STRATEGY AND IMPACT ON THE INDIAN MOBILE TELECOMMUNICATION SCENARIO

Abhishek Prasad (08) Dipti Navaney (31)Madhavi Shetty (25)

Neha Mehta (15)Pankaj Dedhia (18)

Introduction

• Reliance Communication formerly Reliance Infocomm, setup by Shri. Dhirubhai Ambani in 2000– 1999 change in policy by Govt. for telecom industry– To make an India where the common man in urban as

well as rural area would have access to affordable means of information technology and communication.

– Target to setup 60,000 kms. Of Fiber optics backbone covering nearly 450,000 villages and 77 Mn. Subscribers

– Serving 147 Mn. Customer base as on Sept 2011

The Vision

“My vision is to provide the latest telecommunication facilities to every Indian at the price of a post card”

– Dhirubhai Ambani

Pricing Strategy

• Challenged conventional cost structures in the telecommunications industry

• Broke the mould with a tariff that can be described as the most ambitious ever listed by a telecom company in India.

Pricing Strategy Cont..

• Other operators aimed for the higher value market.

• Reliance realized that there is a market in driving volumes and created a completely new market.

Dhirubhai Ambani Pioneer Offer

• Consumers were given – free digital mobile phone– unlimited free incoming calls– billing at 15-seconds pulse rate, for a one-time fee of Rs

3000

• Value added services like – voice mail– call waiting– call hold– call divert– call identification– call conferencing– dynamic locking and text messaging were offered for

free.

Value Added Services

Free Internet!

• Internet access through the phones was also offered “free” initially.

Living The Dream

“The pricing system is in line with Dhirubhai Ambani's dream and directive of making phone calls affordable for every Indian. It has been made possible due to the significant capital productivity achieved”

- Mukesh Ambani

Advantages over existing competition

• Biggest entry barrier : Handset prices

• Minimum handset cost – Rs 7500

• This meant dealing with two suppliers:– one for the service– another for the handset.

But With RIM..

• Access to a fancy handset without the initial price barrier• And dealing with just one supplier

How RIM managed the “FREE” handset

• Built-in contract of three years for every customer

–guaranteed cash flows

• Exclusive agreements with handset vendors like LG and Samsung.

–High volumes : Rock bottom costs

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• Reduced the choice available to the customer to just two models per brand– ensuring mass production : further reduction in prices.

Rs 10500 = Rs 800 !

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Path breaking strategies

• “No charge” for incoming calls• Other competitors charged incoming calls at almost half the

rates of outgoing calls

• No implementation of CPP(Calling party pays)

How they managed such low call costs?

• High rental of Rs 600– But 400 mins. Talktime

• Low pulse rate– 15 secs. Compared to existing 1 min.

• RIM to RIM – 40 paise / min

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Shift in Strategy

• Post-Paid to Pre-Paid.– Cash is collected beforehand– Cost of collecting bills - which is 1 to 3 per cent of

revenue – vanished• Pay Rs. 3,500 = Handset + Free Reliance Prepaid

connection + Recharge vouchers worth Rs. 3,240• Automatic Roaming – No Extra Cost

Cost Management - The Inside Story

• Cost Saving – Working through other group company offices– Capital Cost– Personnel Cost– Technology & Engineering

• Centralized Operations

• “80 per cent of our administration and operation is centralised. Compared to the best telecom networks in the world we have deployed only half the number of people per 1,000 lines making our human resources the highest productive resource.”

Economies of Scope

• Optimum Utilization of Network– Reliance landline– Broadband Internet– Leased Line– VPN (Virtual Private Network)– IPLC (International Private Leased Circuit)– IDC (Internet Data Centre) services– Centrex

Sales And Marketing Strategy

Tapping Internal Resources

• 10 connections at a discounted rate per employee• Share Holders encouraged to promote the service

– Overall discount of Rs. 4100 for two connections

Dhirubhai Ambani Entrepreneurship Programme – A

New Way to Market:• Began with an aim of enrolling 200,000 individuals

• Trained these entrepreneurs in basic skill sets, so that they are able to deliver value to customers at their doorsteps.

• Contributing to society and gaining goodwill and enhancing networks

• Retailers like FabMall, PlanetM, HP, Music World and Timex started to bundle their products along with RIM.

Advertising – Educating Masses and Evoking Passions:

RWorld – World in your hands

• Mixing of data applications• Live News from TV channels like

– NDTV, CNBC, Aaj Tak• Specific festival services for the Durga Puja and Dusshera

festivals.• Heavily promoted Reliance mobile ShowTime

– the first of its kind concerted movie promotion through Reliance mobile RWorld and Reliance WebWorlds.

Product Innovations – Connecting with Every Section of Society:

• Leveraged its product innovation skills, applications development skills– managing queues in temples– connecting all police stations, to delivering egovernance

solutions to citizens.• Connect with the huge farmer and trader community of

India– Mandi (market) onto mobile handsets– tied up with National Commodity & Derivatives

Exchange Limited (NCDEX) to disseminate its spot and future commodity prices on RWorld Mobile App.

More Innovations

• Tap into the retailer community– deployed India's first Wireless Point of Sale (POS)

Terminal for processing credit card transactions in association with HDFC

• Rconnect– India's only nationwide wireless Internet connectivity– helped it to connect to the growing community of

Internet users,– Enabling it to gain over 300,000 subscribers in less than

seven months

Customer Service – Icing on the Marketing Cake

• A 24 by 7, 365 days a year customer service was set up in a central location in Mumbai

• Service was offered in 10 languages• Other mobile operators took more than two days, RIM

provided fully provisioned mobile phone within 15 minutes.

Moulding the regulations

• (TRAI) regulations : Mobility range of about 20-25 km with no roaming.

• RIM overcame the policy shackles by enabling the customer to use the same handset in areas other than where it was registered.

• RIM ‘s political influence helped them gain the Unified License

What others could not see

• While others saw weaknesses of India as a market – widespread poverty and low levels of telecommunication penetration –RIM realized that these actually were strengths which it could tap into.

Continuing the legacy

• RIM managers saw that telecommunications would be much valued by the poorer sections of society if it could be used to create opportunities and offered at affordable prices.

Thank you