Low-cost Mobile Business Models: Strategies for Profits at the Bottom of the Pyramid

Published by: Pyramid Research

Published: Sep. 1, 2006 - 44 Pages

Table of Contents

Acronyms and Abbreviations

Executive Summary

Section 1: Where Will the Growth Come From?

Section 2: Driving Revenue

2.1 Segmentation

2.2 Low Denomination Vouchers

2.3 Lifetime Subscriptions

2.4 Lower Airtime Prices

2.5 Limited Mobility Plans: Yet to Catch Up

2.6 Community Subscriptions: A Good Idea if Well Managed

2.7 Do Low-cost Models Need Mobile Data?

Section 3: Transformational Cost Models: Rethinking OPEX and CAPEX

3.1 The OPEX Challenge: Keep It Down

3.2 Non-network Operating Expenses

3.3 The CAPEX Pressure: Beyond the Electronics

3.4 Network Operating Expenses

3.5 Is There a Case for Outsourcing Network Operation?

Section 4: Challenging Mobile Fundamentals

4.1 Want to Reach the Next Billion? Time for a Change of Mindset

4.2 Is ARPU Overrated? Increasingly, Yes

4.3 SACs: Yet Another Overrated Indicator

4.4 The Bottom Line: Primarily a Scale and Volume Game

4.5 A New Set of Indicators to Assess Operational Performance

4.6 Government Role: Telecoms Reaganomics Needed

4.7 More Out-of-the-Box Ideas: From Discriminatory QoS to No Customer Care

List of Exhibits

Exhibit 1: ARPU vs. EBITDA Margin for Selected Mobile Network Operators

Exhibit 2: Net Subscriber Additions by Regions, 2005-2010

Exhibit 3: Sample Lowest Denomination Prepaid Recharge Vouchers

Exhibit 4: SMART Prepaid Subscriber Net Additions and ARPU

Exhibit 5: SMART Prepaid Subscriber Net Additions and Revenue Growth

Exhibit 6: India Monthly Subscriber Net Additions, March 2005-March 2006

Exhibit 7: Bharti Churn, Q205-Q206

Exhibit 8: Evolution of Average Revenue per Minute in Selected Markets

Exhibit 9: Average Revenue per Minute vs. EBITDA Margin

Exhibit 10: Telenor Pakistan: Average Revenue per Minute vs. Usage

Exhibit 11: Nigeria SIM Card vs. Mobile User Penetration

Exhibit 12: Breakdown of Operating Expenses for Sample Emerging Market Players

Exhibit 13: Operating Expenses per Subscriber for Selected MNOs, 2005

Exhibit 14: Sample SACs

Exhibit 15: Black Market as Percentage of Handset Sales in Selected Countries

Exhibit 16: Breakdown of Subscriber Acquistion Costs: Mature vs. High-growth Markets

Exhibit 17: Breakdown of Network Operating Expenses in High-growth Markets

Exhibit 18: Subscribers per BTS in Selected Markets, 2005

Exhibit 19: Emerging Market MNO Business Models Mind-shifts, 1990-2010

Exhibit 20: Mapping the Strategic Relevance of ARPU

Exhibit 21: High ARPUs Are Not a Prerequisite for Strong Profitability: Prepaid ARPUs vs. EBITDA Margins

Exhibit 22: Hypothetical ARPU Focus vs. Traffic Focus

Exhibit 23: Sample Scenario of Evolution of Tax and Penetration

Abstract

• Alcatel
• Bharti
• Celtel/MTC
• Dialog
• Ericsson
• Globe Telecoms
• Huawei
• Hutch Essar
• MTN Nigeria
• MTS
• Nokia
• SMART
• Tata Teleservices
• Telenor Pakistan
• Zantel

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