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As the newly licensed cdma and Gsm operators commences roll out,
indications are very strong that their might be some displacement in
the Nigerian Telecoms Race. Clear favorites and pioneers like Mtn,
Celtel and Glo are poised to face stiff competition from late entrants,
Etisalat, Alheri and Visafone.
Ordinarily, Visafone should not be classified as a major threat since
they will operate in the CDMA range but the class of additional
license(800Mhz spectrum) that was bought after taking over cellcom,
places the company in good position to provide some unique services and
Coupled with the speedy roll out plans and the pedigree of the chief
promoter, Mr Jim Ovia.Visafone is presently offering Very reliable and
fast internet in the Nigeria Mobile space.
Etisalat is a clear leader with innovative products with foot prints in
the Middle East market and many years of Experience and good financial
position. They are a formidable organization.
Little known Alheri is backed by Nigeria’s leading Business
magnate,Alhaji Aliko Dangote. This will be his first known foray into
the rewarding Nigeria Telecoms market. Despite the seemingly little dog
status in the telecoms market, they possibly have what it takes to
challenge the dominance of the big operators. Alheri, holds a 3G
license which enables an operator to engage in more data intensive
applications and the backers also have deep pockets.
Early and dominant operators provides a significant and sustained
market-share advantage over later entrants. Still, later entrants can
succeed by adopting distinctive positioning and marketing strategies.
Experience has shown that in the Nigerian Telecoms market, innovations
and financial muscles is a major factor for acquiring subscribers. Late
entrant Globalcom is an example of such innovative spirits. Pioneers in
most industries, once they have reached the status of incumbent, are
powerful. Sometimes, however, they get complacent or are not in a
position to cater to the growing or shifting demands of the
marketplace. New entrants can take advantage of gaps in the offerings
of these aging pioneers, or find innovative ways to market their
product or service. Globalcom was able to break into the Nigeria
Telecoms market easier because other operators did not implement per
second billing which should have slowed Globalcom’s race if already in
place as at that time.
While it is fine to be a dominate player in a Telecommunications
starved economy like Nigeria but it comes with a price of higher entry
cost and product research. Late entrants do not need to go all the way
anymore. It cost less to imitate a product than start from the scratch
and with a penetration that is still less than 40 percent of the
license under territory of 140 million people, there are still
opportunities for deeper market share.
For the late entrants to quickly find their voices in the competitive
Nigeria Telecoms market, they need to study the Mobile Value added
services product portfolio offerings of the existing market leaders,
Market environment and positioning. Some Basic strategic planning for
service offering and Product portfolio is for late entrants to look for
new geographic (where possible) and segments for their products.
Presently, most Mobile value added service offerings of Dominant
operators are focused on mass and youth segment market and the chief
products are entertainment based which do not offer any real life
benefits in any manner.
Strategic market entry plans for Telecoms late entrants include price
reduction in an existing market. By introducing a product at a lower
price than Dominate Operators, a late entrant can attract new
subscribers who would not have otherwise signed for the service and in
effect such a product ¬¬will lead to an expansion in the total market.
An operator can also subsidize low end phones to reduce entry cost for
people that ordinarily that might not be able to pay a lump sum for
handset or even acquire one.
Product and service innovation with focus on a niche market, can help
to establish late entrants as dominant players. Companies can compete
by being innovative in the marketplace. The innovation may be radical
or incremental. One example of incremental innovation is an enhanced
version of an existing product. The enhanced product can compete
directly with existing products, or it can be positioned to attract a
smaller segment of the existing market. In addition, the improved
product or service can sometimes attract new subscribers that are not
the current target for the existing product or service. For example,
Blackberry phones are currently without international language
translations for emails and Sms. All the unique selling points for
Nigeria Mobile operators for BlackBerry phones is the email service
while neglecting the value added on for Blackberry, that has potentials
to earn data revenue, change the face of e-commerce interactions in
Nigeria and also further differentiate the operators offerings of
Blackberry.
Late entrants can adopt the above to make in roads into the Nigeria
Market but they should also be mindful of the barrier set up of the
dominant players with substantial research and development investments,
being early in the market are well positioned to stifle the growth of
the new entrants.
Dominant operators like the MTN,Glo and Celtel in the GSM market and
starcoms, Telkom-Muiltilinks in the CDMA market had established a
presence in the market place, build brand equity and created an
excellent distribution network. Also, a peculiarity of telecoms
industry is that the quality of service is primarily determined by
coverage. Having evolved over time, the first entrant's(MTN) network
usually has much better coverage. The customers become used to enhanced
coverage over time. So new entrants have to invest significantly to
achieve this same coverage, an effort that is capital intensive and
time consuming. All new networks have initial bugs that take time to
fix. Subscribers are just not willing to go through another learning
curve, when there is already a robust supplier of service. Another
frequent constraint is access to property to build the towers, since
the first entrants have already seized the ideal sites for coverage but
Visafone will be leveraging on the extensive branch infrastructure of
Zenith Bank to roll out while Alheri and Etisalat can opt for
Co-location services of Helios Towers. But in the absence of these bail
outs, the late entrants may require to invest larger amounts in network
infrastructure to gain similar coverage. Given these hurdles, it can
take two to three years before a challenger achieves coverage
competitive with the incumbent's.
In addition to coverage and related quality of service, another huge
barrier to entry for new entrants is the issue of number portability.
The NCC has been making efforts and educating the dominate operators on
number portability since they will most likely serve as the donor
network while the late entrant will most likely be the recipient
network. The success of number portability depends on the ability of
the donor network to perfect the processing of the subscriber in a turn
around time or hence the subscriber becomes frustrated while attempting
to join another network while keeping his number.
The inherent advantages to being first in the Nigerian telecoms market
are control of ideal sites; freedom to evolve and fine-tune network
coverage; building of brand loyalty by offering superior customer
service; locking in customers by subsidizing equipment for an extended
period under fixed-service contracts, and gaining control of key
channels of distribution.
Late entrants do also have its own advantages if they are able to learn
from the pit falls of the dominate operators in offering a superior
level of customer service, deploying new technology, so that a new
entrant can offer similar or better service at a lower cost, the new
entrant may also develop a new way to access the market, with an
innovative distribution strategy and may simply be pricing
aggressively, targeting selected segments by taking advantage of the
incumbent's tendency to average pricing across all segments.
While the dominant operators do have their own advantages, so do the
late entrants. They are coming with latest technology and more
knowledgeable about the end-user experiences of that particular market.
Examples abound of Telecoms operators that moved from late entrant
position to dominant players by getting it right. Orange, successfully
established its self as a dominant player from a late entrant in the
British Market and Globalcom, did same too in the Nigerian Market.
I wish Visafone,Alheri,Etisalat and Nigomsat (If eventually awarded a
license) an interesting journey into the fastest growing telecoms
market in Africa!
Emmanuel Okoegwale
emmanuel@gomobileng.com
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Posted by Robot| 13.03.2008 21:52