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Reference no. ESMT-309-0096-1
ESMT European School of Management and Technology (2009)
27 March 2009
This is part of a case series. The cases explore Celtel Nigeria's innovative approach to serving the rural poor. The (A) case provides an overview of the mobile telecommunications market in Nigeria as of mid 2007, as well as detailed demographic and socioeconomic information. At the time of the case Celtel Nigeria is the second largest mobile telecommunications company in the Nigerian market with a 28% market share and a subscriber base of approximately 8 million. The company has experienced considerable success in serving Nigeria's cities and larger towns, but has only recently shifted its attention to serving poorer consumers in rural areas - a massive but as of yet untapped market. But this shift from urban to rural has not been easy, and although some 50% of Nigeria's population live in rural regions the challenges of reaching them sometimes seem overwhelming. The absence of a reliable national electricity grid means that the company's rural telecommunication towers have to be run on diesel generators, resulting in high maintenance and diesel fuel costs. Theft and vandalism of expensive communications equipment and generators has emerged as a major concern, resulting in the need to employ full-time security guards on virtually every base station site outside of urban areas. The distribution and marketing of products and services is also a challenge, with existing distributor networks well established in urban areas, but virtually absent from the countryside. On top of all this, while there is a real demand for telecommunications services most consumers in rural areas still see mobile telephony as an expensive necessity, with affordability remaining a very real issue for many communities. At the end of the (A) case Celtel Nigeria's Chief Operating Officer Lars Stork is pondering the challenges of bringing the benefits of mobile telecommunications to Nigeria's rural poor, setting the scene for analysis by students in suggesting potential route to market approaches for the company. The (B) case demonstrates how Celtel has been able to implement a highly innovative marketing strategy to serve low-income rural customers. At the heart of this marketing approach is what is called the Rural Acquisition Initiative (RAI), a micro-franchising model involving partnerships with local entrepreneurs. It is recommended that both case (A) and (B) are distributed to students, but the case can also be taught if only the (A) case is distributed. In the latter situation, instructors will still need to review the (B) case to be able to explain the business model behind the rural acquisition model. This case has been featured on our website, click to view the article.
2008 - EFMD Case Writing Competition - special category winner