India is fast growing in its potential as an emerging market going by Warren Buffets words in CNBC’’s money control news website and I quote “I don’t really see India as an emerging market but I think of the Indian Market as beyond the emerging market size.” Though opinionated in his statement, India has fast realized what China is doing to outpace some of the already developed economies such as Japan.
China was rated this year as the second largest economy in the World from Japan in terms of GDP (measure of the goods and services a country produces) with Japan’s economy worth 5.74 trillion at the end of 2010 while China’s economy was worth 5.8 trillion in the same period according to a BBC News report. One of its secrets is its realizations that its homegrown business models can ‘reproduce’ as well in similar emerging economies such as Africa. Hence by using this platform India has realized it could use its already fashioned business model to penetrate similar emerging economies.
India’s Telkom sector
Being that India’s business model is ideal for an emerging economy, let’s angle this concept to India’s telecoms sector. India’s business model that has emerged from Indian Telekom has been based on increasing volumes, affordability and inclusive growth. From this perspective India’s business model has managed to penetrate a similar emerging economy - Kenya by Bharti Airtel buying Zain Kenya and using its fashion model to impact growth in Airtel’s Kenya customer base.
Airtel’s strategy in Kenya was solely based on increasing volumes, affordability and inclusive growth so it reduced its voice call and sms rates to attract more subscribers.Airtel Kenya dropped its call rates and sms rates to 3 Kshs and 1 Kshs respectively increasing its customer base by 1.4 million from last year between the months of June and September.
Bharti Airtel replication into Kenya’s economy may have all along been strategic as well as suitable for the use of this model. Kenya’s mobile market has all along been dominated and run by western model – that is inclusive of Safaricom which is owned by Vodacom a United Kingdom company.
Western Model
According to the Economic times. India times.com, a western business model offers high tariffs and niche products and by comparing to Safaricom’s services it is working well within this model – that is before Airtel Kenya forced Safaricom to join the band wagon in reducing its sms rates from Kshs 3.50 within the network and Kshs 5.00 to local networks. Airtel Kenya was working within its model and by critics stating Airtel’s likelihood of reducing its profits, its CEO Rene Meza claimed that increasing in customer base was a priority compared to making profits.
Bharti Airtel which controls India’s telecoms is already well established in terms of growth and penetration in its home market, adding on 15 million new subscribers every month according to myjoyonline.com hence being considered the biggest region in terms of penetration of mobile telephony.
With this superior brand already home tested, India has forged to replicate its brand. Now in over 15 countries Bharti Airtel is one of India’s many sectors that are helping it compete with the dominating emerging economies like China and Brazil.
Ian Karoki
07-1151
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