Fortune at the Bottom of the Indian Pyramid

bharti_airtel_vodafone_idea_cellular_logos.JPGIndia’s cellular market has more than 217 million customers and is adding eight million subscribers a month, making it the world’s fastest growing. With just 13% penetration of mobile subscribers, there’s still a lot more opportunity for wireless carriers and a lot of areas in India still don’t have cellular coverage. So far India’s mobile revolution is mainly confined to the cities, but the real opportunity lies in providing telephone service in the vast rural hinterland that have more than 770 million people, only 2 percent of who have telephone service. Even the teledensity, the percentage of people owning ANY phone, in India is just 21 percent (compared to the saturated markets in the west). However, building out a wireless network infrastructure is no mean feat – it is very very expensive – and a feat that only highly capitalized mobile operators can do.

In order to make a nationwide roll out cheaper and to grow faster, three leading Indian private mobile operators, namely Bharti Airtel, Vodafone and Idea Cellular, are launching a new company to share communications infrastructure to cut costs and help speed the roll out of a nationwide phone network. This new company will be an independently managed communications tower operator by the name Indus Towers. The companies will pool their existing communications towers so Indus Towers will start out with 70,000 tower sites. Bharti (India’s biggest private mobile phone operator) and Vodafone will hold 42 percent stakes each, and Idea Cellular, controlled by the Aditya Birla conglomerate, will hold 16 percent. The new company will also share infrastructure with other service providers like broadcasters and broadband service providers

This is the first such venture to be launched in India and it is a great strategy. Sharing network infrastructure will help reduce mobile phone service costs even more, despite India already having one of the world’s cheapest wireless services at less than two cents (U.S) a minute. No doubt that this is the best strategy to reach a new layer of untapped clientele, and one espoused in the book “The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits” by well-known strategist C.K. Prahalad.