the next billion customers
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The next billion customers. Ayesha Zainudeen [email protected] LIRNEasia Media Workshop: Singapore 28 February 2007 fieldwork by funded by IDRC. Agenda. Research methodology & key findings: Harsha de Silva The SMS story and others Lorraine Carlos Salazar - PowerPoint PPT PresentationTRANSCRIPT
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The next billion customers
Ayesha [email protected]
LIRNEasia Media Workshop: Singapore 28 February 2007fieldwork by funded by IDRC
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Agenda
Research methodology & key findings: Harsha de Silva
The SMS story and others Lorraine Carlos Salazar
The next billion customers Ayesha Zainudeen
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Ownership and GDP per capita (USD, PPP)
23%
9%
22%
60%
76%
11%
23%
7%
14%
63.60%
80.70%
59.00%
38.00%
22.70%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pakistan India Sri Lanka Philippines Thailand
% a
t b
ott
om
of
pyr
amid
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
GD
P p
er c
apit
a, U
SD
(P
PP
)
Own a mobile Own a fixed phone
Own nothing (but use something) Per Capita GDP PPP (US $)
Recap…low levels of ownershhip
Pakistan IndiaSri
LankaPhilip-pines
Thailand
Total number of phones per 100 pop.
29.4 13.4 36.6 45.4 56.7
(2006 Q4) (2006 Q1) (2006 Q4) (2005 Q4) (2005 Q4)Notes: India on an April – March reporting period ; Pakistan on a July – June reporting period; Other countries follow Jan – Dec (calendar year) reporting periods. Sources: India-COAI, TRAI; Thailand–Company Reports; Pakistan–PTA; Philippines–NTC; Sri Lanka- TRC; 2000 onwards from company reports; World Bank (2006); CIA Fact Book (2005)
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Those who own a phone, chose to do so for convenience rather than cost
Primary reason for choosing to own a phone
0%
20%
40%
60%
80%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f pho
ne o
wne
rs
The convenience (accessibility at any time) It is cheaper
For privacy So I don't have rely on other people
Other
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But those who do not, are held back by affordability
Reasons for not owning a phone
75% 82%72% 77% 77%
18%16%
19% 15% 15%
7% 8% 7% 7%2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f n
on
-ow
ner
s at
BO
P
I cannot afford it Don't need one Other
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Affordability as big a problem for urban as rural
Cannot afford to own a phone
79% 81%75% 75%
35%
73% 73% 72% 72%
38%
0%
20%
40%
60%
80%
100%
Pakistan India Sri Lanka Philippines Thailand
% o
f n
on
-ow
ner
s at
BO
P
Urban
Rural
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The expected cost of getting connected is high…
Expected cost of a new phone by non-owners
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f non
-ow
ners
at B
OP >USD 176
USD 146-175
USD 116-145
USD 86-115
USD 56-85
USD 26-55
<USD 25
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…compared to the cost that can be afforded
Initial cost that prospective owner can afford
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f p
rosp
ecti
ve o
wn
ers
at t
he
BO
P
Less than USD 10 USD 10 - 30 USD 31 - 50 USD 51 - 70 More than USD 71
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Expectations & affordability are more in-line re monthly charges
Expected monthly charges by non-owners
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f non
-ow
ners
at B
OP
above USD20
USD16-20
USD11-15
USD5-10
below USD5
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Monthly charges that prospective owners can afford
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
%
of
pro
spec
tive
ow
ner
s at
th
e B
OP
USD 16 - 20
USD 11 - 15
USD 5 - 10
Less than USD 5
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Non-owners who plan to buy a phone in the next two years
53%
38%
53%
42%38%
0%
10%
20%
30%
40%
50%
60%
Pakistan India Sri Lanka Philippines Thailand
% o
f n
on
-ow
ners
plan to buy a phone in the next tw o years
The next billion?
South Asia South-east Asia
Pakistan India Sri Lanka Philippines Thailand
Vertical growth, millions (HH obtaining additional connections)
4 21 0.3 3 0.1
Horizontal growth, millions (non-owners joining market)
26 80 1 7 1
Possible new connections at BOP, millions, next 2 years
30 101 1 10 1
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Higher % of new connections in urban IN, PH and TH
Those who plan to buy a phone in the next two years: Urban vs. rural
53%49%
55%47%
73%
52%
37%
52%
39%45%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pakistan India Sri Lanka Philippines Thailand
% o
f n
on
-ow
ner
s at
BO
P
Urban
Rural
Telecom-transport trade-off? Telecom-transport trade-off?
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Males more certain about purchase in coming two years… esp. in PK, LK & TH
Those who plan to buy a new phone during next two years
64%
39%
70%
43%47%
43%
36%
52%
41%
28%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pakistan India Sri Lanka Philiphines Thailand
% o
fno
n-o
wn
ers
at B
OP
Male
Female
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Prospective owners are heavier users
Average number of calls (out + in) for the
month
Planning to obtain phone
Not planning to obtain
phone
Pakistan 21.6 16.3
India 40.0 31.6
Sri Lanka 15.0 8.7
Philippines 15.3 9.3
Thailand 30.4 35.8Source: Diary
Except in ThailandExcept in Thailand
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Prospective owners are heavier users
Average number of calls for the month: prospective owners vs. non-owners
21.6
40.0
15.0 15.3
30.4
16.3
31.6
8.7 9.3
35.8
0
5
10
15
20
25
30
35
40
45
Pakistan India Sri Lanka Philippines Thailand
aver
age
nu
mb
er o
f ca
lls
Planning to obtian phone Not planning to obtain phone
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Most would use phone for keeping in touch & emergency communication
What respondent would use the phone for if given one at an affordable rate
84%
69%
44%
58%
50% 52%57%
17%13%
26%
11%
21%
10%
18%
5% 3%2% 1% 2% 1%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pakistan India Sri Lanka Philippines
% o
f re
spo
nd
ents
To keep in touch with family andfriends
Only in an emergency
For networking
To enhance my income
Other
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Type of phone prospective owners would buy
23% 29%
52%
8%
68%67%
40%
91%
9% 4% 7% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
Not decided yet
Mobile
Fixed phone
Growth mainly mobile
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Fixed sector growth - post liberalisation (Year 0 onwards)
0
5
10
15
20
25
30
35
40
45
50
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 1
0
Year 1
1
Year 1
2
Year 1
3
Year 1
4
Year 1
5
Fix
ed p
ho
nes
per
100
in
hab
itan
ts
Pakistan
India
Sri Lanka
Philippines
Thailand
Fixed phone growth since liberalization
Thailand; CAGR 10.3%
Sri LankaCAGR = 18.8%
Philippines; CAGR=11.1%
PakistanCAGR =11%
IndiaCAGR = 9.5%
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Mobile sector growth - post liberalisation (Year 0 onwards)
0
5
10
15
20
25
30
35
40
45
50
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 1
0
Year 1
1
Year 1
2
Year 1
3
Year 1
4
Year 1
5
Mo
bil
e p
ho
nes
per
100
in
hab
itan
ts
Pakistan
India
Sri Lanka
Philippines
Thailand
Mobile phone growth since liberalization
Thailand; CAGR = 49.6%
Sri LankaCAGR = 50.8%
Philippines; CAGR=68.8%
PakistanCAGR =109%
IndiaCAGR = 87.8%
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Higher preference for fixed phones in rural areas, except Philippines
Kind of phone prospective owner would buy: urban vs. rural
0%10%20%30%40%50%60%70%80%90%
100%
Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Pakistan India Sri Lanka Philippines Thailand
% o
f p
rosp
ecti
ve o
wn
ers
Have not decided yet
Mobile Phone
Fixed Line phone
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Preference for fixed phones among females in PK and LK
Type of phone prospective owner would buy
0%
20%
40%
60%
80%
100%
Male Female Male Female Male Female Male Female
Pakistan India Sri Lanka Philiphines
% o
f p
rosp
ecti
ve o
wn
ers
at B
OP
Fixed Mobile not decided
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Recap… Females more reliant on household fixed phones & other peoples’ phones
Most frequently used phone: Household fixed phone
11% 9%
19%
3% 4%
16%
10%
23%
4%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pakistan India Sri Lanka Philiphines Thailand
% a
t B
OP
Male
Female
Most frequently used phone: Someone else's phone (neighbor, friend, family, work)
13%8%
27%
34%
13%
48%
16%
39%33%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pakistan India Sri Lanka Philiphines Thailand%
at
BO
P
Male
Female
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A phone is possible on incomes of USD2 per day
Income distribution of prospective owners
27%
55%
35%
5%
48%
44%
56%
64%
9% 9%
28%
1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pakistan India Sri Lanka Philippines
% o
f p
rosp
ecti
ve o
wn
ers
USD151-500
USD51-150
Below USD50
The addressable market does not stop at USD100 per month; it goes down further. The addressable market does not stop at USD100 per month; it goes down further.
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Internet…
Pakistan India Sri Lanka Philippines Thailand
Use the Internet
2% 0% 1% 9% 10%
Internet use
3%
0%
2%
12%
14%
1%0%
1%
6%
7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Pakistan India Sri Lanka Philiphines Thailand
% a
t B
OP
Male
Female Large gender divide, even in South East Asia
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…what internet??
Have not heard about the Internet before
36%
72%
29%
14%
36%
0%
20%
40%
60%
80%
Pakistan India Sri Lanka Philippines Thailand
% a
t th
e B
OP
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BOP in summary Almost everyone can afford to use a phone, but not to
own one Benefits of ownership (direct access) are known
Perceived as improving efficiency and income in India Phones are highly valued for emergency communication and
keeping in touch High price expectations drive a cost-cutting culture
BUT, this is not a bad thing: it seems to be driving affordable access at the bottom of the pyramid
Next Billion: affordability is a key barrier 140m at the BOP in IN, PK, LK, PH, TH in next 2 years The addressable market does goes below USD100 a month Individual use is still very low; Internet far far away
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To think about…
Telecom operators Leverage benefits of direct access
Security, friends & familyParticularly in India: cost saving + income
enhancing Increase awareness on efficiency economic gain
Collaborate on meaningful content SMS based services vs. Bollywood movies
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To think about…
Handset manufacturers Affordable handsets with local language
SMS capability Ultra low-cost phones with “warranty”? Installments?
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Thank you