Survival Consolidation
Survival Consolidation is certainly not an attractive scenario. Due to prolonged economic downturn, communications in emerging countries will remain voice-centric. The number of minutes of use on the mobile is increasing, but revenue growth will stall. Operators fail to grow beyond the $5 ARPU voice market, the bottom of pyramid (BoP) proves unviable to cater to given the economic situation. As a consequence, emerging operators growth stalls by 2015 and triggers consolidation in large (e.g. India) and fragmented (e.g. Africa) markets alike.
Because of the lack of financial capabilities, internet and data usage is limited to large cities with sufficient data networks. But deployment of basic mobile data services, such as mobile money and information advisory services, has good potential. We already see some successful mobile money schemes, among others Gcash and Smart Money in the Philippines, Wizzit in South Africa, Celpay in Zambia and, above all, M-Pesa in Kenya, which has now seven million users in a country of 38 million people. Examples of information advisory services are mKrishi in India, CellBazaar in Bangladesh and Nong Xin Tong in China, providing agriculture information, advice and trade support.
In the Market Shakeout scenario, where the market is stagnant or even declining, the vertical integration model is disaggregated and the industry is further fragmented by initiatives from other parties that extend ultra-fast broadband to particular areas. Operators are looking for growth through premium connectivity services sold to application and content providers and device manufacturers.
Voice revenue is stalling and emerging market operators will focus primarily on growing data usage of their current voice subscribers rather than growing their voice offerings to BoP. Their limited investment capabilities for the required data infrastructure fuels network outsourcing models for most operators. Operators such as Bharti are already outsourcing their networks to equipment suppliers as Ericsson and NSN.
MVNOs will emerge to offer low-cost data services to cater to specific local market needs such as mobile money and health care. Also parties such as Nokia will search for opportunities here. Nokia already announced plans to target emerging markets with its Nokia Money service. Where services are not profitable, organizations as NGOs might come in to subsidize particular offerings to reach certain communities.
Clash of the Giants
In this scenario, where the addressable market is expanding, mega carriers are looking for growth through selected verticals, such as e-health and smart grids, for which they provide packaged end-to-end solutions. Global industry collaboration on common capabilities and platforms must improve competiveness with global OTT providers, which 76% of telecom executives identified as the greatest threat to their business over the next five to ten years.
For instance, the world's largest mobile operators, including AT&T, Vodafone, Orange, Bharti, China Mobile and Orascom, team together on a wholesale platform for mobile applications in response to the success of the app stores driven by the likes of Apple.
Emerging market operators focus on maximizing their asset utilization by growing voice revenues through expanding their customer base to the remaining population at the BoP, together with data services packaged in such a way that they meet the needs and tastes of lower-income consumers. Extending communications to many more people is possible as ultra low-costs handset penetration increases.