1. IUSACell – Case Study
-Group: B
- IIM – Ahmedabad
- 6th Feb 2010

2. Participants: Hemendra, Dhruv,
Suvadip

3.  Background
 Mexican Telecom Market
 About IUSACell
 Vision & Strategy
 Current Environment & Challenges
 Product Market Mix
 Measure of Success
 Vulnerabilities Observed
 Functional Strategy Gaps
 Business Plan
 Going Forward Strategy
Discussion Outlines

4. Mexico Market Scenario
Monopolistic Market till 1989 - Telemex being the only LL
operator
IUSACELL Started Cellular Services in 1989
Telecom Regulatory Body, SCT created 9 cellular business
regions & Infused competition with 2 licenses per region.
6 Year exclusive rights for public domestic and international
long distance services with Telemex
Inadequate & unreliable services of Telemex
Low mobile penetration in 1993 – 0.4%
High customer dissat with Landline services
Delivery time 6 months & above
High call drop – 14.5%
Call success in first attempt– 82.7%

5. About IUSACELL
1939
Founded by Alego
Peralta
1989
Incorporated as a wholly
owned subsidiary to
market cellular services in
Mexico City area
1957
Entered
Telecommunication
Area of Operation
4 out of 9 regions
Current market
share ranges from
40% to 70%
Service Offering
Basic Telephony , Value Added Service , Roaming
& Telephonic Accessories
1993
23% stake bought
by Bell Atlantic

6. Current Vision & Strategy
• Vision:
- To be an established player in Telecom services & solutions with a high degree
of customer satisfaction.
• Strategy:
- Aggressive acquisition thru reducing upfront cost
- Addressing the base thru flexible pricing package
- Targeting high value new subscribers thru alternative educational tools
- Creating differentiation thru enhanced Value Added Services.
- Customer Service Restructuring
- Regional Expansion thru acquisitions & JVs

7. Current Environment & Challenges (SWOT)
STRENGTH WEAKNESS
1. Presence in 4 most lucurative markets in Mexcio 1. Poor understanding of Customers requirements
2. Region 9- Central Hub for routing calls to the US 2. Targeting Wrong set of customers
3. Highest mobile customer base 3. Decline of APRU and HIGH in Churn
4. Wide offering of VAS/ VOICE 4. High on customer dissat (billing & service)
5. International partners-Bell Atlantic 5. Dependacy on single operator as a carrier
6. High cost of customer acquisition
OPPORTUNITY THREAT
1. Low Mobile penetration 1. Advance Technology
2. Growing Economy 2. Competition entry
3.Opportunity in NLD/ ILD and BroadBand services 3. Telmex's capacity to cross subsidised mobile business
4. Bad Landline services 4. Regulatory environment.
5. Digitization of Network 5. Political Uncertainty

8.  Basic Services
 VAS
 Roaming
Services
 Handset &
Accessories
Current Market Mix
Services
 Business &
Personal Users
 Professional
 SEC C&D users
Customers
 Huge Untapped
Potential
 Duo
Competition
 High ARPU /
MoUs as
compared to US.
Market
Scenarios
 Subs presence
in 4 key regions
(Central & North)
 Coverage in the
most dense &
lucrative markets.
 Strategic
connectivity with
US markets.
•
Market
Presence

9. 38% 37%
25%
42%
36%
22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Levels A & B
(Large & Medium
Business Owners)
Level C
(Middle Class)
Level D
(Working Poor)
Socio-Economic Class
IUSACELL Telcel
20%
34%
38%
8%
26%
38%
28%
8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
18-25 Years 26-35 Years 36-49 years > 50 Years
Age-Wise Classification
IUSACELL Telcel
62% of the customers are from Middle
& Lower Segment.
Telcel’s customer composition is
better than IUSACELL.
Telcel has higher proportion of
younger users.
IUSACELL has higher proportion of
middle-aged customers.
Customer Profiles

10. Customer Profiles
37%
13%
20%
4%
11%
35%
12%
28%
7%
11%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Professional Middle
Management
Senior
Management
Students Others
Occupation-Wise Classification
IUSACELL Telcel
33%
27%
39%
33%
25%
42%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Business Personal Both
Usage-Wise Classification
IUSACELL Telcel
Higher proportion of Senior
Management users are with Telcel.

11. Strategy Gaps
• Customer Segment
- Customer Profile: ‘Many Free Riders’
- 74% of churn customers stop using cellular services.
- 62% of the customers belong to SEC C&D.
- 40% customer used less than 100 min
- Lower proportion of youth segment.
• Product Strategy
- VAS, not appealing customer?
- Sub. Rev less than 5%
- Poor usage except msg. center
- Telephone & Accessories:- Contributing about 2.5 % of rev but attracting risk
profile customers.

12. Strategy Gaps
• Distribution Strategy
- Despite CSC relatively lower proportion of SEC A & B but resulting in
high cost
- CR (Corp Rep): 75 people but relatively lower proportion of high value
customer like President / Director, relatively to Telcel
• Customer Care Management
- 35 % of churn to Telcel due to customer service issues
- Lack of Retention activities

13. Vulnerabilities Observed
 Aggressive Customer Acquisition
- High Cost
- Poor targeting of Customer
 High Customer Churn
- Poor Network Quality
- Billing issues
- No customer connect
 Expanding new business segments with core segment is
under strain

14. Segmented approach for customers
Best Fit Plans For:
- Light Users: 0-300
- Medium Users: 301-800
- Heavy Users: > 800
Segmented Approach:
- Roamers (Inroamers): Roam
Mexico @ IUSA Cell
- VAS: Bulk Minutes/ High Rentals
(Built in VAS)
- Data Plans & NLD / ILD
- Local Voice Calls
- Regionalized Segmentation
-Light Users: 0-300
- Medium Users: 301-800
- Heavy Users: > 800
Mass Advertising:
- Low ARPU users (Prepaid)
- Convenience User
(Advance Rental Scheme)
- Productivity (Solutions +
Voice)
Direct Marketing:
- Churn from Competition
- Retention Plans
- Bill Payment – Loyalty
Points
MoU Usage
Pattern
Winback
&
Loyality
Life
Style
Strategy….Going Forward

15. Segmented approach for customers
Best Fit Plans For:
- Light Users: 0-300
- Medium Users: 301-800
- Heavy Users: > 800
Segmented Approach:
- Roamers (Inroamers): Roam
Mexico @ IUSA Cell
- VAS: Bulk Minutes/ High Rentals
(Built in VAS)
- Data Plans & NLD / ILD
- Local Voice Calls
- Regionalized Segmentation
-Light Users: 0-300
- Medium Users: 301-800
- Heavy Users: > 800
Mass Advertising:
- Low ARPU users (Prepaid)
- Convenience User
(Advance Rental Scheme)
- Productivity (Solutions +
Voice)
Direct Marketing:
- Churn from Competition
- Retention Plans
- Bill Payment – Loyalty
Points
MoU Usage
Pattern
Winback
&
Loyality
Life
Style
Strategy….Going Forward

16. Measure of Success
• Growth in Revenue Market share
• Enhance Revenue Per Subscriber (ARPU)
• Increase in Operating Income

17. Business Plan for IUSACELL
• Based on status quo

19. Target Market: Product & Market Mix
Segment Product / Services Value Proposition
Category A – Life Style
/ Productivity
VAS , Data, Voice
Solutions – 20%
Solution / Differential
Service Experience
Corporate / HNI / VIP Voice & VAS – 30% Customized / VAS /
Retention
CMS: Category C Segmented Base
Voice – 45%
Usage Based
Segments

20. About IUSACELL
Subsidiary of Grupo IUSA- A diversified group- into Industrial
Production/ Construction, Telecom, Energy Supply
Established – October 1989
Area of Operation - 4 out of 9 regions
Current market share - 40% to 64% (in different regions)
1993-94 : 43% stake bought by BELL ATLANTIC
Service offering: Basic service, VAS, Roaming and Telephones
accessories.