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TRANSCRIPT
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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.