Half of new mobile subscribers are coming from rural areas.
Last month, Reliance Communications and Idea Cellular entered into alliances with two unusual partners — Krishak Bharati Cooperative Ltd (Kribhco) and the Department of Posts. While Kribhco’s 25,000 cooperatives will market RCom’s telecom products and services, the post offices in Kerala will sell Idea’s specially-designed stamp-sized recharge vouchers.
A few months earlier, Airtel entered into a joint venture with the Indian Farmers Fertiliser Cooperative Ltd (Iffco) to offer specifically designed products and services. The target consumers are the 55 million farmers under Iffco’s fold. Airtel has already enrolled over 60,000 farmers under this scheme.
Mobile phone manufacturer Nokia, which had earlier launched a basic handset with a torch and an alarm clock, has now gone a step further with Nokia Life Tools – a range of agriculture, education and entertainment services designed especially for consumers in small towns and rural areas. The Life Tools provide basic information on weather, mandi prices and crops.
The efforts of Indian telecom companies to woo Bharat have finally started bearing fruit. Airtel gets more than half its new subscribers from rural and semi-urban areas. Similarly with Vodafone-Essar (50 per cent), Idea Cellular (56 per cent) and Reliance Communications (50 per cent). The Indian telecom sector adds an average of 10 million subscribers every month, of which rural areas account for over five million. And Nokia sells over 1.6 million phones yearly in rural areas.
The ring will only get louder, as even after all this, mobile phones reach just 13 per cent of the rural population. An Assocham report on rural consumption says that in three years the per capital income in rural areas will double. Considering that rural households form 72 per cent of the total, the rural market roughly comprises 720 million customers.
The Indian telecom market woke up to the potential about three years ago and the moves are paying off now. Bharti Airtel’s president (mobile services), Atul Bindal, said the company was finally seeing its rural strategy yielding handsome results.
Apart from the tie-up with Iffco, the company has set up Airtel Service Centres in rural areas to provide services and handle customer queries and complaints, eliminating the need for call centres.
The company has also tied up with Nokia to launch an educational initiative in order to give rural users a live experience on mobility services, that include hands-on training on making the first phone call and sending SMS with localised content.
No one is saying selling phones in rural areas is easy. “There is a long gestation period in the rural segment, compared with that in urban centres. For example, if an urban user brings in specific minutes of usage during a specific period, that from a rural customer takes much more time,” Bindal said.
Idea Cellular Managing Director Sanjeev Aga agreed. “Providing telecom services in rural India is not an easy affair. Companies have to overcome many constraints, like electricity (causing infrastructural issues) and topographical and logistic (distribution) issues, among others. Moreover, rural India’s income is dependent on harvest, monsoon and many other factors.”
That’s true, but companies have hardly any option, as metros and major cities have becoming saturated. “Even though there is a drag on the average revenue per user and minutes of usage as customer acquisition in rural areas is happening at the entry level, these concerns would be mitigated once the market matures,” Aga added.
Sheriar Irani, an independent analyst, said even though the immediate benefits are low and would initially drain the operators’ overall revenues, rural markets are lucrative in the long run. Look at the FMCG industry, where most of the majors are now focusing on rural areas.
