiency, customers per employee, gross revenue per employee per month, business model, capital expenditure, operating expenditure, payment models, average revenue per user, ARPU, minutes per use per subscriber, MoU, Indian telecom industry, Bharti Airtel Limited, economic slowdown
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Faced with intensifying competition and the global economic slowdown, Bharti Airtel Limited. (BAL) focused on cost optimization. In 2008, it merged operations across its telecom circles and in the later part it also discontinued certain sops to customers such as "free minutes". In the subsequent months, the company was able to increase its employee productivity. However, the company was facing a decrease in the average revenue per user (ARPU), minutes per use (MoU) per subscriber, and revenue from SMS and non-voice services. While experts appreciated its ability to increase productivity, they felt that its decision to discontinue offers such as "free minutes" could prove to be costly.
Questions for Discussion:
1. Critically analyze BAL's cost optimization measures with the emphasis on its decision to merge operations across its telecom sectors.
2. What are the factors that influence employee productivity? How can these be measured?
3. Do you think that discontinuing offers such as "free minutes" in a bid to increase realization rates a prudent decision in the highly competitive Indian telecom market? Discuss.
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