Telecom operators need to dive into the remaining low-end market

It is now clear that Rwanda Utilities Regulatory Authority (RURA), will, eventually, license a fourth national operator.

It is now clear that Rwanda Utilities Regulatory Authority (RURA), will, eventually, license a fourth national operator.

Going by the dynamics unfolding within the telecoms markets, there is need by the three existing operators to undertake a strategic shift in how they attack the remaining parts of the Rwandan market. This is a market with its own set of unique features. Such an observation can be made when one studies how the three operators have looked at the market so far and how the remaining segments should be looked at from several angles.

This seems to be one of the main reasons why another player is set to gain entry. It can be said that there has been an obvious bias for the three players to consider servicing the high-end including the corporate segments of the market.

This market according to some analysts I have spoken to, have now reached what they refer to as a ‘growth plateau’. Servicing this segment has reached the apex and there is very little room for additional penetration.

With penetration levels now reaching 3 million this segment is now totally sorted out. This represents, in one way or another, the easy part of the market. This easy market includes those who are well versed with the use of the mobile telephone as a lifestyle product.

These are the segments that can easily respond to glamorous advertising and huge sales promotion campaigns that we see the three players rolling out. However the remaining but equally huge component of the Rwandan market is still largely intact.

This is what analysts and market gurus refer to as the bottom of the economic pyramid. This is the most difficult market to break into. The operator that will manage to break into this territory successfully will no doubt capture more market share. However getting an additional 3 million subscribers or more from rural Rwanda is a huge challenge that will require out of the box thinking. For instance these are not the kind of subscribers who will easily respond to the classic but expensive marketing campaigns that we see around.

 For some of these clients all they need is a simple connection and cheap but equally reliable services. To enter such a market operators will have to slash costs such as expensive marketing budgets substantially in order to deliver lower tariffs. The operator who will be able to survive in this kind of terrain will have to transform itself into a very ‘lean/ mean’ service provider. Within this segment incomes are extremely low despite the huge numbers who are yet to be connected.
However, for operators who have been ignoring this segment a second look is necessary.

I will illustrate my point. Last week I had accompanied my former college mate to Eastern Rwanda where he runs an agri-business project being sponsored by an international NGO. Hardly a year into the project the rural folks he works with have managed to extricate themselves from the viscous circle of poverty. They are now dollar generating business operators exporting their products ‘big time’ to the huge US market.

From ground zero these rural folks now manage to save over $20,000 every month from their collective work. They are even talking about purchasing additional equipment to boost their expansion ambitions. The group is the envy of the whole district. Make no mistake they are still very much the rural folks despite the recent success that has visited them. Most of them do not have cell phones. And such scenes abound all over rural Rwanda.

This is the reason why the Government is serious about using ICT’s to transform the rural landscape. Operators will now have to transform the challenges existent in rural Rwanda into opportunities for their own growth and that of the larger economy. After all is that not what business is all about?

ojiwah@gmail.com
Fred Oluoch-Ojiwah is a journalist with The New Times

 

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