Ronnie05's Blog

Summarizing 2011 for Indian telecom

Posted in Industry updates by Manas Ganguly on December 25, 2011

2011 is perhaps Indian telecom’s biggest year yet with launch of 3G services, mobile number portability implementation and 175 million new mobile phone subscribers in 10 months, taking the total subscriber base to 881 million.

However there have been challenges for the Indian telecom businesses-

1. 93 percent of users are low-spending pre-paid users
2. A low ARPU together with high energy costs for the diesel backup for a half-million towers, it’s a struggle for margins.
3. 3G licenses have come at a very heavy cost and the impact is in terms of cash strapped operations for many Telcos. The government made a lot of money and squandered off a little more, but that is a different story.
4. Inspite of huge investments on 3G, Poor user experience and a lack of content failed to draw users, killing all operator hopes of recovering that money.
5. Mobile number portability: 25 million users applied to switch operators while retaining their number, with 2.5 million requests pouring in each month. The churn is also taking its toll as Operators are responding with tariff cuts and deals.

A few future defining trends also shaped up in 2011 as markets evolved, matured and consolidated:

1. 2011 is possibly the year, when the Indian Telecom Industry moved up from a entry to a replacement market. The new sub adds plummeted to 6-7 million per month as against an average of 15-20 million activations in 2010.
2. Data emerges the hero as Telecom starts evolving from a some-what voice centric industry. 2011 should herald the decade of data for India with preliminary 3G and EVDO Rev. B launches. LTE is round the corner.
3. New classes of devices such as Smartphones and Tablets in the entry level with advanced OSs and application capabilities widen the consumer choice as well as the experience. Low cost Androidss are driving smartphone adoption rapidly across in ~$80 price segments
4. Tariffs bottoming out, Indian Telcos look for the next springwell of revenue and profits and new revenue models would start to emerge. Operators are looking at various VAS aided business models to augment their margins and profits.
5. The Aakash Tablet (and NotionInk’s Adam before that) established India’s status as a low cost innovator. Going forward with the markets in SE Asia and Africa being key to telecom growth, India will feature as a global innovation and R&D centre
6. The government has announced the NTP (National Telecom Policy) which is a proactive step in terms of defining telecom sector businesses going forward. The industry awaits greater clarity on a few issues such as mergers and acquisitions and we will see things get more clear and better as wel go along.

Indian Telecom Story (Part XXXVIII): Mobile Number Portability Update

Posted in Industry updates by Manas Ganguly on March 22, 2011

Mobile number Portability, much debated and delayed in execution is finally turning out a bugbear in as far as its “game changing” attributes are concerned.

1. 1.9 million subscribers have opted for a operator change keeping their number constant.That is less than .3% of India’s 771 million subscriber base.

2. CDMA operators as expected are the big loosers with Reliance and TTSL showing downhill numbers.

3. The ad campaigns by Idea and Vodafone seems to have given it traction as both these companies topped the national no.1 Airtel in MNP subscribers addition.

4. What is not spoken about in this data and not documented is the number of subcribers who were retained by the incumbent operator and the cost of retention. Some of the offers extended have been obscenely high.

5. Net, MNP has had very little impact in Indian markets. However, it would be in best interests of operators, customers and markets that a charter of “to-dos” that i had discussed in an earlier post are adhered to for stemming loss of high net worth customers to competitors going forward in MNP regime.

Data: COAI release

Indian Telecom Story (Part XXXVII): Overcoming MNP blues!

Posted in Industry updates by Manas Ganguly on January 23, 2011

In a post some days back, i had discussed the impact of Mobile Number Portability on the Indian Telecom Operators. MNP has occupied a lot of mind space of Telecom reports, discussions and blogs over the last few days.

Impact of MNP on postpaid subscribers could be an industry-wide game changer.Marketing costs of retention of subscribers could rise gradually. Higher spends on service retention, deep discounts, near-term increase in S&M (sales and marketing) costs, network expenses and other investments could risk Telco profitabilities by 5-8%!

How does an operator optimize his investments into building a better customer service and brand-engagement? Here are a few direction pointers:

1. Process optimization based on lessons from FMCG, retail and banking industries would lead to reducing turnaround times and provisioning errors.
2. Complaint handling and document management procedures can also be enhanced.
3. Operators would need to devise holistic strategies to build ‘best-in-class’ customer services. This can be enhanced by a greater insight into subscribers and their points of engagement with the company. Outsourced operations that have customer-centric activity will be re-looked at with a renewed vigor.
4. Marketing analytics of cluster and segment subscribers based on the usage and demographic patterns can lead to a critical insight into behavioral patterns.
5. Predictive analytics can ensure a better engagement with promotions and schemes.If subscribers are broadly divided on the basis of profile or occupation, each of them is likely to have different levels of affinity to exercise portability.
6. The perception of true value, beyond the traditional freebies and promotional services, would make the subscriber more willing to remain loyal to their service providers.
7. Subscriber points of engagement would be better analyzed, quality service level differentiation better implemented and marketed.

Indian Telecom Story (Part XXXVI): Mobile Number portability dawns!

Posted in Industry updates by Manas Ganguly on January 20, 2011

The key word here is FINALLY. After years of being pushed and lobbied against Mobile number portability finally becomes a reality on Indian Soils. So whats changing?

Is the MNP a bug bear or will it see huge churns?

There are arguments and numbers both in favour and against. 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 5% subscriber base of post-paid subscribers contributes about 20% of revenues for larger telecom players. That’s the prize money various mobile operators are going to fight over — to win the post-paid subscribers.

Sample This: Hindustan Times – MaRS in a report have painted a dooms scenario for a few of the operators. According to this survey 17.6% or an estimated 120 million users (of the 700 million base) will want to switch. Two of the old timers, Airtel and Vodafone are expected to count windfalls where as BSNL and the CDMA houses are expected to loose subscribers!

The test market, Haryana, where MNP was introduced 2 months back hasn’t however shown any huge blip in terms of churn. Just about 1,40,000 out of 19 million subscribers in Haryana (1% users) have switched their operators, according to the Telecom Regulatory Authority of India.

Telecom operators are already developing specific retention strategies wherein key customers will be offered incentives to stay on. Deep discounts would be offered to high value customers who would want to change operator.

CDMA operators (Reliance and Tata Tele) are expected to be the big losers as users may side up with the incentive to move to GSM comes from a wider choice of handsets as well as service providers.

How does it effect the Operators?

MNP is expected to cause a near-term increase in S&M (sales and marketing) costs, network expenses, and churn rates. However, meaningful proportion of corporate subscribers moving from incumbents to new entrants would not possibly happen. Operators are likely to respond by bringing down post-paid tariffs, which are currently about 25% higher than pre-paid call rates. The boldest move yet has came from Loop Mobile, a regional operator in Mumbai, that went beyond the talk by offering to compensate subscribers for every dropped call. Such post-paid tariff reduction could put Telco earnings at risk by a factor of 5-8%. MNP is likely to increase the cost structure of all the players as they will need to spend more on improving their quality of service and customer care. Measures, to both attract customers and retain customers take its toll on profitability of Telcos given that tariff levels are already extremely low. Under such a scenario, telecom operators with stronger financial profile would be better placed to cope with the increasing competitive intensity

Indian Telecom Story (Part VIII): Telco’s Mobile Number Portability Woes

Posted in The Technology Ecosystem by Manas Ganguly on May 14, 2009

MNPMobile number portability is one of the most debated topics in the perspective of the Indian Telecom Industry. It was first announced in 2007 and TRAI submitted its first recommendations on the MNP in April 2008. Given the intense lobbying that one has seen form the industry at large, the introduction date has been shifted from June 2009 to August 2009 and now September 20th, 2009. The first regions to be able to test this service by September will be Karnataka, Andhra Pradesh, Tamil Nadu and Kolkata. MNP will cover the other places in these regions by March next year. The other sginificant part of the story is that Consumers may not have to pay more than Rs 300 to change from one mobile service provider to another while keeping the phone number intact. Other unofficial reports put the MNP charges to be Rs.200, which would be peanuts to consuners who want to change their service provider. It is suspected (not confirmed), that lot of the MNP churn would be the top 9% consumers who contribute 29% of the revenues and 45% of the Telco Margins!

Mobile Number Portability along with other factors such as Infrastructure Overcapacity (and sharing of Infrastructure), entry of new players into the Sector, Reduction in Call termination charges, is expected to reduce the call tarriffs in the country.The fall in tariff may add boost to the fastest growing Telcom Market in the world and may also help in reaching new records in subscriber additions. However, it is the Telco margins which are under pressure and there is not much that the Telcos are doing about it except probably for vehement lobbying.

%d bloggers like this: