PESTEL Analysis of Airtel
Airtel is a telecommunications limited company headquartered in New Delhi, and was incorporated in 1995 by Sunil Bharti. It’s present in 20 countries, mainly in South Asia and Africa. By 2012, Airtel was the third largest telecommunication company in the world with more than 243,336 million subscribers. It prides as the largest cellular service company in India with more than 176 million subscribers. In this essay, we shall give Pestel analysis of Airtel in understanding how it keeps pace in the telecommunications industry.
Political: Recently, the ministry of India’s Telecom industry increased FDI from 49 percent to 74. This sparked off competition among promoters of the industry, and sold their shares to foreign investors. Currently, Airtel is collaborating with SINTEL, which helps in infrastructural development and upgrading to the latest standards of technology. Globalization also promotes Airtel’s presence in other countries around the world. This has augmented tremendous growth, enabling it to launch its services in Sri Lanka and acquired Zain in Africa. Experts argue that this has only been achieved because of the politics of the day in India.
Economical: Exception of some raw materials from excise duty has cut down equipment cost not only for Airtel but also across telecom industry. Consequently, Airtel is able to expand its network presence to other places at a lower cost. Airtel, like most companies in the world suffered the effects of the Global Financial Crisis of 2007-2008. The government further reduced taxes on convergence product to 5% up from 10 percent. This helped the company to develop quality devices that match those used in the communication sector. The ultimate effect of this was as a drop in the cost of DTH expansion. To mitigate the impact of government taxes, Airtel introduced lower per minute tariff after the government introduced per second billing plan.
Social factors: With a higher limit of FDI, more foreign investors are likely to enter the Indian communication industry. Since more than 70% Indians live in rural areas, new foreign entrants in the market will help reduce the isolation of the rural dwellers from the rest of the country. This will also boost access to medical and educational facilities and increase business viability. To meet the expected demand for its services, Airtel has set up about 100,000 customer service centers in rural areas.
Technological factors: India has seen entry of foreign developers with new technology and improved infrastructure. With Airtel’s infrastructure, it can provide better communication services to its customers in urban centers and expand its coverage to remote areas in the country. The introduction of Mobile Number Portability in India helps customers to retain their mobile numbers even after migrating to other networks. This has increased competition in the market as clients can switch service providers whenever they feel dissatisfied.
Environmental Factors: Today, the world gives much attention to environmental conservation and protection. Thus, Airtel has an obligation to minimize its negative impact to the environment even as it endeavors to keep pace in the dynamic communication industry. It also engages in an array of CSR activities.
Legal Factors: India charges high license fees for new entrants in the market. This limits spectrum visibility. Increase of FDI limits to 74% has attracted foreign investors, who are offering better services with latest technology.
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