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Indonesia:
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      telecom
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Solidiance examines a telecom template for
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Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market




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Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market


   Indo...
Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market


   Indo...
Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market


   A mo...
Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market


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Indonesia : Mobile Telecom Industry
        Solidiance examines a telecom template for Indonesia’s mobile telecom market

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Indonesia Mobile Telecom Industry - www.solidiance.com

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Indonesia’s telecom sector is experiencing growth that is by any measure exceptional. The market dynamics create for a highly competitive industry in which the consumers are reaping the benefits.
Whereas penetration rates indicate mobile phone penetration is close to 50% of the population (115 million subscribers), realistic penetration factoring in the number of mobile phone users with multiple handsets would adjust down that number closer to 30% (70 millions subscriber). Solidiance highlights some best practices local operators need to look at to survive in one of the most competitive and price sensitive market.

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Transcript of "Indonesia Mobile Telecom Industry - www.solidiance.com"

  1. 1. Indonesia: mobile telecom industry Solidiance examines a telecom template for something déjà vu July 2009
  2. 2. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market “ Whereas there are no clean cut comparisons to the rapid democratisation of the mobile phone as we are seeing in Indonesia, the latent demand in rural markets is something that telecom providers in Refine your process, strive for other parts of the world have capitalised on in the dominance, and build a brand. ” recent past (and present). In India, for example, the market is highly competitive with nearly the same number of providers as in Indonesia. ARPU is similarly falling, and providers are scrambling to Sunil Bharti Mittal – Chairman, Bharti keep churn low, and profitability stable. An example for Indonesian providers to look at is Bharti Airtel Airtel, which has been able to carve out the largest segment of India’s mobile telecom market. 2
  3. 3. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market Indonesia’s mobile telecom industry Dramatic Growth Indonesia’s telecom sector is experiencing growth that is by any measure exceptional. The market dynamics create for a highly competitive industry in which the consumers are reaping the benefits. Whereas penetration rates indicate mobile phone penetration is close to 50% of the population, realistic penetration factoring in the number of mobile phone users with multiple handsets would adjust down that number closer to 30%. The democratisation that is occurring in the market has set up the Indonesian market to see dramatic rises in mobile phone usage over the next three to five years. The competitive landscape coupled with the ever increasing capabilities of mobile phones is priming Indonesia for a major societal change as more Indonesians are becoming mobile phone users. 3
  4. 4. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market Indonesian market not unprecedented Success in a similar market It had soon become associated with desirable Bharti Airtel is the preeminent service provider in attributes such as ‘cool’ and ‘creative’ that also India’s highly competitive mobile telecom market. translated into increased market share. It is able to retain a large market share and reap profits by implementing a comprehensive strategy This strategy by Bharti Airtel in an Indian market aimed at gaining new customers while retaining that closely parallels the current Indonesian mobile existing customers. The strategy hinges on offering telecom market has lessons for operators that industry leading customer service, tailored plans for hope to duplicate its success. In addition to customers, aggressive rollouts of new technology, branding, Bharti Airtel has other ‘best practices’ and an extensive branding campaign. that will be covered in subsequent article commentaries over the course of the next two Extensive Branding: The ‘Express Yourself’ months. campaign by Bharti has been a major effort to add an emotional component to its brand. Mobile phone communications are, by their nature, often “ tools for consumers to ‘express themselves’ to others. The ad campaigns have had strong Differentiating merely on network, emotional components to them, and touch on coverage and SMS is just not enough. You themes such as national pride. By creating an need to go behind all the rational association between past successes of Indians and Bharti Airtel’s services, customers no longer view indentifies – which are prerequisites in any Bharti’s service offerings as undifferentiated. case- and connect at a deeper level. We Additionally, the brand campaign was meant to needed a strong differentiator in an tie together all of Bharti Airtel’s offerings under one increasingly commoditised and crowed unified ‘face’ to consumers. This consistency and market...We believe ‘Express Yourself’ brand positioning have been keys to Bharti’s success in the Indian mobile telecom market. The allows us to connect at a deeper level and create a long term platform for the ” purpose of the extensive branding campaign by Bharti was to create brand relevance in a market brand. that was predominantly defined by price. It aimed to lessen the influence of price on consumer’s Atul Binda – Chief Marketing Officer, Bharti decision making process, and raise the influence of the brand itself. Catchy campaigns, and Televentures affiliations with the likes of A R Rahman, who was signed to create a unique Airtel ring tone, served to position Bharti Airtel as the most favourably placed brand in the industry. 4
  5. 5. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market A model for success Establishing brand relevance Bharti Airtel’s branding strategy entailed extensive use of all advertising channels. With a major slant towards television commercials, Bharti took an aggressive approach similar to alcohol producers in the United States. Rather than focus on promoting individual products and services, Bharti focused on selling the Airtel brand. Many television advertisements include India’s largest Bollywood stars, and aim to be memorable rather than sell anything. GSM Subscribers (Millions) 2007-2008 5
  6. 6. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market Lessons can be learned Creating a brand Lessons for Indonesian providers Bharti Airtel did not differentiate themselves from Bharti Airtel did not enter the market as a premium other providers in India simply through offering service provider, and did not have any clear superior quality, but through making a concerted competitive advantages over its competitors. effort at positioning themselves favourably in the What it realized is that competing on price in a mind of consumers. This concerted effort entailed highly competitive and saturated market would putting forth a large amount of resources to make not be an effective long term strategy. Rather that a real change in how Bharti Airtel was viewed worry about being undercut by low cost providers, compared to alternative mobile telecom service Bharti Airtel focused on creating brand relevance, providers. In 2007-08, Bharti Airtel increased its and selling its brand to consumers rather than the advertising expenditure by 40.7% and saw a Airtel commoditised services. This has proven to be an Revenues and Profits corresponding 44.4% rise in effective strategy, and has helped Airtel retain sales. In 2008, Airtel had the second highest and grow its customer base. Additionally, through advertising spend out of any INR (Millions) its extensive brand campaign, it has been able to company in India (based on television and print change the market dynamics by making pricing a advertisements). It spent nearly $48m in 2008, component of customer decision making rather second only to Hindustan Unilever. It Solidiance than the singular decision making factor. Library 2009 understood the societal dynamics, namely India’s love of its Bollywood actors, and created ad campaigns featuring several ‘A list’ stars. Airtel Revenues and Profits 6
  7. 7. Indonesia : Mobile Telecom Industry Solidiance examines a telecom template for Indonesia’s mobile telecom market Solidiance is a marketing and innovation strategy consulting firm with focus on growth in Asia Pacific. We are devoted to working side-by-side with our clients to outpace the competition, close gaps in growth and deliver breakthroughs in performance and profitability. Our Asia focus provides our clients with a better understanding of intrinsic regional issues. To subscribe to further white papers and to learn more about Solidiance please visit: www.solidiance.com Mark Lee - Principal Osman Syed – Consultant Mark is a Principal based in the Singapore office with more than eight years of consulting experience. Mark has a strong focus on quantitative based projects. Osman is a Consultant based in the Singapore office. Previous roles include being regional manager for He is focussing on emerging technology, telecom and Synovate Business Consulting in Singapore, handling media industries tracking developments and projects for MNCs across Asia, focused predominantly benchmarking metrics. He is currently focusing on the on the market and competitive strategy side. Mark telecom industry, across South East Asian markets. With managed most survey-based projects for MNCs where a passion for combining numerical and qualitative he advised international companies on market entry, analytics, Osman is interested in advanced market customer segmentation prioritization and growth segmentation and size forecasting models to help strategies. Having worked for five years in the M&A clients identify and prioritize market opportunities and to team of a Korean Conglomerate in Spain, Mark also has develop growth strategies. vast experience with mergers and acquisitions in Osman graduated in 2008 from the Ross School of Europe, Asia and Africa. Mark is fluent in Korean, English Business with a Bachelor in Business Administration. and Spanish. He holds a BS in mechanical engineering, from the Worcester Polytechnic Institute (United States) and a MBA from the University of Rochester. China Singapore Thailand Suite 801 Suite 17-01 Suite 32-05 Hong Kong Plaza High Street Center Interchange 21 283 Huaihai Road Central 1 North Bridge Road 399 Sukhumvit Road Shanghai 200021 Singapore 179094 Bangkok 10110 Tel: +86 21 5168 8905 Tel: +65 6408 8208 Tel: +66 (0)2 660 3638 info@solidiance.com 7
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