The reduction in mobile number portability (MNP) is good news for telcos since it means they have to invest less in trying to retain existing customers, said industry executives and analysts.
MNP fell to 4.1 million in October last year from 5.4 million in the previous month, and the MNP churn rate dipped to 0.3% from 0.5% in September, ICICI Securities said in a report based on the Telecom Regulatory Authority of India (Trai)’s subscriber data for October.
“Cheaper plans are the primary reason for portability. Earlier you could arbitrage costs but now, with a uniformity in prices across telcos, there is no compelling reason to port,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents all private players.
The recent increase in rates spelt a turning point in the telecom sector, which had seen the private sector operators engage in price wars for three years. With the price increases of up to 33% in some plans – although Jio maintains it is 25% cheaper than its competitors – analysts said the difference in charges was not enough to make customers port out.
The slowing churn is good news for operators as it helps them save costs at a time of continuing revenue pressure.
“Retaining an old customer is much more expensive than getting a new one, which costs a telco Rs 250 per customer,” said Mathews.
That’s because for a new customer the telco has to pay for verification process, but losing steady customers means the operator will have to make additional efforts to retain them with lower price plans that ultimately hit the balance sheet.
But this does not mean there has been a decline in the number of subscribers.
Bharti Airtel and VIL added 0.1 million and 0.2 million customers in October 2019, according to the telecom regulator’s data. While the uptick was a first for VIL since the merger in August 2018, Bharti Airtel saw an increase in numbers for the first time since January 2019. Rival Jio added 9.1 million customers during the month.
“Customer additions are happening because of increased penetration in rural areas and multiple smartphones that are being used by one person in urban areas. Families have shifted from one number to multiple ones as their dependency on devices increases and customer additions will go up,” said Hemant M Joshi, technology, media and telecommunications leader at Deloitte India.
However, the total subscriber base growth is expected to fall in 2020, in the aftermath of the price increases by telcos, costlier minimum recharge plans and rapid uptake of 4G bundled offers, a scenario which is expected to cause a sharp dip in the number of customers with multiple SIMs or mobile connections.
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3 Comments on this Story
Rahul Naik377 days ago
Few people are changing their service providers as quality of service has degraded for all of them. No one is better than other.
ivcu1990377 days ago
In future telecom service becomes a commandity market because as Govt forcibly made everyone to link their mobile number to all purposes. Everyone must have a mobile number without which no can live. Therefore it is better for telco's to receive one time life time non refundable deposit from individuals and forget the collection of payments in future. People are ready to pay and live happily
ivcu1990377 days ago
In future telecom service becomes a commodity market because it will become a part and parcel of everyone as Govt forcibly made everyone to link their mobile nu