5 minutes & a new mobile plan could possibly earn millions for Telstra
Executive Summary:
Telstra is the largest telecom company in Australia with close to 62% market share and ranked 2nd most valuable brand in Australia in 2015 (Brand Value 2015: AUD10,647m^)
Australia is considered to be a top choice for skilled immigration and every year millions of people come to Australia in search for better career opportunities & good standard of living.
With rapid influx of new people entering the mainstream population, the question is if Telstra is considered to be the preferred choice of mobile service provider among these population.
Problem Statement:
During 2012–13, Australia issued over permanent migration visa to over 1,90,000 people*.
If we do a breakdown per country, it looks like the following:
For a person who arrives in a country the top 2 items in his/her shopping cart are Forex currency (for transaction) & a mobile SIM card for communication.
My analysis:
I have gathered facts and evidences by conducting one-to-one interviews of close to 27 people who have migrated to Australia recently about their preferred mobile company and the result is quite surprising.
Vodafone is the absolute favorite enjoying a market share of over 60% and Telstra is yet to open their score.
This could be attributed to a wide range of diverse factors. However, when I interviewed these people and inquired “Why not Telstra?”, the common responses were the following ones:
“Expensive”
“Only 500mb data”
“I chose Vodafone as the plan was cheap and I got a phone along with that. Data is shared and they gave me an option to suspend line for 3 months at nominal fees”
“India unlimited”
“Telstra is expensive as their network is good”
“Yeah it’s a bit expensive”
“Telstra gives better coverage but freebies r less”
“Vodafone was easily accessible at the airport”
Potential revenue leakage:
As per my study, each individual on an average spends $49 per month (AUD) on mobile per month from the below data from my interviews.
Considering the age group of people not using mobile phones, we have roughly 33,910 in the age bracket of (0–14years ) out of total 190,000 population.#
Hence the monthly spend on mobile phones is close to (1,90,000–33,910) x 49$ (assuming each person has atleast one Sim card and spend $49 per month on voice and data plans). This translates to a whopping $7,648410 = $7648.4k = $7.6 million per month
The figure is indeed staggering $7.6 million x 12 months =91.2 million per year
To add there are opportunities to offer additional “bundled plans” which might include home+phone+mobile plans etc.
What could be done:
This could be a huge loss to the company as people do not like to switch providers due to their brand loyalty and also for the fact that mobile number portability is cumbersome. That means once a customer is lost to a competitor, they might never come back to Telstra for the rest of their lives and this is a perennial revenue leakage.
I share below a comparison of a $50 plan from Telstra and Vodafone.
Steps that could be taken are the following ones:
1. Establish in the portfolio offers with unlimited free calling to home countries such as India, China, UK, Philippines, South Africa, Vietnam, New Zealand, Korea, Ireland, Sri Lanka etc
2. Kiosks or vending machine with SIM starter kit at major airports including Sydney, Melbourne, Adelaide which are preferred destination for migrants in Australia etc.
3. Spend on advertisement to change the customer perception as “always expensive”. Partnership with commercial airlines like Qantas, Singapore Airlines, Air India, Thai Airlines could be a promising lead.
4. Sales promotion on immigration websites or forums like expat forum could prove to be beneficial.
5.Option to reserve/select a number online could be an interesting proposition for people arriving in Australia as they can share these information with their family well in advance and this would make people happy of this precious possession.
6. Possibly to further collaborate with a partner to offer a simple mobile banking solution for efficient remittance of currency to families back home.
Next steps:
The sample size of this study is quite small & restricted to only people from one geography (i.e India) but it definitely shows a pattern or trend. What I would ideally like to do is to extend the sample with a more, diverse range of people with different demographics and socio-economic background to avoid any skewed data.
Conclusion
If the above hypothesis is:
10% true means that Telstra could add revenue worth $9million per year
25% true means a probability to add another $23million per year
40% or more means that they need to act rapidly.
About me :
I am Debo, working for a major Telecom company in India for over 12 years as Product Development and Process Improvement consultant.
Disclaimer:
This is an exploratory study only and some of the data could be outdated hence its not suitable to make any business decisions based on them. Reading the document roughly takes around 5mins and hence the title of the document is “5 minutes & a new mobile plan could possibly earn millions for Telstra”.
Scope:
1) Only includes the people applying under Migration Program. Asylum seekers, Family — Expert Panel on Asylum Seekers, New Zealand citizens, Humanitarian Program and temporary entrants like tourists, international students and people on working holiday visa are outside the scope of this study.
2) Sample people interviewed are skilled migrants from Indian Origin only.
Information Sources:
~Licensed images used from http://www.dreamstime.com/
^Brand Finance Australia 100 March 2015
*Report on Australia Migration Trend 2012–2013
#Source: Table 2.2: Migration Programme visa places by age group, 2010–11 to 2012–13