On 20 Jan 2011, a new era dawned on the Indian Telecom
industry with the launch of Mobile Number Portability (MNP). Putting aside, the
enormous amount of money and effort spent on MNP campaigns, hype created by
various service providers featuring silver screen glitterati and discussions at
length on various business and news TV channels; in sheer numerical terms MNP
turned out to be a dud though the first months’ launch report showed profitable
net port-in additions.
Just 12 days of MNP during Jan’11 have thrown a different
set of statistics. Some large telecom operators like Vodafone, Bharti Airtel
and Reliance have made substantial gains which can be adjudged from the fact
that these three large telecom operators, which used to together constitute
about 40-42% of the net additions prior to the launch of MNP, witnessed sharp
rise in this percentage and constituted over 50% of the net additions in the
January subscriber base. COAI believes that MNP would not be a game changer
owing to factors like multiple SIM card users, competitive tariff plans and
postpaid to prepaid gap that affect the outcome.
Despite the delayed launch and a strained consumer
adoption environment due to technical, regulatory and procedural glitches,
almost 5 million subscribers have applied to port their mobile numbers by the
end of March.
According to the Telecom Regulatory Authority of India
(TRAI), the wireless user base grew 2.55 percent, from 791.38 million in
February 2011. The number of mobile phone subscribers in India rose to 811.59
million in March with the addition of 20.21 million connections, official data
shows.
The Indian market has been on a roll with net additions
crossing 10 million a month consistently since the past 2 years. But majority
of the additions have been in the lower ARPU segment around Rs. 25, whereas
figures show that the MNP additions though lesser in number have contributed
significantly to the operators’ revenue over the higher ARPU segment around Rs.
600
Singapore mobile subscribers were one of the first in the
world to enjoy mobile number portability through this Call-Forwarding solution
when it was launched there in 1997. Hong Kong, the UK, and Holland followed in
1999 and now over 54 countries around the world have implemented mobile number
portability. The global experience shows that the postpaid segment (the high
ARPU customers) is more receptive of porting-in to a better service provider.
Though the postpaid segment is still small as 4% against
the 96% prepaid segment where the churn is greater, as non-number sticky
customers always had an option to keep shifting SIMs based on promo-tariffs.
Statistics show that the ARPU of regular postpaid subscriber is about 5 times
ARPU of prepaid subscriber. And the postpaid subscriber is 3-4 times loyal
compared to prepaid subscriber. Therefore the postpaid segment and customer
value are the main focus areas, as it gives an opportunity to attract the high
ARPU sticky (loyal)” customers.
Market surveys have shown that up to 50% of all mobile
users in India are unhappy with their operator, and are willing to switch to
another service provider if allowed to retain their number. In spite of
complaints that operators were not allowing number porting, delays and other
problems faced during the change-over period which stretched to more than a
week, voluntary port-ins acquired at merely no cost at all to the operators
have resulted in greater revenue and a substantial percentage of the total
subscriber additions. Considering the major players like Airtel, Vodafone and
Idea we see that the revenue from MNP additions are an average of 27% to actual
subscriber base additions. Subsequently, though adoption will be limited to a
relatively small segment of customers comprising post-paid and high-spending
prepaid subscribers, a more pronounced effect of MNP is likely to be an
increased focus on improving the customer experience in driving higher revenues
through network superiority and customer experience excellence.
The impact of MNP should be seen from the
above perspectives –
Brings higher ARPU subscribers to the
operators
Attraction of subscribers with higher loyalty
potential
Lower Cost of Sale
Hence, we have devised a metric to assess the impact of
the MNP port-in (port-out) subscriber Vis-Ã -vis the average fresh subscriber – ‘MNP Accelerator Effect’ taking into account the effect of higher
ARPU, higher life, lower cost of acquisition
Based on industry averages, the MNP accelerator for the
operators has been computed as below. This illustrates the Revenue effect of
MNP port-in subscriber Vs average fresh addition over a 12 month period.
Therefore, the helping hand of business intelligence and
analytics, which provide a thousand metrics such as the MNP accelerator effect,
proves that numbers aren’t sheer numbers but go beyond- to unveil the ultimate
business and customer value.
The wheel
has ultimately taken the complete turn now and the customer is the King yet
again with MNP which helps operators bring added choice and convenience to
India’s mobile subscribers @ cost – a mere ’19 – a onetime MNP charge.
Now, the
essentialities fall on business and operational efficiencies, the growing need
to incorporate upfront technology advancements in business intelligence and
employ appropriate analytical methodologies to retain high value customers,
improving existing customer loyalty and retention, customer engagement and attracting
profitable customers.
By Sathya Karthik, CEO, ABIBA System
