Www.lirneasia.net The next billion customers Ayesha Zainudeen [email protected] LIRNEasia Media Workshop: Singapore 28 February 2007 fieldwork by funded

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The next billion customers

Ayesha [email protected]

LIRNEasia Media Workshop: Singapore 28 February 2007fieldwork by funded by IDRC

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Agenda

Research methodology & key findings: Harsha de Silva

The SMS story and others Lorraine Carlos Salazar

The next billion customers Ayesha Zainudeen

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Ownership and GDP per capita (USD, PPP)

23%

9%

22%

60%

76%

11%

23%

7%

14%

63.60%

80.70%

59.00%

38.00%

22.70%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Pakistan India Sri Lanka Philippines Thailand

% a

t b

ott

om

of

pyr

amid

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

GD

P p

er c

apit

a, U

SD

(P

PP

)

Own a mobile Own a fixed phone

Own nothing (but use something) Per Capita GDP PPP (US $)

Recap…low levels of ownershhip

Pakistan IndiaSri

LankaPhilip-pines

Thailand

Total number of phones per 100 pop.

29.4 13.4 36.6 45.4 56.7

(2006 Q4) (2006 Q1) (2006 Q4) (2005 Q4) (2005 Q4)Notes: India on an April – March reporting period ; Pakistan on a July – June reporting period; Other countries follow Jan – Dec (calendar year) reporting periods. Sources: India-COAI, TRAI; Thailand–Company Reports; Pakistan–PTA; Philippines–NTC; Sri Lanka- TRC; 2000 onwards from company reports; World Bank (2006); CIA Fact Book (2005)

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Those who own a phone, chose to do so for convenience rather than cost

Primary reason for choosing to own a phone

0%

20%

40%

60%

80%

100%


% o

f pho

ne o

wne

rs

The convenience (accessibility at any time) It is cheaper

For privacy So I don't have rely on other people

Other

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But those who do not, are held back by affordability

Reasons for not owning a phone

75% 82%72% 77% 77%

18%16%

19% 15% 15%

7% 8% 7% 7%2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f n

on

-ow

ner

s at

BO

P

I cannot afford it Don't need one Other

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Affordability as big a problem for urban as rural

Cannot afford to own a phone

79% 81%75% 75%

35%

73% 73% 72% 72%

38%

0%

20%

40%

60%

80%

100%


% o

f n

on

-ow

ner

s at

BO

P

Urban

Rural

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The expected cost of getting connected is high…

Expected cost of a new phone by non-owners

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pakistan India Sri Lanka Philippines

% o

f non

-ow

ners

at B

OP >USD 176

USD 146-175

USD 116-145

USD 86-115

USD 56-85

USD 26-55

<USD 25

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…compared to the cost that can be afforded

Initial cost that prospective owner can afford

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f p

rosp

ecti

ve o

wn

ers

at t

he

BO

P

Less than USD 10 USD 10 - 30 USD 31 - 50 USD 51 - 70 More than USD 71

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Expectations & affordability are more in-line re monthly charges

Expected monthly charges by non-owners

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f non

-ow

ners

at B

OP

above USD20

USD16-20

USD11-15

USD5-10

below USD5

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Monthly charges that prospective owners can afford

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


%

of

pro

spec

tive

ow

ner

s at

th

e B

OP

USD 16 - 20

USD 11 - 15

USD 5 - 10

Less than USD 5

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Non-owners who plan to buy a phone in the next two years

53%

38%

53%

42%38%

0%

10%

20%

30%

40%

50%

60%


% o

f n

on

-ow

ners

plan to buy a phone in the next tw o years

The next billion?

South Asia South-east Asia


Vertical growth, millions (HH obtaining additional connections)

4 21 0.3 3 0.1

Horizontal growth, millions (non-owners joining market)

26 80 1 7 1

Possible new connections at BOP, millions, next 2 years

30 101 1 10 1

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Higher % of new connections in urban IN, PH and TH

Those who plan to buy a phone in the next two years: Urban vs. rural

53%49%

55%47%

73%

52%

37%

52%

39%45%

0%

10%

20%

30%

40%

50%

60%

70%

80%


% o

f n

on

-ow

ner

s at

BO

P

Urban

Rural

Telecom-transport trade-off? Telecom-transport trade-off?

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Males more certain about purchase in coming two years… esp. in PK, LK & TH

Those who plan to buy a new phone during next two years

64%

39%

70%

43%47%

43%

36%

52%

41%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pakistan India Sri Lanka Philiphines Thailand

% o

fno

n-o

wn

ers

at B

OP

Male

Female

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Prospective owners are heavier users

Average number of calls (out + in) for the

month

Planning to obtain phone

Not planning to obtain

phone

Pakistan 21.6 16.3

India 40.0 31.6

Sri Lanka 15.0 8.7

Philippines 15.3 9.3

Thailand 30.4 35.8Source: Diary

Except in ThailandExcept in Thailand

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Prospective owners are heavier users

Average number of calls for the month: prospective owners vs. non-owners

21.6

40.0

15.0 15.3

30.4

16.3

31.6

8.7 9.3

35.8

0

5

10

15

20

25

30

35

40

45


aver

age

nu

mb

er o

f ca

lls

Planning to obtian phone Not planning to obtain phone

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Most would use phone for keeping in touch & emergency communication

What respondent would use the phone for if given one at an affordable rate

84%

69%

44%

58%

50% 52%57%

17%13%

26%

11%

21%

10%

18%

5% 3%2% 1% 2% 1%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


% o

f re

spo

nd

ents

To keep in touch with family andfriends

Only in an emergency

For networking

To enhance my income

Other

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Type of phone prospective owners would buy

23% 29%

52%

8%

68%67%

40%

91%

9% 4% 7% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Not decided yet

Mobile

Fixed phone

Growth mainly mobile

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Fixed sector growth - post liberalisation (Year 0 onwards)

0

5

10

15

20

25

30

35

40

45

50

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 1

0

Year 1

1

Year 1

2

Year 1

3

Year 1

4

Year 1

5

Fix

ed p

ho

nes

per

100

in

hab

itan

ts

Pakistan

India

Sri Lanka

Philippines

Thailand

Fixed phone growth since liberalization

Thailand; CAGR 10.3%

Sri LankaCAGR = 18.8%

Philippines; CAGR=11.1%

PakistanCAGR =11%

IndiaCAGR = 9.5%

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Mobile sector growth - post liberalisation (Year 0 onwards)

0

5

10

15

20

25

30

35

40

45

50

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 1

0

Year 1

1

Year 1

2

Year 1

3

Year 1

4

Year 1

5

Mo

bil

e p

ho

nes

per

100

in

hab

itan

ts

Pakistan

India

Sri Lanka

Philippines

Thailand

Mobile phone growth since liberalization

Thailand; CAGR = 49.6%

Sri LankaCAGR = 50.8%

Philippines; CAGR=68.8%

PakistanCAGR =109%

IndiaCAGR = 87.8%

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Higher preference for fixed phones in rural areas, except Philippines

Kind of phone prospective owner would buy: urban vs. rural

0%10%20%30%40%50%60%70%80%90%

100%

Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural


% o

f p

rosp

ecti

ve o

wn

ers

Have not decided yet

Mobile Phone

Fixed Line phone

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Preference for fixed phones among females in PK and LK

Type of phone prospective owner would buy

0%

20%

40%

60%

80%

100%

Male Female Male Female Male Female Male Female

Pakistan India Sri Lanka Philiphines

% o

f p

rosp

ecti

ve o

wn

ers

at B

OP

Fixed Mobile not decided

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Recap… Females more reliant on household fixed phones & other peoples’ phones

Most frequently used phone: Household fixed phone

11% 9%

19%

3% 4%

16%

10%

23%

4%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%


% a

t B

OP

Male

Female

Most frequently used phone: Someone else's phone (neighbor, friend, family, work)

13%8%

27%

34%

13%

48%

16%

39%33%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pakistan India Sri Lanka Philiphines Thailand%

at

BO

P

Male

Female

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A phone is possible on incomes of USD2 per day

Income distribution of prospective owners

27%

55%

35%

5%

48%

44%

56%

64%

9% 9%

28%

1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% o

f p

rosp

ecti

ve o

wn

ers

USD151-500

USD51-150

Below USD50

The addressable market does not stop at USD100 per month; it goes down further. The addressable market does not stop at USD100 per month; it goes down further.

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Internet…


Use the Internet

2% 0% 1% 9% 10%

Internet use

3%

0%

2%

12%

14%

1%0%

1%

6%

7%

0%

2%

4%

6%

8%

10%

12%

14%

16%


% a

t B

OP

Male

Female Large gender divide, even in South East Asia

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…what internet??

Have not heard about the Internet before

36%

72%

29%

14%

36%

0%

20%

40%

60%

80%


% a

t th

e B

OP

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BOP in summary Almost everyone can afford to use a phone, but not to

own one Benefits of ownership (direct access) are known

Perceived as improving efficiency and income in India Phones are highly valued for emergency communication and

keeping in touch High price expectations drive a cost-cutting culture

BUT, this is not a bad thing: it seems to be driving affordable access at the bottom of the pyramid

Next Billion: affordability is a key barrier 140m at the BOP in IN, PK, LK, PH, TH in next 2 years The addressable market does goes below USD100 a month Individual use is still very low; Internet far far away

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To think about…

Telecom operators Leverage benefits of direct access

Security, friends & familyParticularly in India: cost saving + income

enhancing Increase awareness on efficiency economic gain

Collaborate on meaningful content SMS based services vs. Bollywood movies

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To think about…

Handset manufacturers Affordable handsets with local language

SMS capability Ultra low-cost phones with “warranty”? Installments?

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Thank you

Documents

Www.lirneasia.net The next billion customers Ayesha Zainudeen [email protected] LIRNEasia Media Workshop: Singapore 28 February 2007 fieldwork by funded