The next billion customers

Transcription

1 The next billion customers Ayesha Zainudeen LIRNEasia Media Workshop: Singapore 28 February 2007 fieldwork by funded by IDRC

2 Agenda Research methodology & key findings: Harsha de Silva The SMS story and others Lorraine Carlos Salazar The next billion customers Ayesha Zainudeen

3 Recap low levels of ownershhip Ownership and GDP per capita (USD, PPP) % at bottom of pyramid Total number of phones per 100 pop. 23% 18 % % 11% % 23% % 38.0 Pakistan India Sri Lanka Philippines Thailand Pakistan Own a mobile India Sri Lanka Philippines Own a fixed phone Own nothing (but use something) Per Capita GDP PPP (US $) 76% 14 % 22.7 Thailand 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, (2006 TRAI; Q4) Thailand Company (2006 Q1) Reports; Pakistan PTA; (2006 Q4) Philippines NTC; (2005 Q4) Sri Lanka- (2005 TRC; 2000 Q4) onwards from company reports; World Bank (2006); CIA Fact Book (2005) 9,000 8,000 7,000 6,000 5,000 4, ,000 2,000 1,000 GDP per capita, USD (PPP)

4 Those who own a phone, chose to do so for convenience rather than cost Primary reason for choosing to own a phone 10 % of phone owners Pakistan India Sri Lanka Philippines Thailand The convenience (accessibility at any time) It is cheaper For privacy So I don't have rely on other people Other

5 But those who do not, are held back by affordability Reasons for not owning a phone % of non-owners at BOP % 7% 8% 7% 7% 16% 18% 15% 15% 19% 75% 82% 72% 77% 77% Pakistan India Sri Lanka Philippines Thailand I cannot afford it Don't need one Other

6 Affordability as big a problem for urban as rural Cannot afford to own a phone % of non-owners at BOP % 81% 73% 73% 75% 72% 75% 72% 35% 38% Pakistan India Sri Lanka Philippines Thailand Urban Rural

7 The expected cost of getting connected is high Expected cost of a new phone by non-owners 10 % of non-owners at BOP Pakistan India Sri Lanka Philippines >USD 176 USD USD USD USD USD <USD 25

8 compared to the cost that can be afforded 10 Initial cost that prospective owner can afford % of prospective owners at the BOP Pakistan India Sri Lanka Philippines Less than USD 10 USD USD USD More than USD 71

9 Expectations & affordability are more in-line re monthly charges Expected monthly charges by non-owners 10 9 % of non-owners at BOP Pakistan India Sri Lanka Philippines above USD20 USD16-20 USD11-15 USD5-10 below USD5

10 Monthly charges that prospective owners can afford 10 % of prospective owners at the BOP Pakistan India Sri Lanka Philippines USD USD USD 5-10 Less than USD 5

11 The next billion? Non-owners who plan to buy a phone in the next two years 6 53% 53% % of non-owners % 42% 38% Vertical growth, millions (HH obtaining additional connections) Horizontal growth, millions (non-owners joining market) Possible new connections at BOP, millions, next 2 years Pakistan India Sri Lanka Philippines Thailand South Asia plan to buy a phone in the next tw o years South-east Asia Pakistan India Sri Lanka Philippines Thailand

12 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 % of non-owners at BOP % 52% 49% 37% 55% 52% 47% 39% 73% 45% Pakistan India Sri Lanka Philippines Thailand Telecom-transport trade-off? Telecom-transport trade-off? Urban Rural

13 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 % ofnon-owners at BOP % 52% 47% 43% 43% 39% 41% 36% 28% Pakistan India Sri Lanka Philiphines Thailand Male Female

14 Prospective owners are heavier users Average number of calls (out + in) for the month Planning to obtain phone Not planning to obtain phone Pakistan India Sri Lanka Philippines Thailand Source: Diary Except in Thailand Except in Thailand

15 Prospective owners are heavier users Average number of calls for the month: prospective owners vs. non-owners average number of calls Pakistan India Sri Lanka Philippines Thailand Planning to obtian phone Not planning to obtain phone

16 Most would use phone for keeping in touch & emergency communication What respondent would use the phone for if given one at an affordable rate 9 84% % of respondents % 1 69% 52% 26% 18% 44% 57% 11% 58% 21% 17% 5% 3% 2% 1% 2% 1% Pakistan India Sri Lanka Philippines To keep in touch with family and friends Only in an emergency For networking To enhance my income Other

17 Growth mainly mobile Type of phone prospective owners would buy % 4% 7% 1% 4 67% 68% 91% 52% 23% 29% 8% Pakistan India Sri Lanka Philippines Not decided yet Mobile Fixed phone

18 Fixed phone growth since liberalization Fixed sector growth - post liberalisation (Year 0 onwards) India CAGR = 9.5% Pakistan CAGR =11% Sri Lanka CAGR = 18.8% Thailand; CAGR 10.3% Philippines; CAGR=11.1% Pakistan India Sri Lanka Philippines Thailand Fixed phones per 100 inhabitants Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

19 Mobile phone growth since liberalization Mobile sector growth - post liberalisation (Year 0 onwards) Pakistan CAGR =109% India CAGR = 87.8% Philippines; CAGR=68.8% Sri Lanka CAGR = 50.8% Thailand; CAGR = 49.6% Pakistan India Sri Lanka Philippines Thailand Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Mobile phones per 100 inhabitants

20 Higher preference for fixed phones in rural areas, except Philippines Kind of phone prospective owner would buy: urban vs. rural % of prospective owners Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Pakistan India Sri Lanka Philippines Thailand Have not decided yet Mobile Phone Fixed Line phone

21 Preference for fixed phones among females in PK and LK Type of phone prospective owner would buy % of prospective owners at BOP Male Female Male Female Male Female Male Female Pakistan India Sri Lanka Philiphines Fixed Mobile not decided

22 Recap Females more reliant on household fixed phones & other peoples phones Most frequently used phone: Household fixed phone Most frequently used phone: Someone else's phone (neighbor, friend, family, work) % at BOP % 16% 19% 11% 9% 1 12% 3% 4% 4% Pakistan India Sri Lanka Philiphines Thailand 6 5 Male 4 Female 3 % at BOP % 39% 34% 33% 27% 13% 16% 8% 13% 12% Pakistan India Sri Lanka Philiphines Thailand Male Female

23 A phone is possible on incomes of USD2 per day Income distribution of prospective owners % of prospective owners 10 1% 9% 9% 9 28% 8 44% % 56% USD USD % Below USD % % 35% 5% Pakistan India Sri Lanka Philippines The The addressable market does not not stop at at USD100 per per month; it it goes down further.

24 Internet Pakistan India Sri Lanka Philippines Thailand Use the Internet 2% 1% 9% 1 Internet use % at BOP 16% 14% 12% 1 8% 6% 4% 2% 14% 12% 7% 6% 3% 2% 1% 1% Pakistan India Sri Lanka Philiphines Thailand Male Female Large gender divide, even in South East Asia

25 what internet?? Have not heard about the Internet before 8 72% 6 % at the BOP % 36% 29% 14% Pakistan India Sri Lanka Philippines Thailand

26 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

27 To think about Telecom operators Leverage benefits of direct access Security, friends & family Particularly in India: cost saving + income enhancing Increase awareness on efficiency economic gain Collaborate on meaningful content SMS based services vs. Bollywood movies

28 To think about Handset manufacturers Affordable handsets with local language SMS capability Ultra low-cost phones with warranty? Installments?

29 Thank you