News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Tuesday, 2 March 2010

The road to hell...

... is paved, as Dr. Johnson didn't ever say, with good intentions.

One such intention was set out here in the most recent DTW post, namely that this blog would review some of the predictions made in the Industry Outlook report that is made available for free downloading by Informa Telecoms & Media. The plan was to zero in on any predictions relating specifically to emerging markets and developing countries.

Two months have passed since that rash promise was made and not a peep has been heard from this once prolific blog - no fewer than 147 posts saw were published here in 2009.

Apologies, then, to anyone who has found DevelopingTelecomsWatch to be a useful source of news, commentary and speculation and who now wonders whether the blog has fizzled out of existence. Happily, for anyone that cares, this is not the case. That said, I do not expect to be writing anything like as often in 2010 than was the case last year. My commercial activities are, I am pleased to report, taking up far more time now, suggesting that this year will be more profitable than the one we have left behind us. I do hope that regular readers are facing this first year of a new decade with similar optimism.

Failure to deliver on good intentions notwithstanding, then, perhaps DTW and its writer are not on that proverbial road to hell.

What of our industry and its interests across emerging markets? Hellbound? Or good times ahead?

Belatedly, then, with two months of the new year having already passed, let's attempt to answer those questions by taking a look at a couple of the predictions made by the crystal ball gazers at Informa:

'So-called emerging markets will transition into a new phase of competition based on services and bring into question the validity of the term "emerging market" as it is understood in the telecoms sector today.'

Informa's report notes that "Until now, the term 'emerging market' in the context of the mobile sector has been used as a catch-all phrase to describe markets characterised by low penetration rates, a proliferation of mobile network operators, steep drops in the price of basic communications and resulting explosive mobile subscription growth."

This is familiar territory here at DTW. Numerous times, reference has been made to markets in which the price of mobile services has been squeezed down to a level that makes life very hard for some of the competing cellcos. In July last year, for example, this blog covered the decision of Millicom International Cellular to withdraw from all the Asian markets in which it once did business - Sri Lanka, Laos and Cambodia. The latter country certainly matches the Informa's report's reference to "a proliferation" of MNOs. No fewer than nine (!!) cellcos are currently fighting for business in a country with just 14.8 million inhabitants. Here they all are, with market share figures from Informa's WCIS product:
  1. Cellcard (GSM, 42.12% market share - the operator in which Millicom had a stake)
  2. Metfone (GSM, 18.86%, owned by Viettel of Vietnam)
  3. Mfone (GSM/W-CDMA, 15.52%)
  4. Hello (GSM, 13.38%, controlled by Axiata)
  5. Star-Cell (GSM, 3.56%, part of the TeliaSonera group)
  6. Beeline Cambodia (GSM, 2.90%, owned by Russia's Vimpelcom)
  7. qb (W-CDMA, 1.95%)
  8. Latelz (GSM, 1.32%)
  9. GT-TELL/Excell (CDMA, 0.39%)
Regular readers may have spotted that from time to time I like to share video clips of telecoms operators' TV advertisments from around the world. Latelz (AKA Smart Mobile), as the list above suggests, is one player that may need some pretty compelling advertising if it is to become a more significant player. You decide how powerfully the Smart Mobile case is made by these:

Cambodia is a pretty extreme case, perhaps, but DTW has also examined a number of African markets which seem to be ripe for mobile market consolidation. I daresay there are many more around the world in much the same state.

While I am insinctively in favour of competitive environments which offer value and choice to consumers of mobile services, I do also sympathise when I speak with employees of operators that are struggling to improve shareholder value in the context of dramatically slashed prices. These guys, it sometmes seems to me, can feel as if they are on that proverbial inferno-bound round. If Informa's prediction is on the money, however, perhaps that fiery destination need not be reached this year.

On to the next prediction with an emerging markets/developing countries angle...

'Mobile banking efforts will continue to proliferate in emerging markets, but in the short-term these will be more important as a customer acquisition and retention tool than as a genuine driver of significant new operator revenue streams.'

The efforts made to date in this area got some coverage here last year. In May we noted that giant cellco Bharti Airtel was looking to tap into the big opportunity presented by the fact that 85% of the citizens of its Indian home market do not have bank accounts. By August, readers were invited to consider whether mobile operators would necessarily dominate the market for mobile banking services aimed at turning a profit while going some way to alleviating the poverty of subscribers in developing countries. An alternative that we discussed was the possibility of operator-neutral solutions gaining traction.

The chaps at Informa were have not been alone in keeping discussions of this sort on the agenda for 2010. Indeed, mobile banking in emerging markets got a mention during the plenary session of last month's Mobile World Congress. Simon Rockman of the Register noted, however, with some distaste, "that transforming the lives of millions of people by giving them bank accounts – something that can make the difference between eating and starving - didn't garner the same round of applause" as that received by the GSMA project aimed at making every mobile phone use the same charger."

Writing up his notes from the Congress the following week, Rockman also wondered at some of the number crunching around the scale of the m-banking opportunity. He noted that day four of event saw an assembly of the mobile money working group that has received USD 12.5m from the Bill and Melinda Gates Foundation and is working towards the GSMA's target of getting 20 million of the billion people who have a mobile phone but do not have a bank account onto the first rung of the financial ladder.

Ignacio Mas, writes Rockman, gave a detailed account of what the Bill and Melinda Gates Foundation wants to achieve: "They wanted the very poor and insecure to be able to save", targeting people living on less than USD 2 per day. "As much as they have low subsistence incomes", reports Rockman, "the real problem is stability - they might only find work occasionally and have to eke out money until they next find work. Or if they are farmers they get paid seasonally at harvest time."

Without access to banks, continues Rockman, such people are very vulnerable: "They will often give the money to people they trust for safekeeping but these are people in a similar situation to themselves. Lack of stability means people get multiple jobs. They can't concentrate on what will get the best return and pull themselves out of poverty because they have to opt for stability."

This, and other challenges, blight the lives of so many people around the world that it does seem reasonable to suppose that a huge opportunity does exist for the telecoms industry to provide what the retail banking sector cannot in underdeveloped countries.

Well, I enjoyed finally finding the time to write something here after such a long hiatus - but will refrain from making rash promises about when the next article will appear. More soon, I hope, though.


  1. With regards to Cambodia those numbers seem to be incorrect or some discrepencies:

    Cellcard currently claims 2,500,000 subscribers
    Metfone claims 2,000,000
    Mfone isn't saying but maybe 1,000,000
    Hello claims 770,000
    Star-Cell claims less than 200,000
    Beeline claims 500,000 to 600,000
    Smart Mobile claims 400,000
    qb isn't saying but maybe 40,000
    Excell claims 40,000

    Certainly Star-Cell is not number 5 and their active users are less than 15% of their (unaudited) claims.

    qb and Excell are barely active and focus on niche segments only.

    The other 6 players are competing much more agressively and with much larger funding focused on mass market.

  2. James, thanks for the alternative numbers. Mine are drawn from Informa's WCIS product: I'd be keen to know where you've seen the operators' claimed numbers. Press releases or something else in the public domain to which you could post links? Thanks!

  3. Cellcard, Metfone, Smart Mobile, Excell all made PR or announced in their advertising those numbers - some links might be on the web (Phnom Penh Post, PRwire) but most is in news articles or advertising only available domestically.

    Hello and Star-Cell both have released information publically in quarterly or annual reports as they belong to publicly listed companies. These reports can be downloaded.

    The only reason that Star-Cell has such a high number is because they gave away more than 100,000 simcards for free and then keep extending the validity. They numbers they released are actually stated as unaudited and definitely being played around with.

    Teliasonera basically took a leading telecom and trashed it. Nobody knows why.


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