1. The telecom industry is reaching saturation in urban areas but rural penetration remains low, representing a major growth opportunity. 2. However, acquiring new rural customers requires generating higher Average Revenue Per User (ARPU) which currently comes mainly from urban postpaid subscribers. 3. The document proposes launching an exclusive "premium luxury" mobile service brand targeting high ARPU urban customers to fund rural expansion, using social diffusion and exclusivity to build the brand.

1. Telecom Disruption to Conquer

2. Telecom Universe

3. Urban is reaching saturation 66% population projection for 2015 – 435 mn Rural penetration – 9.01% Currently one in two net adds from rural Additional potential 100 mn Favorable demo Increase urbanisation Under penetration of customers with other segments Additional potential 200 mn Reach Affordability Further erosion of ARPU Urban Vs Rural Penetration

4. Hence, the future opportunity URBAN 66% Teledensity RURAL 10% Teledensity The Future Opportunity

5. However, the Acquisition reality…

6. Higher ARPU earnings enables the acquisition of new consumers ARPU

7. Unless A telecom company continues to gain more ARPU , it cannot fuel it's acquisition of the vast opportunity in the semi -urban & rural markets.

8. ARPU generation

9. 80% POSTPAID PREPAID 80% 20% 20% ARPU Postpaid customers give 4 times as much ARPU as Prepaid customers ( TRAI Dec ‘08) SUBSCRIBER BASE

10. Also, ARPU revenue is highest in Metros (Urban markets) as compared to the rest of India (across brands) TRAI – Oct 08 Non Metros Metros

11. How will this work? URBAN ARPU RURAL ARPU Higher URBAN Post paid ARPU = More Profits = More CAPITAL to make rural acquisitions Telecom companies have acquired 3G spectrums at a very high cost, both b2b & end-consumer usage shall come from Urban-India.

12. How do we generate higher ARPU? VAS More Talk time Data Services This usage pattern is that of urban postpaid customers

13. Therefore, Urban Postpaid customers are our main source of ARPU.

14. Teledensity is highest amongst SEC A & B 71% of SEC A & 60% of SEC B is already penetrated.

15. If most of the high ARPU generating TG has been captured, will they switch to a new player?

16. Apart from functional attributes, brand appeal is one of the key drivers – which seems to be the stronghold of Airtel & Vodafone Brand appeal 5.8 Provides accurate and timely billing 4.8 Convenient/hassle free 4.7 Leader 4.5 Most popular/recommended by All That is available everywhere 2.1 Innovative 2.0 Large Corporate Group 1.8 Young & Exciting 1.1 The best brand 1.0 Professional/For Business 4.1 Affordable 3.6 Reliable & Trustworthy 3.2 Provides Value for money 2.5 Regularly offers good schemes 2.1 10.0 Covers most cities/towns that I go to 6.9 Has Strong and constant signal 6.4 That offers good customer service Importance index* Purchase Consideration Product awareness Importance index* 10.0 5.7 7.3 3.8 2.9 2.1 3.8 5.4 2.2 5.3 6.5 5.2 1.3 4.0 1.0 4.7 3.4 Network Pricing 1.0 Top 10

17. Brand Association Map Key drivers of network and brand appeal mainly associated with Airtel and Vodafone

18. We cannot get new urban Postpaid customers because it’s already highly penetrated by Airtel, Vodafone & customers are highly loyal to these brands. So how do we disrupt these brands which have first mover advantage and own the highest parameters of the lifestyle imagery. AIRTEL Vodafone

19. AIRTEL VODAFONE Brand “X” Will the urban high ARPU consumers ever shift ?

20. So while we can acquire the rural consumers by a combination of good imagery + great core functional attributes + conversion offers…How will we ever acquire the profit giving Urban ARPU consumers? Also since ARPU in is largely driven by VAS (more than talk time – which is reducing in its contribution to ARPU) is handicapped in India by the lack of penetration of phones which are compatible or enabled with pro-VAS features & the lower the SEC you go to the pre-paid segment, the lower is the calibration of the phone & hence the lesser the ARPU. 2 important points of note

21. Burning How do we get higher ARPU’s consumers from urban areas, to sustain the acquisition of the rural? So the question is

22. Higher ARPU = higher profits

24. Premium luxury phones Mass premium phones Mass phones

26. Mass premium brands Mass brands NO PREMIUM LUXURY PLAYER IN THE SERVICE PROVIDERS…

27. HENCE, In terms of image association… Premium Luxury phones Mass Luxury Phones Mass Phones ? Can there be a premium luxury mobile service ?!

28. Introducing,

29. Looking at what the Luxury mobile phone consumer wants…

30. Exclusivity Exceptional Benefits Pampering “ I want to be made to feel special. I should be treated special and they should be willing to handle all my quirks.” “ I should have the most latest and exclusive things available. The moment others are seen having it, I know it’s time for me to get something new.” “ I want benefits that make my life easy and comfortable. It should in some way benefit to my life, either functionally or in a feel good manner. ” LUXURY IS : “Something you really don’t need at all. But it is so exceptional that you really must have it, (if only you could afford it)” Sales Driver Sales Driver Imagery Driver

31. Hence,

32. Pampering A special ‘RM service’ instead of a common customer care service Bill pick-ups from your home / office Exclusive club memberships Exclusive tie-ups with international airlines and five star hotels Invites to the hottest page 3 events and parties

33. Exceptional Benefits No call drops (can be facilitated since less subscribers, hence, less traffic) Greatest network clarity (can be facilitated since less subscribers, hence, less traffic) International video-conferencing facility 3G facility Launch with the Google phone, iphone 5, Vertu etc; in India (never launch with non-cutting edge phones). Like Singapore telecom operators, discount the cutting edge device. A two year minimum monthly bill amount contract gets at 0 rupees.

34. Exclusivity Looking at what the luxury consumer likes: Likes only the Exclusive You are not worth it unless you are INSIDE the circle

35. Hence, Luxury operates on the principles of reverse psychology: Exclusion Desire to belong to that group Leads to… Therefore, Key Task: To build exclusivity around the brand by intention

37. The social diffusion effect: Opinion leaders Introduce your brand to a small group of opinion leaders and watch it spread by itself. (people who have very high influence, lots of friends and who are aspirational to others)

40. Phase I Recruited a core group of opinion leaders Still remains a niche… hence, aspirational Make yourself inaccessible  a Luxury Only by invitation

41. Phase II Identify more, larger groups opinion leaders and recruit them Spreads to a much larger consumer base… but is still by invitation, hence, still cool & important… Make yourself, deliberately accessible to a few more  Mass luxury

42. Phase III Going Mass The image that has been built over phase I & II continues… But volumes increase many fold… The brand now is not by “invitation only & truly massified – hence, though massified stays premium in its imagery”

43. Hence, 3year plan for Platinum… Launch with phase 1 Using the exclusion theory Year 2 - Phase 2 Massification of luxury Platinum would have carved a premium niche for itself Give away platinum tattoos for the handsets Have a tier system – where the highest tier, the 1 st phase consumers always get the best of the service. E.g. loyalty programs (gold, silver, classic) E.g. the highest tier gets a personal RM, while the tier 2 gets a group RM, etc. Year 3 – Phase 3 Least facilities People will be willing to pay a premium for buying into the brand

45. The simple question is: How many consumers of ‘premium luxury mobile phones’ are aware of the call charges that they pay? Almost none…

46. Hence, We can charge at Rs.1 per minute as opposed to the 50paise that Vodafone charges. This means: 1 Platinum connection 2 vodafone connections ARPU from 1 Platinum consumer ARPU from 10 vodafone consumers Since there are other premium services available as well…

47. The high ARPU generating Urban market is truly open to us now & with number portability & approximately 25% churn of SEC A consumers due to network & call drops shall be open to us. On the one simple principle… What my boss or that tashan wala peer of mine has, I need…

48. THINK: ( where is the iPhone, Black Berry equivalent “brand”?) Mass premium brands Mass brands NO PREMIUM LUXURY PLAYER IN THE SERVICE PROVIDERS…