8 February 2021 - Ever since the emergence of COVID-19, the consumer landscape has changed...
Our observation and motives
This can be reflected within the telecommunication industry as we observe a heightened usage of mobile internet as a response to the lockdown or movement restriction implementation across various countries. However, for telecommunication services to capture these inbound customers into their ecosystem, it is vital for us to understand the underlying motivation behind the consumers' choice and considerations towards which services they opt for. In essence, we understand that the adverse economic impact of COVID-19 has significantly affected the financial well-being of millions of South & Southeast Asian consumers. Thus, we attempt to understand the relationship between telecommunication average price and the consumers' affordability level by putting forward our analysis on 7 countries including Bangladesh, Cambodia, Indonesia, Malaysia, Nepal, Sri Lanka, and Singapore.
According to the UN Broadband Commission, mobile internet affordability is defined as — the cost of 1GB of mobile data not exceeding more than 2% of the average monthly income of a country's citizens. Therefore, the lower the percentage value indicator for Affordability (as % of GNI), the more affordable the mobile internet is in the country. For example, even when Singapore's mobile data industry average (IA) was at USD1.22 per GB per month, they were still the most affordable in the region at only 0.3%, ranking at 7th place globally. Whilst Malaysia was rated at 0.9% affordability and ranked 48th globally, it remained one of the highest mobile data costs to consumers with IA at USD1.33 in the region.
In the Alliance for Affordable Internet (A4AI) 2020 report, it was discovered that in low- and middle-income countries, mobile data have experienced a consistent decline in prices. Therefore, it resulted in the cost of 1GB of mobile data falling from 7% to 3.1% of average monthly income. However, as displayed in the figure above, Nepal was still ranked below the affordability line, at 5.2% as of country GNI, while Cambodia and Bangladesh are barely above the line at 1.9% and 1.7% respectively.
Within the mobile data category, the Industry Average (IA) Price from each of the 7 countries has been displayed. 3 top telecommunication mobile data service providers per country were selected from this category and its Average Price (AP) was calculated based on secondary research (i.e. telco's product offering website).
To provide a better overview, the disparity between the Industry Average (IA) and Telco Average Price (AP) was presented in the illustration above.
The placements before and after the Industry Average (IA) line depict the position of telcos on whether they belong to the premium or non-premium category. By pitting this data against the telco's mobile network Quality of Service (QoS) and market share, a premiumization and de-premiumization pricing strategy can be formulated to either increase or decrease its market share by appealing more to the mass market or premium market. For instance in Sri Lanka, the IA was USD0.37. Sri Lanka Dialog is considered premium with Mobile Data Average Price (AP) at USD0.56 that was above the IA compared to Mobitel and Dialog at USD0.26 and USD0.29 respectively that were below the IA.
To dive deeper into Aleevar's methodology, expected outcomes, and activities ahead, please refer to our previous article on the Trilemma of Premiumization in pandemic period.
To jump into Aleevar's telco premiumization checklist with the suggested future action plan and activities guide available, click on this link - Trilemma of Telco Premiumization.