Anyways, in this article We discuss the Airtel Business model, its advantages, disadvantages, its areas of improvements, what is going wrong with Airtel to do a stock Analysis of Airtel. A look at the nos reveal that Airtel complains were way above the rest - 3570 for Airtel compared to 2100 of the next highest Reliance Communications. That's a big difference of more than 75% higher complains.
Airtel is known to be one among the market leaders in the telecom space in India. With the acquisition in the African continent, it is the world's fifth largest telecom operation and telecom services provider.
What is the major area for customer complains?
The major area of customer complains is the same usual stuff - change to higher billing without notice, unsolicited activiation of chargeable services, no satisfactory resolution of complains.
Now, the biggest problem with Airtel is that it has started to charge its customers if they call up on their customer services no. 121. Ideally, this call should be free. But no, airtel is planning to save some money by reducing the no. of customer service representatives (and hence their salaries) and hence they are discouraging the customers to call on customer care nos. They expect customers to get that info by SMS or by logging onto airtel site on internet.
That, in my frank opinion, is really weird. India is not a country where you will find majority of the people feeling happy about getting info and updates through SMS - they are still not that tech savvy. People prefer to speak and listen - and that is the most effective way to win satisfying customers. Airtel seems to have got it wrong. The fact is that info is not available properly through SMS or Voice based services, and people are then forced to call. And when they are charged for it, they feel cheated.
With no. portability coming in, many individuals have switched. In fact another competitor, DOCOMO, had even advertised attacking this method of charging customer care calls - they advertised by explicitly mentioning "No charge for customer care calls".
Club these 2 things together - high no. of customer complains, and if you want a resolution for that you are charged for such calls. Won't the customers run away to other operators?
Advertising of Airtel?
It's a big question mark to me.
First, lets see what the competitors are doing in advertising space.
Idea has signed up with Abhishek Bacchan - they must be paying a big amount to him. They have also joined hands with six world cup captain from different countries with the concept of "Keep Cricket Clean". Still, that amount will not be that high. So bascially, Idea has one single brand ambassador.
Vodafone - we love the ZooZoo and the cute dogie. No brand ambassadors to pay. It's a great advertising concept and works far better than anyone else. The only people you need to pay is the ad agency. Highly effective and cost saving.
Docomo - Simple and effective. No high cost.
Now come to Airtel Advertising. Have a look at the list of "Brand Ambassadors" - Shahrukh Khan, Saif Ali Khan, Kareena Kapoor, even Saina Nehwal (for international roaming). Interestingly, they are all big superstars and must be costing a big amount to Airtel for being its brand ambassadors. Imagine, if the same amount of money being paid to 4 brand ambassadors had been reduced to a single one, and the saved money had been spent in keeping customers happy with no charges to call customer care, or paid back to the Airtel stock holders as dividends, it would have been much more beneficial to win loyal customers and satisfying stock holders.
It surprises to think that they are ready to pay multi million dollars to so called superstars, but not willing to offer satisfactory customer support.
The philosphy of hiring more and more "superstars" for brand advertisements needs a rethink. If a line of superstars was the only way to getting you more business, then Vodafone, Docomo, Idea would have collapsed by now. Rather, they are doing fairly well.
Rebranding exercise of Airtel - who bears the heavy cost?
So we all were happy to see the new logo of Airtel? Were we? Ask the shareholders.
The company management went for a new logo - justified it in several ways - red color for youth and energy, logo in small letter for showing humility, blah, blah, blah, etc., etc.
Every single poster on even a paan-shop, every single ad board on the street, everything was replaced with the new logo. Crores of Rs. were spent in this new rebranding exercise.
As per the news for last quarter results, the net income declined by a hooping 41%, and the company happily attributed it to the cost associated with rebranding exercise.
The big question is - who bears the heavy cost of this rebranding? It's you, the shareholders.
Another question - whether this was necesary? ANy analyst would say it was not. Are the customers deciding their telecom operator based upon their logo? Or based upon what color it is? Or based upon whether it is in small letters or capital letters?
The fact is that this was an unnecesary cost. It could have been paid back to the shareholders in the form of dividend or invested in improving business operations or providing better satisfying support to the customer. At the end, it came out as a loss. It's the shareholders who lost.
Other problems with Airtel:
There have been several other instances which force a customer to run away or switch to other operator.
Unwanted charges for services not requested is one common complain.
Then, all of a sudden, one fine day majority of the prepaid customers find that their connection is blocked. All they receive is an SMS saying that CUSTOMERS have not provided their full KYC details (Know Your Customer) details and asked to come to the nearest Airtel Relationship center.
Upon reaching the ARC, they find a big queue of people having the same problem. And this is not just with new customers, even old customers who are more than 5 years with Airtel were hit. Whose responsibility is it to follow KYC upfront?
Few years back in Maharashtra, one fine day all Airtel prepaid mobiles go off and the situation remains as it is for 3 days. Why? Because Airtel has a power problem at one of their towers. Later, an apology is published in national newspapers. What about the problems people faced for those 3 days?
All of a sudden, one fine day the internet tarrif is suddenly increased from 10 ps rate to 30 paise rate - Tripled. And then the customers are expected to remain loyal with more business.
Overall Airtel Stock Analysis?
Given the fierce competition going on in the Indian Telecom market, that too with MNP being available, it seems that with its current pricing and charges model, Airtel is bound to loose out on it market share. It will be the Docomos and Virgin mobiles who might hit it hard.
All the high costs involved in rebranding has already taken a hit on income. Its true that this does not happen very often, but Shareholders need to be aware about these management decisions, because its the shareholders who own the company and they get hit.
Then comes to African business they recently got into. Last Quarter results also mentioned that they had big forex losses because of forex currency price fluctuation. It is again going to take a toll on shareholder's investments.
3G plans have been lauched in Bangalore & Mumbai, but the cost is high.
Not sure whether they will benefit or loose out from MNP, but looking at the high no. of customer complains does not pose a rosy picture for Airtel stock.
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