Telecommunication New 1

8/8/2019 Telecommunication New 1

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TELECOMMUNICATION-RURAL STRATEGIES


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TELECOM SECTOR: A GLOBAL SCENARIO

The Indian telecom market has been displaying

sustained high growth rates. Riding on expectations of

overall high economic growth and consequent rising

income levels.

The Indian telecom network is the eighth largest in the

world and the second largest among emerging

economies.

The Indian telecom market size of over US $ 8 billion is

expected to increase three fold by 2012.

This exponential growth of mobile telephony can be

attributed to the introduction of digital cellular

technology and decrease in tariffs due to competitive

pressures.


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INDIAN TELECOM SECTOR

Indian Telecom sector, like any other

industrial sector in the country, has gone

through many phases of growth and

diversification.

The Indian telecom sector can be broadly

classified into Fixed Line Telephony and

mobile telephony. The major players of the

telecom sector are experiencing a fierce

competition in both the segments.

The Public Players and the Private Players

share the fixed line and the mobile

segments.

Major players are BSNL, MTNL, TATA,

AIRTEL.


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OPPORTUNITIES

India offers an unprecedentedopportunity for telecom serviceoperators.

A host of factors are contributing toenlarged opportunities for growth and

investment in telecom:

an expanding Indian economy withincreased focus on the services sector

population mix moving favorablytowards a younger age profile

urbanization with increasing incomes

Investors can look to capture the gainsof the Indian telecom boom anddiversify their operations outside

developed economies.


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STRATEGIES FOR ENTERING RURAL

MARKET:

1. Low pricing

2. No brands

3. Educating ruralpeople

4. Understanding theirneeds & requirements

5. Easy accessibility


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BHARTI AIRTEL


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COMPANY PROFILE

They served an aggregate of105,195,762customers as of June 30,2009; of whom102,367,881 subscribe to their GSM servicesand 2,827,881 use Tele media Services either

for voice and/or broadband access delivered

through DSL.

They also offer an integrated suite of telecom

solutions to their enterprise customers, in

addition to providing long distance connectivity

both nationally and internationally.

The company also deploys, owns and manages

passive infrastructure pertaining to telecom

operations under its subsidiary Bharti Infratel

Limited.


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BHARTI AIRTELVISION

By 2010 Airtel will be the most

admired brand in India.

Loved by more customers: Targeted

by top talent Benchmarked by more

businesses

We at Airtel always think in

freshand innovative ways about theneeds of our customers and how wewant them to feel. We deliver whatwe promise and go out of our way

to delight the customer with a little

bit more.

MISSION

Recruit & Maintain Calibre Working

Staff

Provides Customer Specific Software

Solution

Continues Improvement in Software

Quality

Not remain as Only SoftwareSolution Provider, but be as

Continues Service Provider

To empower stakeholders in servicesand inventories to deal with

associate


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CHALLENGE/OPPORTUNITY

Bharti Airtel was faced with the challenge of profitably serving the rural areas ofIndia. It is an extremely daunting task due to a variety of factors:

rural users' low incomes,

a widely dispersed population,

and a less than ideal public infrastructure (i.e., roads, electricity, etc.).

Specifically, Bharti Airtel had to address the following conditions:

Low income

Besides deploying a scalable network, Bharti Airtel also needed to establish a cost-

effective marketing, sales, and distribution channel to provide service promotion and

customer support.

Opportunities:

Rural dwellers place a high value on communications.

Various studies (e.g., fishermen in the Indian state of Kerala and grain producers in

Niger) have shown that increased mobile service penetration in rural areas could have

tremendous socio-economic benefits for the rural population.


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ALLIANCES/PARTNERSHIPS

To extend its reach in India's rural markets, Bharti Airtel is focusing on

innovative initiatives.

Bharti Airtel has launched micro financing agreements in collaboration withNokia and SKS Micro-finance.

Bharti Airtel also formed a joint venture with the Indian Farmers Fertilizer

Cooperative Limited (IFFCO).

IFFCO Kisan Sanchar provides subsidized handsets and connections at

competitive rates in rural areas.


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STRATEGY

Bharti Airtel first studies the commercial viability of a rural community (and the surrounding

villages) based on parameters such as source of:

livelihood,

average income,

and involvement in frequent commercial transactions or travels.

Bharti Airtel has adopted the strategy of direct communications to market its value proposition

to rural customers.

The company has developed a shared phone service called Public Call Offices (PCOs) in rural

regions.

Bharti Airtel Service Centers have been set up in villages to address customer queries and

complaints.

Bharti Airtel has already established over 18,000 service centers in rural India, covering over

400 languages and local dialects.


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SUCCESS FACTORS

Bharti Airtel does not provide separate rural key performance indicators, but the

following results have been publicly announced:

As of April 2010, Bharti Airtel's network covered 440,000 villages in India, which,together with its urban services, accounted for coverage of approximately 84

percent of India's total population.

As of March 31, 2010, Bharti Airtel had added 9 million new customers to reach atotal of 128 million connections. Ovum estimates that rural users accounted for 60

percent of the company's net subscriber adds in that quarter.

Despite Bharti Airetel's overall ARPU of just under $5, its mobile division's earningsbefore interest, taxes, depreciation, and amortization (EBITDA) margin wasapproximately 30 percent, and its earnings before interest and taxes (EBIT) marginwas approximately 19 percent, which indicate a healthy return on overall (including

significant rural) investments.


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VODAFONE


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VODAFONE

Vodafone Essar, formerly known

as Hutchison Essar is a cellular

operator in India that covers 23 telecom

circles in India based

in Mumbai.[2] Vodafone Essar is the Indian

subsidiary of Vodafone Group 67%

and Essar Group 33%. It is the second

largest mobile phone operator in terms of

revenue behind Bharti Airtel, and third

largest in terms of customers.

We are no longer a mobile company

anymore. We are now a totalcommunications company, asserted Arun

Sarin, CEO, Vodafone, in his first exposure

to the media at the 3GSM World

Congress 2007, after announcing his plans

to acquire a 67 per cent stake in Hutchison

Essar for $11.1 billion.


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Cont

Vodafone, of late, has been changing its strategy. In emerging markets, the focus hasbeen on growth.

Vodafone is gung-ho on the mobile growth for the simple fact that while there are 1.4billion TV sets globally and 1 billion personal computers, there are over 2 billion

mobile phone users.

The company has already been exploring the mobile advertising and social networkingspaces, besides the mobile payments (including money transfers) and mobile TV.

Vodafone already has partnerships towards these ends with the likes of YouTube

(videos), MySpace (social networking), Google (search), Yahoo (Instant messaging)and eBay to name a few.

Vodafone At Home and Vodafone At Office have been great success stories of thecompany to address fixed-line revenue.


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STRATEGY

A low-cost network

Self-evidently, consumers in rural markets are extremely price conscious.

They are able to compete in an extremely low calling charges environment

through efficiency and careful controlof operations.

In India, along with two other operators, established an independent

company, Indus Towers, to build the network. Coupled with innovative

distribution and customer service models, this enables vodafone to offer call

rates as low as 2 US cents per minute, down from 5 cents in 2001 and 40

cents in 1995.

Vodafone offer small denomination pre-pay vouchers to make their service

more accessible to people on low incomes.


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Cont

Moreaffordable handsets

Historically, the price of the handset has been a key barrier to

affordability of mobile communications, particularly in

countries where phones are

not subsidised.

With Vodafones unique scale and scope they spotted the

opportunity to develop own-branded, affordable handsets.


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Cont.

Connectingremote communities

To reach rural communities, vodafone need to address both

network and distribution challenges.

For example, in India, where 70% of the population

is rural, they have gained access to 69% of the population

by setting up 500,000 points of sale in 100,000 towns and

villages. Their customer service vans tour remote areas

attracting 2,000 walk-ins per day, and self-service

prepay recharge kiosks in urban centres provideapproximately 22,000 transactions per day.

Establishing a network where there is neither an electricity

grid nor a transmission link to the fixed-line network,

requires an innovative approach.


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INVESTMENT PLANS

The planned $2 bn capex in the next two years announced by Vodafone, following the

acquisition, may not bring in good results if they want to gain significant market share as its

rivals-Bharti and Reliance have decided to increase their capex during the fiscal 2007 itself.

Vodafone's target to achieve 20-25% market share by 2010-11 and market penetration of

more than 40% may be realistic. The operational plan focuses on the following objectives:

Expanding distribution and network coverage,

lowering the total cost of network ownership,

growing market share,

driving a customer focused approach, etc.

Besides, Vodafone, a new player in a new market, will face competition from established

telecom companies, when it expands its network.


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RURAL STRATEGY Contradictory to Hutchison Essar's plans, Vodafone will have a rural

thrust and a part of the $2 bn investment in two years will be used totap the rural market,.

With 45% of the growth likely to come from the rural belt and

deployment and roll out in Indian terrain being a tough affair, the

planned investments may not be adequate.

Vodafone could source handsets at special rates because it enjoys

economies of scale, a big achievement for Vodafone vis-a-vis Indian

operators.

Without a strong penetration in the rural markets, no telecom operatorcan sustain in the race.

Tata Teleservices is planning to focus its strategy on rural market

expansion.


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Cont

Reliance Communications is also committed to bringing about acomplete revolution in rural telephony. This gigantic operation istargeted to cover two-thirds of Indian villages and over 5,700 citiesand towns.

Bharti Airtel has also set in motion the rural and semi-urban marketexpansion and continues to lead the effort. Increasingly, the focus ison B & C circles and specifically semi-urban and rural areas.

Bharti Airtel is following the 'match-box approach' which essentially

will ensure Airtel's availability wherever a match-box is available,ven in the smallest and remotest corners of the country. The other keyinitiative is its 'Chapa Chapa' approach which supports its objectiveof reaching out to all towns with a population of less than 5,000.


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Vodafone says:

Our strategy is to compete vigorously on price while offeringthe highest standards in the industry. Savings are alreadybeing achieved without compromising our responsibilities tosociety and the environment.

We are doing this by:

Leveraging our scale to share global resources, such asprocurement and IT

Sharing networks with other operators

Outsourcing services where this is more efficient

Standardising equipment and systems across the Group

Employing new technology to reduce capital expenditure.


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RELIANCE COMMUNICATION


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RELIANCE COMMUNICATION

TARGETS RURAL CUSTOMERS

Three new initiatives launched known as, Grameen VAS

,M2M (Machine to Machine) solutions and BharatNet plan

for rural customers.

The Indian telecom wireless rural subscriber base is now over

125 million.

The next wave of telecom growth is emerging from rural India.


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GRAMEEN VAS

RCOMs Grameen VAS services cater to the specific local

needs of rural mobile consumers in over 500,000 Indian

villages.

Grameen VAS would cover several specialized services

including :

1. Mandi Bhav,

2. Agriculture & Animal Husbandry Updates,3. Weather Forecast, Local Info, Samachar etc. all in multiple

Indian Languages.

To increase adoption, Grameen VAS is priced at Rs. 15/month.


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M2M

Machine to Machine Applications:

These are mobile applications that aid automation,

surveillance, remote monitoring, and data gathering.

The M2M opportunity for rural market includes

Automation of Agro & Irrigation services,

water level monitoring, data gathering for milk & agri-cooperatives, fisheries,

poultry, and soil analysis.


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BharatNet Plan:

RCOMs strategy to drive rural internet penetration.

To address this clear need, RCOM is launching BharatNetplan, the high-speed wireless internet service in over 20,000

rural locations across the country.

As part of this, RCOM is offering BharatNet internet access

for just Rs. 98/weekwith downloads up to 350MB.


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OTHER SCHEMES


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A fewmonths earlier, Airtel entered intoa joint venturewith the Indian

Farmers Fertilizer Cooperative Ltd (Iffco) tooffer specificallydesigned

products and services.

Mobile phonemanufacturer Nokia,which hadearlier launchedabasic

handset with a torch andanalarm clock, has nowgonea step further

with Nokia Life Tools

Bharti Airtel has set up, Airtel Service Centres inrural areas to provide

services and handle customer queries and complaints,eliminating the

needfor call centres.

companies havealso tied up with Nokia to launch aneducational

initiative inorder togiverural users a liveexperienceonmobility

services, that include hands-on trainingonmaking thefirst phone call and

sending SMS with localized content.


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CONCLUSION

With Vodafone-Essar ,Idea Cellularand Reliance

Communications The Indian telecom sectoradds anaverage

of 10million subscribers everymonth,ofwhich rural areas

account foroverfivemillion.

Nokia sells over 1.6million phones yearly inrural areas.

Market saturation

Rural markets are lucrative in the longrun.

Telecommunication New 1

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