Mobile Number Portability (MNP) has been launched today, which will give a choice to over 600 million mobile subscribers to change their operators while retaining their mobile numbers.
To avail the MNP service, mobile subscribers will have to shed Rs19. To port his number, the subscriber has to request the new operator for acceptance of his connection and the process should get completed in four days.
Service providers have been waiting for this day since long and are using every marketing strategy to woo more and more new customers. Operators are not expecting the churn due to mobile number portability to be more than 1 per cent. However, the current industry average churn rate is 4-5 per cent per month.
What makes operators estimate such low percentage? Well, their estimate is based on their experience in the circle of Haryana, where MNP was launched in December last year and about 100,000 customers decided to change their operators on a customer base of 19 million.
Syniverse and MNP Interconnection Telecom Solutions (MITS) have been given licence by the Department of Telecommunications (DoT) to implement MNP across the country. For porting, a subscriber has to send an SMS (PORT<space>Mobile Number) from the number he wishes to be ported, to number 1900.
Analysts believe that the increase in the number of subscribers is a temporary gain for operators. Rather, the profitability of operators is most likely to go down as MNP will force operators to spend more in order to attract and retain customers.
“Higher customer acquisition and retention costs coupled with declining tariffs are likely to affect the profitability of telecom operators post implementation of MNP. Under such a scenario, telecom operators with stronger financial profile would be better placed to cope with the increasing competitive intensity,” said ICRA.
Prashant Singhal, Partner and Telecom Industry Leader, Ernst & Young, said that the impact of MNP will be felt in the first six months.
Analysts estimate the rate of subscriber churn at 6-8% among pre-paid subscribers, who make up nearly 95% of India’s 700 million mobile phone connections, and 1-3% among post-paid subscribers.
The postpaid customers contribute about 15-20 percent to operators’ revenue. Hence, the operators are aiming at retaining their high-Average Revenue Per User (ARPU) postpaid customers. To site an example, Vodafone Essar is already analyzing the records of their high-paying postpaid customers to observe whether there has been a sudden drop in their ARPUs. This will give them an idea that customers are using another alternate service.
“Our approach is to go to the consumer even before he registers to Our approach is to go to the consumer even before he registers to understand the reason — whether is it network problem, service or something else. Giving freebies or discounts is only a small part of the game,” said a Vodafone official.
The company also says that going by its record in Haryana where MNP was launched on an experimental basis last December, they were able to retain 60 per cent of the customers who might have shifted services.
State-owned MTNL is also of the similar view. An official from MTNL said, “We have asked our marketing and customer care people to address the issues of our subscribers, who are likely to shift. MTNL also offers BlackBerry services, which has picked up very well. So, there will be a focus on high-end customers.”
There are a lot of new players in the telecom sector that are trying best to woo customers. A player called Sistema Shyam that runs under MTS brand, plans to offer subsidised mobile phones under a two way scheme. One way is by paying for the phone upfront but getting reimbursed for the money you have spend through free talk time, downloads and even SMSes. The second method is to buy a phone under a long term EMI scheme. Sistema also plans to offer packages offering a good amount of free talk time and data rolled in.
Loop Mobile has come up with an interesting service. It will soon be offering a service guarantee scheme where they will compensate their subscribers for every call drop. An official of the company said, “This does not mean that we have not stopped bringing a superior network. In case of any call drop, a subscriber has to send an SMS NC to 50800 (postpaid) / 50505 (prepaid) and get their money back.”
Furthermore, Loop has decided to bring a few changes in the customer care service. It plans to answer all calls to the customer care centres within 10 seconds or reverse the money spent on the call.
Few experts believe that state-owned Bharat Sanchar Nigam Limited (BSNL) might be the one company, which would be impacted the most from MNP. The reason being, after observing trend in Haryana, BSNL has not been able to make any fresh investments to update and expand its network capacity.
However, BSNL UP (East circle) Chief General Manager, Om Vir Singh was quoted as saying, “We are confident given BSNL’s vast presence and visibility, the company would be the major gainer.” Singh further said, the churning of mobile phone subscribers under MNP was likely to be one odd per cent in the circle.
BSNL is not charging any MNP or new subscriber identity module (SIM) fee from potential subscribers. In fact, the company is additionally giving Rs 100 free talk value. The company had been gearing up for MNP since long and is optimizing its Base Transceiver Station (BTS) for seamless service.
However, a few operators feel that MNP will not affect them much. Rajiv Bawa, Corporate Affairs executive Vice President, Uninor was quoted as saying, “Our research suggests that MNP will not be a game changer. However, it could still result in some interesting new strategies. MNP will definitely have higher relevance in the postpaid segment since these number loyal subscribers haven’t yet had free choice on worries of losing their number identity. MNP may also force operators to think segmentation in the prepaid market.”
To beat the competition, operators will have to offer better customer service and netter and network coverage. Services like 3G will also play a good role in attracting customers.