Telecom Tuesday: Tata Tele growth, BSNL MNP Implementation, Rural Internet Penetration

Tata Teleservices has not become the 4th largest Telecom Operator in India

Tata Teleservices has crossed the 75 million subscriber mark to become the fourth largest telecom operator in the country leaving behind state operated BSNL. The three telecom operators Airtel, Vodafone and Reliance have all over 100 million wireless subscribers with Airtel at the top.
The growth of Mobile subscribers has been primarily led by Tata Docomo, the GSM based offering which has constantly launched path breaking pricing plans as well as innovative data schemes. Infact, Tata Docomo launched last year with “one paisa per second” plan which set the tone for Entire Indian telecom Industry.
Tata Tele has doubled its subscriber base in last one year going from 38.1 million mobile subscribers in July 2009 to 76.9 Million in August 2010.

BSNL says it is ready to offer MNP to its subscribers

Mobile Number Portability has been already seen postponement of dates more than 4 times. But, it seems that we may get lucky the 5th time. There are  signs that MNP will be implemented this time.
BSNL has gone ahead and announced that it is ready with its infrastructure to implement MNP for its subscribers.
Having said that, it does not necessarily mean that larger Operators will be ready by then…Infact, they are quite reluctant to offer MNP to their subscribers and fear that the service may lead them to lose a significant number of subscribers to their competitors. Also, some of these Telecom operators want compensation from the government in lieu of possible financial loss that they will suffer after implementing the MNP.
Guess, only time will tell if MNP will be implemented by Oct. or we will see yet another postponement.

84% of rural India are unaware of Internet

Although, Urban India has adopted Internet in large numbers (especially younger generation), Internet penetration in Rural India is close to zilch. Even though Government is making huge efforts to increase the penetration, it seems to be failing miserably.
According to the survey conducted jointly by IAMAI and IMRB, about 84 percent of people in rural India are not aware of Internet. The organizations believe that this lack of awareness is the primary reason that has prevented internet take-up in rural India.

The research further found that 38 percent of rural inhabitants feel no need for internet access. Further reasons for not using the internet include lack of an internet access point (31%), unfamiliar with computers (31%), no computer available (28%), need for guidance (28%), no electricity (22%), and not being able to afford internet (10%).

At present, common service centers and cyber cafés serve as the primary mode of accessing internet, with more than 70 percent of the rural population accessing the internet this way.

Bharti Airtel–Perfect example of outsourcing all its activities! But can it succeed in Africa?

Airtel is one of the most prominent telecom companies in the world with its services spanning 19 countries in South Asia and Africa. It has a number of firsts to its credit which has positioned it much ahead of its competitors. It’s bouquet of fixed – line services, mobile services and also broadband have positioned it in a league of its own.

These statistics are a pointer of its growing dominance over others –

• 140+ million subscribers as of July 2010 (Vodafone comes way behind at 111 million subscribers)
• World’s third largest single country operator and fifth largest telecom operator in the world
• First Indian telecom operator to achieve the Cisco Gold certification for good competency, service, support and customer satisfaction standards
• First mobile telephony company to outsource everything except marketing, sales and finance

It is the last point which made me thinking. This has turned out to be the reason for the wide gulf between the best and the rest.
This made me understand and analyse as to what Airtel really did.
Airtel outsourced their IT processes to IBM, entire network operations to Ericsson and Siemens along with Alcatel Lucent recently and the transmission towers to another company

So what did this initiative bring for them?

It reduced has their costs considerably and they were able to acquire more customers and were able to pass on these savings to the customers instead of the shareholders and this increased their customer base even more and they again followed this pattern
Airtel was also able to differentiate themselves easily from the rest in the market who were and have been in the RED for a long period of time. Being in a position where they reduced their costs considerably, they had the opportunity to control the market and introduce various initiatives without being majorly affected in terms of revenues / profits.
Airtel has done this successfully in India and is now on a mission to implement the same in Africa. It has embarked on a number of initiatives –

• Airtel paid US $10.7 billion to acquire Zain, the Kuwait based mobile telephone company’s operations in 15 African countries. This has given it a strong chance of increasing its operational base
• It is betting on opportunities in Africa where the mobile penetration level is less than 32% which is much lesser than India and there are fewer competitors
• It has outsourced its IT to IBM for 10 years and is looking for prospective vendors to outsource its network operations
• It has hired Ogilvy for its marketing, branding and PR activities across the continent

But the biggest challenge facing it currently is the different cultures, demographics and habits of people in the 15 different African nations. Could constant change of names from Kencell, Celtel, Zain and finally Airtel really change people’s perceptions of a telecom provider?

Only time will tell. But till then we can be contented to see an Indian telecom provider making it big at the world stage.
What do you think is the best strategy for Airtel to succeed in the African continent?