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Opportunities in rural areas of emerging markets for mobile telephone operators

2012

Customers in the countryside are different. They need unique offerings. Wireless network operators have to rethink their approach. Suitable strategies are already available.

Today mobile communication is so commonplace that the markets of the industrialized world are thought to have reached saturation point. Mobility players find it hard to achieve even meager growth rates in these markets. Things look totally different in emerging and developing countries, where mobile phones are less widespread.

But this is changing fast. The demand for mobile communication in these countries is high, as the growth rates in several key emerging markets show. However, these new customers are not all city dwellers, as you might think. There is considerable demand for mobile communication among the rural population too.

"Metropolitan" business models do not work in the countryside. Unfortunately, this demand does not automatically translate into big profits. Product design, sales and marketing models established in the cities cannot simply be transferred to the countryside. Equipping sparsely populated areas with the technical infrastructure needed for comprehensive mobile coverage does not come cheap: in fact, the costs increase as one penetrates more remote markets. At the same time, since the rural population has a low average income, the Average Revenue Per User (ARPU) tends to reduce with remoteness.

Among companies who have entered the rural market, the successful ones are those who see their rural customers as a separate customer group that has to be addressed with specially tailored concepts. Companies who simply transfer the concepts they have established in big cities to the countryside, are destined to fail.

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