Competing In Low ARPU Markets

I was recently involved in some discussions where we were talking about the challenges faced by operators in an emerging market. The market was characterised by very low ARPU levels making it difficult to put in place even a minimum level of IT infrastructure in a cost effective manner. To top it there were a number of challenges in operating the IT infrastructure.

With multiple trans-national operators in the market – lured by historic ties from the colonial era or by a genuine belief that the market challenges provide an opportunity – the demand for world-class IT solutions existed but was not feasible.

How could this operator meet these challenges? Although there is no silver-bullet for this problem, here are a few thoughts…

Communications and Society

The most important consideration is likely to be that of cost. The operator is likely to look at ways to manage his expenses within means and efforts would be invested into cutting cost – and, rightly so.

However, it will be far more relevant to look at the values that can be delivered by the operator by looking at social parameters of the market. And this could sometimes go beyond the call of telecom (pun intended). Here are a set of considerations by factoring which there could be a mutually beneficial relationship for the operator.

Focus On Local Talent

Some the emerging markets have strong University systems and an abundance of local talent that can be used directly or with suitable grooming into a range of activities. This enables a good employment opportunity for the local talent and this may turn out to be consistent with strategies to contain cost too!



A very fundamental aspiration of all societies tend to be about well-being and staying healthy. If the emerging market is in a country with poor health indicators, it would make sense to start planning products – if need be in collaboration with healthcare providers and insurance companies – to tap into this aspiration.


Access To Scientific Inputs

Another significant requirement that goes unfulfilled in these emerging economies is access to scientific inputs. The society could easily benefit from connecting up with research centres in agriculture, technology schools etc. A collaborative approach by the operator would go a long way in making the operator an integral part of the lives of individuals in the society.


Cloud Models

Another line of attack, besides that of finding a purpose beyond telecom, is what I call Cloud Model – realisation of a set of shared resources so that the cost is managed either by “Opexing Capex” or by virtue of achieving scale across multiple operations.

The Cooperative IT

We have seen the success of cooperative farming under similar economic constraints. It is hence possible to conceive a similar success if operators could come together and enable a cooperative setup that may operate across operators too – except for those aspects that the operator believes would be differentiating themselves in the market. In fact, it is possible that the operator can start with an undifferentiated setup initially and based on financial milestones create a progressive roadmap towards differentiation.

Multi-market Cloud

Another option available for operators who service multiple markets is to share their IT infrastructures across their markets with a roadmap towards individual differentiation. This approach has failed in Europe, for example where multi-market operators have been unable to harmonise applications centrally owing to market specific resistance. However, it is one thing to harmonise and yet another to setup, in my view. But the significant problem could be the connectivity across the markets to any form of centralised or distributed Data Center in the developing world. (I have heard of stories about 5MB VSAT links being the only option for data centres in some parts of central Africa, for example).


These are some of the technical and social initiatives that I could think of for making it easy for operators to invest in developing markets where the ARPU may not be encouraging.

Any more ideas?


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