Emerging Markets Communications Strategies

Analyzes the issues facing existing and new players who are looking for a share of growing mobile markets in over 30 developing countries, including the developing regions of Asia and Africa.

February 29, 2012 14:45 telliott

At MWC yesterday, several emerging market operators, led by keynoter Sunil Mittal of Bharti Airtel, cited a lack of affordable smartphones as the key obstacle to growing data services and – not coincidentally – ARPU. (GSMA covers the talks here.)

Mittal called for GSMA to mount a program aimed at producing a $50 smartphone in a year.

As goals go, this is less dramatic than President Kennedy’s 1961 challenge to put a man on the moon before the end of the decade. SA’s Wireless Smartphone Strategies service projects that just under 5% of global smartphones will ship this year with a wholesale ASP under $100, so much of the heavy lifting of meeting the $50 price point has already been done. (See “Global Smartphone Sales Forecast by Price-Tier: 2003 to 2016”.)

Still, it’s ambitious. But even more ambitious would be to offer a $50 smartphone that people in developing countries would actually want to buy and use. I hate to keep beating up on the $38 Aakash tablet – actually, that’s not true: I love beating up on it – but the lesson there is that meeting a price point without providing value for money is a bad idea.

Our recent interviews with potential tablet buyers in developing countries and before that with first-time phone users clearly demonstrated that low and middle income customers are willing to accept some compromises to meet their budgets, but not every compromise. A one megapixel cameraphone might be acceptable, but don’t try to foist off some old VGA sensors just to keep the BOM down. (See “Tablet Prospects in Developing Countries: The Voice of the Consumer” and “Voices of the Next Billion: Mobile Adoption at the "Bottom of the Pyramid")


For SA’s blogging from Barcelona, click here

February 21, 2012 18:54 telliott

In the past year a number of infrastructure sharing deals and outsourcing of network management from firms like Ericsson, Nokia Siemens Networks and Huawei have been announced across a wide spectrum of developing countries. For operators seeking to reduce expenditures as ARPUs relentlessly decline, these various techniques for cost sharing and organizational optimization can be very attractive. But is it also possible that such practices lower the barriers to entry or to expansion to the extent that competition in a given market is effectively enhanced?


See "Can Outsourcing, Infrastructure Sharing and Managed Services Lead to More Competition?"

February 21, 2012 02:33 rgupta


In emerging markets, some operators like Bharti Airtel and China Mobile launched their own app stores. This has given developers an opportunity to provide localized applications to operators. Some handset vendors like Nokia also focus a lot on localized app stores, but generally speaking, developers in emerging markets find operators easier to deal with as they understand local markets better than international vendors. However, in emerging markets operators have started focusing on app stores to boost their ARPUs.

Since smartphones are just 5-8% of the total installed base and less than 50% of the handsets have even GPRS capability, can app stores really be successful? 


See:  Localization is a Key to Success for App Stores in Emerging Markets



February 2, 2012 18:25 rgupta

The Supreme Court of India today cancelled 122 2G licenses that were granted in 2008 mostly to new players but also to Idea Cellular and Tata Teleservices. The court has given four months to the government to auction these licenses and till then the existing operators would continue to operate, so nothing will happen to the existing subscriber base. However, it would be a major setback for the foreign operators like Etisalat and Telenor, which have made substantial investment in passive infrastructure and subscriber acquisition. For a discussion of Telenor’s entry into India, see “Telenor's India venture: Is it a misadventure?

It will be very difficult for all the operators whose licenses have been cancelled to participate in the fresh auction. Most of these companies don’t have the financial muscle to participate in the auction as any fresh auction would cost them around US$ 1-2 billion. (This is a conservative estimate as for 3G licenses in 14 circles Bharti paid around US$ 3 billion)  Even those who would participate and win after paying such a huge price would find it difficult to compete with big players like Bharti Airtel and Vodafone. So in a nutshell the court verdict would eventually result in a few operators in each of the circles; tariffs will no longer be low as there won’t be any player which can afford to play the game based on cheap tariffs after paying huge auction money.

The government and the regulator are working on an exit policy for the operators but this would not solve the problem of the foreign players. Foreign players entered Indian market with the intention to compete in the Indian market and were here to stay and expand their businesses. The court verdict has put them in a Catch 22 situation. If they decide to exit, they will lose out a lot in terms of subscriber base and investment made, but if they don’t , they will have to shell out huge amounts to get these licenses back again. Essentially this would mean going back to the drawing board and chalking out a new strategy to get returns on the investments. At present the focus of these players is using cheaper tariffs to add new subscribers in smaller towns and villages, but the ROI demands of new license fees mean they would have to focus on high ARPU customers even though they don’t have 3G licenses, which is definitely an uphill task. 

- Rahul Gupta

See also, “Low Income Indian Mobile User Survey Analysis: Basic Services”