Airtel Magic - Selling a Pre-paid Cellphone Service

            

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Themes: Marketing Mix
Period : 2002
Organization : Bharti Cellular Limited, Spice Telecom
Pub Date : 2003
Countries : Switzerland
Industry : Cellular

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Case Code : MKTG040
Case Length : 12 Pages
Price: Rs. 300;

Airtel Magic - Selling a Pre-paid Cellphone Service | Case Study

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The Future - Far from Magical Contd...

Given the vast reach of BSNL and years of experience in the Indian telecom sector, the new, private players were justified in their fears. Moreover, BSNL did not have to pay any license fee (8-12% of the revenue share paid by all private players) to the government.

Being a major stakeholder in the fixed line telephone network (90%), it did have to shell a large share of its revenues as interconnect charges (over 70% of the calls made from cellular network used fixed line network) for routing calls, both landline and STD.

With such control (on fixed line network) and established infrastructure, BSNL could pose a severe threat to its competitors on the pricing front. With the Department of Telecommunications announcing plans to grant International Long Distance (ILD) license to BSNL and BSNL planning to acquire a subscriber base of over 4 million (by late 2003 across 1,000 cities), the competition in the cellular market was expected to intensify further.

Meanwhile, true to the belief of industry observers that the cellular telecom sector would see product/service innovations, Bharti launched a two-in-one cellular card in October 2002. This product offered both the features of post-paid and pre-paid cards in one card9.

It was aimed at customers residing in places where post-paid facilities were not available. The product was available with all Magic vendors and ICICI's ATMs. Commenting on Bharti's leadership position, representatives of BPL and Hutch said that Bharti might seem to have an advantage at present but it was a long-term game and it was too early to respond.

As the market awaited the response of other competitors in November 2002, Indian pre-paid cellular services customers expected the future to be anything but dull. Competitive tariff plans, value-added services and to top it all, entertaining advertisement campaigns - customers, perhaps, could not have asked for more!

Exhibits

Exhibit I: Cellular Telephony & The Pre-Paid/Post-Paid Issue
Exhibit II: About the Bharti Group
Exhibit III: Old Logo of Magic & New Logo of Magic
Exhibit IV: Post-Paid & Pre-Paid Cellular Brands in India (Late 2002)

9] The starter pack of the product costed Rs 999, which included an airtime worth Rs 499 and which carried an additional charge of Rs 10 as rental charge every day. For both, incoming and outgoing calls, customers were charged at Rs 1.15 (30 seconds) between 8 am and 9 pm and Rs 0.25 between 9pm and 8am.