By Nitya Pandit
After installing 180,000 base stations worth Rs 60,000 crore across India, Airtel is going to spend Rs 2000 crore over the next 3 years for its Project Next. Airtel has initiated this project with the objective of competing with its rivals and retaining its customers.
It intends to do so by fine-tuning its postpaid plans, physical stores, and digital assets. The Sunil Mittal-owned company is striving to reduce customer frustration through digital innovation.
What is the project about?
Project Next is a digital innovation program that will change the Airtel customer experience. The telecom giant has spent almost 2450 hours observing customers and mapping traffic flows within its stores. The first step will be to revamp Airtel’s 2,500 stores that will become the ‘Next-Gen Airtel Stores’. Airtel will achieve this with the help of a UK-based design studio, 8 Inc.
The stores will be divided into 3 zones. The first zone will be a self-service zone where customers will experience the company’s services, games and apps. The second zone, called the ‘share zone’, will have a live feed for customers to see other subscribers’ experiences. Finally, the third zone will have a touchscreen tabletop for customers to compare Airtel’s plans.
The benefits promised
The telecom giant has interacted with thousands of customers in its innovation lab to ensure that Project Next’s Postpaid Promise plan can be implemented. The plan, starting on the 1st of August 2017, will let consumers roll over their unused monthly data to the next billing cycle to avoid data wastage. Additionally, users in a combined family plan will be allowed to customise their own plan.
Airtel’s project will also be supported by the new My Airtel App which will eliminate the need to visit a physical store. The project will also provide services like a pickup and repair of devices that have been damaged accidentally. Further, a new digital smartphone protection suite called Airtel Secure will provide protection against malware threats.
The current state of the telecom space
In the telecom space, a majority of the market share (about 80%) is held by the top 5 service providers. There is vigorous competition between them to maintain and improve their status. However, the entry of Reliance Jio Infocomm Ltd, in September 2016, caused a disruption in the market by threatening the control of the top firms.
In March 2017, following Jio’s entry, Airtel suffered from a 72% dip in its net income and a 12% decrease in its revenue. It also recorded its lowest profits over the past 4 years. As Jio’s heavy discounts continue to attract customers, Airtel is being forced to make price cuts. Although Airtel has managed to widen its subscriber base, it faces intense competition and needs to fight extra hard to maintain its leadership position. Hence, Airtel’s Project Next comes as a move aimed at retaining market dominance.
Post Jio’s offer of free voice and data plans, telecom tariffs have declined and consumer spending fell by 26%. This lower aggregate revenue for the sector has translated into lower collections for the government. This is because 12% of every telecom company’s adjusted gross revenue goes as regulatory fees to the government.
Are mergers the new tool?
To remain competitive, Vodafone India and Idea plan on merging and creating one entity that would lead the market. Airtel too is keen on merging with the Indian unit of Norway’s Telenor. For this, it has received approval from the Securities and Exchange Board of India, the Bombay Stock Exchange, and the National Stock Exchange.
Furthermore, if Bharti Enterprises and the Tatas join forces, their combined entity would have a revenue market share (RMS) of 40%. This is only 4% lesser than the potential RMS of the merged Vodafone-Idea entity. Hence, Airtel’s introduction of Project Next and its upcoming merger is indicative of the swift measures companies need to take in order to remain competitive.
There is speculation about whether or not Reliance’s Jio will it continue to grow in the future, especially post-March 2018 when its free and cheap plans will come to an end. Airtel must keep a close watch on its market share, even though it dropped by only 0.5% due to Jio’s entry. Airtel must also focus on maintaining its services, pleasing its customers and preparing for a new revenue stream from smart city projects and the Digital India initiative.
Featured Image Credits: Visual Hunt
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