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.

May 26, 2010 04:05 telliott
We recently did some interesting interviews with low-income mobile phone users in Manila. (See “Voices of the Next Billion: Initial Input from First Time Mobile Phone Owners in the Philippines.”) They were not the poorest of Manila’s poor, but they were poor enough, some with stories that were difficult to hear, like Edward, who took some architecture courses but has a part time job on a cleaning crew at a McDonald’s. He missed a call from a better job because nobody was home to answer the landline. He got a mobile phone after that, but the job won’t be calling him back – there’s too many others in line. Or Jennalyn, who makes $65 a month as a nanny, and whose husband had to go back to the family farm because he couldn’t get work in Manila. Obviously, we didn’t do the research to learn if being poor in Manila is a hard life – we pretty much knew that going in. (Although having names and faces and stories does take it out of the abstract a little.) A research goal we did have was to find out what people in constrained economic circumstances want in a mobile phone. There we did encounter unexpected things – not “rethink-your-entire-worldview” unexpected, but thought-provoking nonetheless. For example, not everybody wants a cameraphone, but for those who do, VGA resolution is not enough. Several people said a camera was a key factor in their next phone decision – but at least a megapixel. (This included non-cameraphone owners as well as those whose current phone has a VGA camera. Few respondents had digital cameras, so the cameraphone is their sole image recording device.)
  •  Edward, for example, wants to be able to take printable pictures of his 5 month old baby.
  • ­ Alvin, an unemployed 27 year old, has a used Nokia 3200 but would like to upgrade to a used E71, primarily for the camera. He wants to be able to upload pictures onto the Facebook account he maintains at Internet cafes.
I’m not arguing on the basis of a small sample that megapixel-plus cameras are the key to the low-income market. But I am suggesting that bare minimum functionality may be where planning offerings for the bottom of the pyramid should start – but it should definitely not be where it stops. 3G phones, while currently a bit of a stretch for this segment, ought to be within a reasonable planning horizon.

January 7, 2010 21:01 telliott
Barely two months after the break-off with MTN, Bharti is on a shopping spree once again. This time, instead of looking for big buy outs like MTN, Bharti is aiming at a smaller target: a 70% stake in Warid Telecom, the #4 operator in Bangladesh, for US$ 300 million. Warid has around 2.7 million subscribers, which is roughly how many Bharti adds every month in India. So clearly the story here isn’t the impact on Bharti’s bottom line, but rather what the acquisition says about the company’s growth strategy.  After having its fingers burnt twice with MTN, (for details see our recent report “Bharti Airtel- Looking to Start Afresh”) Bharti has now realized that deals of that scale happen once in a blue moon. If it is not content to stay only in India – and why would it be, since it competes with 10 or 12 price-cutting rival for low margin business? – it makes more sense to concentrate on smaller markets with growth potential. Not bad thinking really from the management. I don’t think Bharti will benefit substantially in the near term by foraying into nearby markets like Sri Lanka and Bangladesh, but if nothing else it will give jitters to the other multinationals competing there, like Telenor (majority owner of Grameenphone), NTT DoCoMo, which just last year bought 30% of Aktel, and Axiata, which owns 85% of Dialog in Sri Lanka. After all, here is a well-funded operator with a lot of experience in low ARPU markets, hoping to push a low-ranking operator further up the chart. Bharti’s timing is good, too, beating out Viettel, which was also interested in Warid. So is it a shift in Bharti’s foreign (acquisition) policy to give up on megadeals? It’s not right to say that there is a shift in policy but it’s proper to say that Bharti has become much more aggressive and opportunistic in looking at easier deals to do if they make strategic sense. We also suspect other operators will focus more on incremental expansion. Orange just announced it was done with megadeals, and Bharti competitors like Telenor and Etisalat have always expanded their emerging market footprints slowly and steadily. Might a mature North American operator look at home market saturation and consider a small presence in Africa? Might Telefonica think outside Latin America and look to potentially game-changing investment in a #3 or #4 operator in Asia, like Sun Cellular in the Philippines? And where will Bharti turn next? We shouldn’t be surprised to hear about Bharti acquiring a stake in some smaller African country like Tanzania. So keep watching this space.   - Rahul Gupta