TELECOMMUNICATION-

RURAL STRATEGIES
 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.
 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.
OPPORTUNITIES
 India offers an unprecedented opportunity
for telecom service operators.

 A host of factors are contributing to

enlarged opportunities for growth and
investment in telecom:
 an expanding Indian economy with
increased focus on the services sector
 population mix moving favorably towards a
younger age profile
 urbanization with increasing incomes

 Investors can look to capture the gains of

the Indian telecom boom and diversify their
operations outside developed economies.
STRATEGIES FOR ENTERING RURAL
MARKET:

1. Low pricing

2. No brands

3. Educating rural
people

4. Understanding their
needs & requirements

5. Easy accessibility
BHARTI AIRTEL
 COMPANY PROFILE

 They served an aggregate of105,195,762 customers as

of June 30,2009; of whom 102,367,881 subscribe to
their GSM services and 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.
BHARTI AIRTEL
VISION MISSION 

 By 2010 Airtel will be the most admired  Recruit & Maintain Calibre Working
brand in India. Staff

 Loved by more customers: Targeted by  Provides Customer Specific Software

Solution
top talent Benchmarked by more
 Continues Improvement in Software
businesses
Quality
“We at Airtel always think in freshand
 Not remain as Only Software Solution
innovative ways about the needs of our Provider, but be as Continues Service
customers and how we want them to feel. Provider
We deliver what we promise and go out
 To empower stakeholders in services
of our way to delight the customer with a
and inventories to deal with associate
little bit more.”
CHALLENGE/OPPORTUNITY

 Bharti Airtel was faced with the challenge of profitably serving the rural areas of India. 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
 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 with Nokia 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.
 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.
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 a total 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 earnings before
interest, taxes, depreciation, and amortization (EBITDA) margin was approximately 30
percent, and its earnings before interest and taxes (EBIT) margin was approximately 19
percent, which indicate a healthy return on overall (including significant rural) investments.
VODAFONE
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 total
communications 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.
Cont…

Vodafone, of late, has been changing its strategy. In emerging markets, the focus has been on
growth.

Vodafone is gung-ho on the mobile growth for the simple fact that while there are 1.4 billion
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 networking spaces,
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 the company to
address fixed-line revenue.
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.
Cont…

More affordable 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 Vodafone’s unique scale and scope they spotted the

opportunity to develop own-branded, affordable handsets.
Cont….

Connecting remote 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 provide
approximately 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.
 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.
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 to
tap 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 operator

can sustain in the race.

 Tata Teleservices is planning to focus its strategy on rural market

expansion.
Cont…
 Reliance Communications is also committed to bringing about a
complete revolution in rural telephony. This gigantic operation is targeted
to cover two-thirds of Indian villages and over 5,700 cities and towns.

 Bharti Airtel has also set in motion the rural and semi-urban market
expansion and continues to lead the effort. Increasingly, the focus is on 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 key initiative is
its 'Chapa Chapa' approach which supports its objective of reaching out
to all towns with a population of less than 5,000.
Vodafone says:
Our strategy is to compete vigorously on price while offering the highest
standards in the industry. Savings are already being achieved without
compromising our responsibilities to society and the environment.

We are doing this by:

 Leveraging our scale to share global resources, such as procurement

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.

RELIANCE
COMMUNICATION
 
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.
GRAMEEN VAS
 RCOM’s 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

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.
BharatNet Plan:

 RCOM’s strategy to drive rural internet penetration. 

 To address this clear need, RCOM is launching “BharatNet

plan”, 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/week with downloads up to 350MB.
OTHER SCHEMES
 A few months earlier, Airtel entered into a joint venture with the Indian
Farmers Fertilizer Cooperative Ltd (Iffco) to offer specifically designed
products and services.

 Mobile phone manufacturer Nokia, which had earlier launched a basic

handset with a torch and an alarm clock, has now gone a step further
with Nokia Life Tools

 Bharti Airtel has set up, Airtel Service Centres in rural areas to provide
services and handle customer queries and complaints, eliminating the
need for call centres.

 companies have also tied up with Nokia to launch an educational

initiative in order to give rural users a live experience on mobility
services, that include hands-on training on making the first phone call
and sending SMS with localized content.
CONCLUSION

 With Vodafone-Essar ,Idea Cellular and Reliance

Communications The Indian telecom sector adds an
average of 10 million subscribers every month, of which
rural areas account for over five million.

 Nokia sells over 1.6 million phones yearly in rural areas.

 Market saturation

 Rural markets are lucrative in the long run.