Making the most out of telecom market realities the Tigo way

Lynn Ockersz

Sri Lanka's major telecom operator, Tigo - formerly Celltel - has much to offer by way of even approaches to successful marketing of telecom services, as this interview with Tigo's CEO, Dumindra Ratnayaka reveals.

Tigo looks to exploiting the expanding local market for telecom services, which will double in three years, rather than try to attract customers of other telecom operators. As for 3G technology, "there is no need to rush into it", on account of its limited market.

Q: What has prompted your name change to Tigo from Celltel?

A: If you go back in history to our holding company Millicom, it started changing its business strategy to what they call the three As Strategy; standing for affordability, accessibility and availability.

That is, our product must be affordable to the consumer, accessibility refers to coverage where you want it, and availability, means that, basically, in the prepaid market, there are points where you can re-load your prepaid account conveniently without having to undergo any unnecessary hassle.

And if you are in a postal situation, it means paying a bill conveniently. That is, our customer service is readily available, without your having to go to any centralized location.

So in this context Millicom decided to invest in markets where they decided there was growth. They started from Latin America, where they had several concerns and went from TBM to GSM in late 2004 and in early 2005. Then they moved also to their South Asian operation.

In that respect we also started investing heavily in Sri Lanka; starting last year to expand our coverage to provide value added services, activate GPRSH, high speed data etc. and expand our prepaid card distribution and provide this E pin reload, which allows you to reload as low as 50 rupees.

Along with this they started re-branding globally because earlier Millicom operations in individual countries had individual names. We were Celltel, some were Mobiphone, some were Mobitel - there was no unique brand name. So they wanted to roll out this unique brand name, Tigo.

Operators were given the option of deciding on the roll out date based on where they were housed and their brand name etc. We obviously had a strong brand name but we considered that the best way to communicate the changes in our network, in terms of coverage and services, is to also go with a new brand name. So that you promote all facilities along with the benefits and that is why we decided on Tigo.

The name Tigo itself comes from Millicom. It does not have any specific meaning. In Spanish, there is the word Contigo, which means 'with you'. So Tigo was derived from that.

Q: In the highly competitive telecom service provisioning industry how do you remain in contention?

A: Basically, it is highly competitive, but how we look at it is that everything is competitive. In the consumer goods area, everything is competitive. But what we look for in our industry is the potential. In Sri Lanka there is about 20 per cent penetration.

There is still out there an 80 per cent slice of the market to be tapped. We believe that in three years it will double. So, that is not a situation where we are trying to grab the customer of an existing operator, but there is more growth potential in the market - which means new customers. That is what we are looking at.

Q: Do you see yourself going into the rural market?

A: We are already in the rural market. In fact we are into very rural markets. Some of these towns have five or six shops. They are as rural as that.

We are yet not very heavy in the North and East. We are in the East, but not in the North - that is North of Vavuniya - due to the current unsettled situation. We were planning to go but couldn't as scheduled. But we are ready to go now as soon as there is a settlement.

Q: Your expansion drive last March has been described as the largest by any telecom operator. Could you tell our readers more about it?

A: It was the largest expansion drive by any telecom operator because it involved 500 base stations within a period of nine to 12 months and no operator has ever done that.

It was a Herculean task, considering the conditions and the regulatory issues we face; that is, getting necessary approvals etc. to put up a site and commission one and get electricity connections etc. But we are proud that we have completed over 70 per cent of the programme. We hope by March we would be able to complete it.

This year, the operation has been held up due to the fighting in the North.

Q: Is it correct that your company does not intend pursuing 3G technology?

A: It is not correct to say that we do not intend to develop 3G technology. Rather, the correct position is that we do not intend to do it immediately.

This is because of the experience of our parent company which has not seen 3G succeeding even in European markets, and in developing markets. Three G is essentially a service which provides high speed data and limited applications.

The voice service is the same as we have in 2 1/2 G and the demand for voice is the prime need of this country. There is a limited demand for high speed data and we believe that by concentrating on the bigger demand we could obtain a bigger market share of the growing market.

The niche is something we will think of playing later, when the market develops into a level where there is more demand and more applications for 3G, where it uses the high speed capabilities of 3G and provide to the consumer an application of value. We believe that there is no need to rush into 3G.

Q: Are you satisfied with the business environment in Sri Lanka? Could the State do anything to improve it?

A: The growth is coming. Last year we saw growth, this year we are seeing growth. The penetration has doubled over three years. An improvement in the economy and reduced inflation would fuel the growth. It will improve the spending powers of people so that they will spend more on telecommunications.

Our parent company operates in developed countries where the situations are not optimal anyway. What they look for is market potential and Sri Lanka has it.