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.

March 5, 2012 16:56 telliott

In the  talk at MWC in which he called for a $50 smartphone , Bharti Airtel Chairman Sunil Mittal also made an interesting observation about Airtel’s low price strategy in Africa: it isn’t working.

More precisely, what he said is that consumers haven’t responded to lower tariffs by talking more, which would at least sustain revenue. Instead,  he observed that “in Africa, subscribers use the money saved on lower-calling rates to buy food and not to talk more.”

The nerve! What’s the matter with these people? Buying food instead of talking on their phones about how hungry they are.

Seriously, Mittal’s remark seems like a staggeringly un-nuanced view of the African consumer, of a piece with his remark elsewhere in his speech that he was surprised to find there is no middle class in Africa.

That said, there undoubtedly are Africans for whom lower phone bills mean increased purchases of other - and more critical – goods.  But I think what we’re seeing here is the second edge of the dual edged sword that is demand inelasticity.

  • On the one hand, operators in countries like Angola have benefitted from the fact that high prices don’t seem to curtail demand: ARPU in Angola is about three times that of Ghana, but average minutes of use are actually higher. (See "Emerging Markets Mobile Subscriptions Forecast, 2010-2015: Sub-Saharan Africa")
  • On the other hand, as Airtel seems to be finding out, after a point cutting prices doesn't stimulate more use. 



Possibly Airtel’s African customers have said all they have to say.


PS. Mittal is also quoted as saying they were surprised at how expensive it is to operate in Africa. Sunil, man, give me a break! You mean nobody did any due diligence before writing that big check to Zain?

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