By Manik K. Malakar
Mobile Number Portability
‘A consumer is a shopper who is sore about something,’ noted columnist Harold Coffin. This is a sentiment that the telecom industry in India may soon come to identify if some developments, namely Mobile Number Portability (MNP) comes into play. Mobile Number Portability is when you change your provider while retaining your mobile telephone number.
Analysts however have differing views on the effect that MNP would have on the telecom industry. “The introduction of mobile number portability (MNP) in India's wireless market is unlikely to have a significantly negative impact on the operators, considering the market's dominant pre-paid nature and existing high churn rate,” says analyst Nitin Soni of Fitch Ratings.
“There could be effect on the tariff, profitability, improvement in customer service levels, reduction in customer complaints and higher value added services,” says Avinash Gupta, Vice President Research Equity, Bonanza Portfolio Limited. MNP implementation in India which was originally scheduled for 2009 will now be implemented in a phased manner starting with the state of Haryana, where MNP services commenced from 25th November 2010, and reaching the entire country by January 20, 2011.
Perhaps telecom companies will be affected as analysts believe that the cost of acquiring a customer will go up. “Customer acquisition cost, due to MNP, is likely to rise as the acquiring operator (Recipient) is unlikely to collect fees from the customer,” feel analysts Ganesh Duvvuri and Devyani Javeri of Edelweiss. Also verification will have to be carried out by the recipient company and that too will add to costs.
Market watchers reveal that the existing provider is termed the donor and the new operator the recipient operator. The Recipient will have to pay Rs. 19 to the clearing house. The recipient may choose to recover these charges from the subscriber. “We believe, the Recipient is likely to waive off these charges,” note Duvvuri and Javeri of Edelweiss. After that the recipient will provide the subscriber with a new SIM card to migrate to their network.
For the moment though it appears that the MNP move may not attract that many new transits. “There could be slow down in the addition of new subscribers – as the need for multiple connections for the customer is likely to go down,” said Gupta.
Data from Fitch Ratings shows that the impact of MNP has been moderate to low across Asia-Pacific. While competition intensified in Malaysia and Korea, there was a low impact in Singapore, Japan and Taiwan. “Overall, Fitch expects the impact of MNP to be limited on Indian incumbents, considering that ARPM (average revenues per minute) have already bottomed out (1USD cent per minute), that India is a pre-dominantly pre-paid market with over 95 per cent pre-paid subscribers, and existing high churn rate,” said Soni.
“Large scale migration is not expected,” confirms Gupta. Thus, the advertisements that have been run by some mobile companies to date advising mobile number portability may prove to be a damp squib in the long run.
Also it is now technology that will come to the fore in the MNP battle. “The companies would endeavour to provide best services to retain their customers and to attract new customers. The companies would be investing in technologies with this end in mind. This would be a continuous process,” notes Gupta.
Amongst the various telecom companies it is Bharti that is most vulnerable according to data from Edelweiss as due to their high pan-India revenue market share, they own a majority of high-end customers. “Thus, we believe, it is most vulnerable to MNP as even if it were to gain customers from competitors, it will have to settle for lower ARPUs,” noted Duvvuri and Javeri.
However there may be good news for the mobile user. In a country where customer service is lackadaisical at best, the MNP move will make telecom companies more sensitive. “It is expected that industry would become more sensitive to the customer needs and technology intensive. Only large volumes can justify investments in technology which could drive the merger and acquisitions activity in the industry,” concluded Gupta.