Cheap and cheerful
Mobile handset sales in emerging markets across the Middle East and Africa are booming, with the region’s top cellular service providers teaming with the world’s biggest handset vendors to tap commercial opportunities across the region.
The biggest growth in demand has been for low- cost handsets predominantly developed by Motorola and Nokia, two companies which have placed the emerging sub-sector at the forefront of their respective global growth strategies.
Both vendors are bridging the ‘digital divide’ by manufacturing low- cost handsets equipped with applications to meet the specific consumer demands of these developing markets.
Nokia, the Finnish-based mobile handset giant, has entered into these markets via new regional offices scattered across the Middle East and Africa which has seen it also expand its workforce in the region tenfold in the last year as it aims to overhaul its sales and redistribution network.
Armed with a 12-strong entry-level product portfolio, Nokia has quickly consolidated its presence in the sector by stressing the user-friendly nature of its handsets to first-time buyers in emerging markets.
According to Sudhir Nair, Nokia’s senior marketing manager in the Middle and Near East, the company’s entry-level product line includes the Nokia 1112, 2310 and 2610, which have been designed for consumers looking to purchase their first handset???.
Realising the importance of this sub-sector, Nair also highlights the need for distribution and retail networks to mature??? in order to maintain the sustainability of operating in emerging markets.
The key challenge is that the market needs to mature from a wholesale-driven model to retail. This will only happen as more malls and high-end retailers establish stores in these markets.???
Anticipating this trend, Nokia ‘s entry-level portfolio includes products with high-spec applications. The Nokia 2610 offers iconic design and a strong range of features for business-minded consumers,??? explains Nair.
A first for entry-level handsets, the 2610 includes e-mail support as well as mobile internet access, e-mail support and internet access via a WAP browser.???
Nokia is not alone in acknowledging the potential of this market. Indeed, a strategy combining rapid product roll-out supported by savvy marketing has seen archrival Motorola snare an 80% share of the market for ultra-low cost handsets priced below US$40.
In this region, we are seeing the strongest growth in the entry level handset market. Expanding our presence in this segment is key to the overall growth of our business,??? says Haroud Radossian, Motorola’s regional sales manager for the Lower Gulf. Our strategy is based on ‘connecting the unconnected’.???
In an earlier interview with ECN, Hassan Alex Tavakoli, vice president of Motorola Middle East and Africa, confirmed that these markets remained at the forefront of the company’s growth strategy worldwide.
The emerging markets are hugely important to the growth of our business and the Middle East and Africa are two of the world’s biggest examples from this perspective,??? he says.
This region really represents the ‘sweet spot’ for our handset business worldwide. Our long-term strategy for the Middle East and Africa will ultimately influence our overall sales results globally.???
With a product portfolio that incorporates basic voice-centric handsets to entry-level Video Graphics Array (VGA) camera-equipped phones, Radossian stresses that Motorola’s lower- cost handsets are manufactured to the same standards as its premium models.
We have several lower cost handsets ranging, from the basic voice-centric models to the colour-screen and entry-level camera phones,??? he says.
Our entry level models boast several innovations, such as premium display technology. This has enabled us to bring the cost of the product down to facilitate the segment of the market that we are targeting.???
Motorola has realigned a portion of its production capabilities to focus on producing handsets specifically for the developing world. Key to this has been its C-11X series of handsets that will be updated in 2007 to include the ultra slimline Motophone range.
According to Tavakoli, the C-11X range remains the company’s biggest selling model in the Middle East.
One of the key selling points of these products is the voice-driven menu which features as standard,??? explains Radossian. In other words, the menus are not in text there is an icon with a voice that explains the function of each profile. The idea is to make it easier for consumers to interact with the phone and access its features.
These products will be heavily promoted in countries with high illiteracy rates such as Algeria, Egypt, India, Morocco, Pakistan and many of the African countries.???
The lack of telecommunications infrastructure in developing countries also poses significant challenges to handset manufacturers, resulting in the companies searching for ‘alternative’ partnerships often with distributors with little to no prior involvement in the mobile handset channel.
In these markets we are basically trying to reach people who don’t have access to landline phones,??? says Radossian.
Some of the logistical problems lie in the geographical remoteness of the areas that we are targeting.
Our strategy is to tie-up with companies that are not necessarily in the telecommunications business. We look to establish deals with distributors that boast reliable distribution channels in a particular country.???
Motorola’s efforts demonstrate the importance of emerging markets to the company’s overall strategy for achieving sustainable growth in the Middle East and Africa.
Its refusal to compromise on quality, combined with its commitment to maintaining low prices, reflects its view that emerging markets are key to realising its ambition of snaring the top spot in the global handset market from archrival Nokia.
The profit margins in the entry-level sector are less than those in the high-end markets but this is part of our two-tier strategy,??? concedes Radossian.
The low- cost products are used to gain market share whereas our premium products help to maintain a healthy profit margin.???
Nokia’s Nair admits the company is pursuing a similar strategy designed to ward off competitive threats to its dominance in the handset market.
We believe that handset sales still have huge growth potential worldwide, but the vast bulk of this growth will be realised in emerging markets,??? he says.
Source- itp Wireless Mobile Telecom
Arab mobile provider, Nokia launches Sudan operations
Oct 5, 2006 (DUBAI) — i2, the largest and most diverse mobile provider in Africa and the Middle East announced today in a press briefing the launch of its operations in Sudan.
i2 introduces its retail concept and after sales services for the first time in the country.
i2 is the first authorized Nokia distributor and service center in the country as well as being the first to offer mobile subscribers original Nokia devices with matching accessories and a one-year warranty. In Sudan, i2 will be available through its showroom, distribution network and service center.
i2′s operation in Sudan will be managed by Mohamed Osman El Tayyeb, Chairman, and Hussein Raouf Atwi, General Manager.
i2 plans to expand its operation throughout Sudan within the year to include Bahri, Omdurman and Kalaka. i2 has opened a branch in the state of Adbara and plans to expand to Madani and Port Sudan.
Nokia has long recognized Africa as an important market for the company’s business. Since early 1990, Nokia has provided mobile phones, enhancement, telecoms networks and related infrastructure and services to operators and customers throughout Africa.
‘Nokia’s approach is to develop and support all local distributors and service partners in all countries. Nokia has been working closely with our regional distributor, i2 across most countries in the Middle East and Africa for many years now.
i2 will be able to offer Nokia’s customers authentic Nokia handsets and official Nokia Customer Care Services to ensure that customers in Sudan receive the best possible Nokia experience.” Said Jarmo Santala, General Manager for Nokia Customer and Market Operations North West Africa.
The cost effectiveness of GSM-based services in comparison to fixed-lines has encouraged the fast growth of mobile services in Africa. Nevertheless, mobile penetration levels in Africa remain low.
‘i2 has a big role to play in the development of the mobile market in Africa. We want to make sure that it’s growing market follows international standards of product quality and service’ stated Abdul Hameed Al Sunaid, President and CEO, i2.
Founded in 1993 in Saudi Arabia as Itsalat International, i2 is the region’s largest and most diverse mobile phone provider in the region. i2 operates in: Bahrain, Chad, Egypt, Ghana, Iran, Iraq, Ivory Coast, KSA, Kuwait, Lebanon, Mauritius, Morocco, Reunion, Senegal, Sudan, Syria, Tunisia, UAE and UK.
Source- http://www.sudantribune.com
Mauritania: Arrival of Third Operator Will Shake Up Cosy Duopoly
Mauritania’s new third operator has already paid a staggering USD107 million for its unified licence. And all this money for a country that only has a population of around 2.75 million people. Currently there is a fairly cosy duopoly on mobile between the former incumbent Mauritel (now owned by Vivendi’s Maroc Telecom) and Mattel (owned by Tunisie Telecom. In other key areas like international bandwidth and the Internet Mauritel has a de-facto monopoly. The new operator Chinguitel has a unified licence and will start operations in December 2006.
The sum for the third bid has raised eyebrows both locally and elsewhere because the runner-up France Telecom (that owns Sonatel in neighbouring Senegal) only paid US$36 million. However Chinguitel looks set to invest a significant sum in making its operation work. And in doing so, it will force the other two operators in the market to raise their game. It has recently appointed a Mauritanian CEO currently working in a telecoms company in Saudi Arabia. Chinguitel is betting that the economy is set for some spectacular growth with the impact of oil (which has recently started pumping from offshore fields) and a newly opened copper mine.
The new entrant is a consortium of Sudatel (with money from the sale of the stake in its mobile operation) and Gulf state investors. It is rumoured to be planning to spend US$40 million on a network that will have 150 base stations from day one compared to the 160 it has taken Mauritel several years to build up. Mattel has only 80 base stations although it is also engaged in a rapd build out to get its coverage to match Mauritel’s.. To meet the competition, Mauritel is also ramping up its network spending and modernising its network over the 2006/2007 period.
A key problem for all operators is access to international bandwidth. An international fibre connection is available through Sonatel but the Senegalese incumbent is charging a significant premium for the transit to the SAT3 landing station. Competition may force the solution of this problem. It would be easy for Mauritel to build a fibre link to Nouadhibou on the country’s northern border. It is then only a comparatively small distance between there and Laayoune, the western-most extension of Maroc Telecom’s fibre network. This would give it access to international bandwidth that was significantly cheaper.
In order to compete, Chinguitel would either have to get regulatory dispensation to share the resulting cheaper prices on Mauritel’s fibre link or build its own. It has two possible choices: go north to Morocco and build a submarine spur to the Canary Islands or build a link to Mali and off to a cheaper SAT3 destination overland. The latter is probably less feasible given the distances and the generally higher prices on SAT3 further along the pipe.
The incumbent’s mobile subsidiary Mobitel Mobile has 500,000 subscribers and its only competitor Mauritel has 400,000 subscribers. However, these figures are misleadingly optimistic as many Mauritanians have two phones because the interconnect rates between the two networks are very high. Industry insiders say there is a a mid-term potential of 1.2 million subscribers.
Currently mobile coverage is limited to coastal strip between Nouakchott and Nouadhibou and the “route de l’espoir” to Mali and along the Senegal River that makes up the frontier with southern neighbour Senegal.
Mattel will launch a GPRS service later this year (probably ahead of the Chinguitel launch) aimed at high-spend, post-paid customers. It will start the service in Nouakchott and roll-out the service once that has been established.
Mattel claims to be 30% cheaper than Mauritel Mobile but this is a relatively recent price differential. Both operators have paid fines for quality of service issues but as local industry sources point out, these fines are relatively modest alongside the sums of money each operator is making.
Mattel seems to have adopted a minimum investment, maximum return approach that has worked well with a duopoly where each player shadows the price and service behaviour of their competitor. However, Mattel chose not to bid for any of the recent round of licences and it looks like that it does not have the money to keep up with the spending race that will be initiated by Chinguitel’s entry into the market. As a result, it is probably the operator with the most to lose as competition hots up.
Internet access is only available in Nouakchott and Nouadhibou and that covers only about 40% of the population.
There used to be five ISPs but that number has gone down to two: Mauritel and Top Technology. The latter is having a hard time making any money. Mauritel has squeezed all Internet competition out of the market. Its charges meant that ISPs were left with a margin on the supply of basic bandwidth of only US$7 per subscriber. Since some had only 200 subscribers, the complete impossibility of creating a business model is apparent. Mauritel has also refused to supply DSL services to the one remaining independent ISP.
There are 3,000 Internet subscribers, of which around 1,000 are DSL subscribers. Many of these subscribers are using Skype to speak to friends and relatives abroad. DSL prices are very high: US$95.69 (without tax) for a 256K connection as the roll-out is essentially seen as targeted at the corporate market.
However the emergence of a third competitor may force Mauritel to adopt the strategy of its parent in Morocco. It has used the lowest DSL prices on the continent (US$22 compared to Mauritel’s $95.69) to get the highest number of DSL subscriptions on the continent (340,000). The tactic has been a “land-grab” to deny its competitor Meditel the opportunity to get established. However before low prices can really emerge both Mauritanian competitors will have to find lower international bandwidth prices.
All of this investment and competition can only be good news for Mauritian consumers until both Mauritel and Chinguitel have effectively forced Mattel off the road.
Source- http://allafrica.com
Technorati : Chinguitel, Mauritania, Mobile, Operator
Ice Rocket : Chinguitel, Mauritania, Mobile, Operator
Reliance Comm to bid for mobile licences abroad
The Reliance-Dhirubhai Anil Ambani Group, has plans to bid for mobile licences abroad for providing high-end business process outsourcing services, reports Business Standard.
It has lined up a raft of initiatives to give its telecommunications business a global footprint.
Moreover, the company also plans to take Internet protocol television (IPTV) and other media services to consumers in foreign markets after it launches them in
India
.
In order to carry these services, the group will set up three broadband cable networks- one from India to China through Nepal, two, an undersea cable between Asia and the US, and three, an extension of its Falcon cable from the Maldives to East Africa. Industry analysts put a USD 1 billion price tag to these three cable systems.
The group is also eyeing mobile licences in
Kenya
,
Bhutan
and
Morocco
.
Source- http://www.myiris.com
