MNP – The Great Leveller – Telcos Need A New Startegy

Its been few hours since MNP was launched and its already become a trending topic on Twitter India. While this must be just news, this also goes on to show the great customer dis-satisfaction with telecom operators. Changing numbers was one of the major reason for sticking with your existing operator, specially for the high spending subscribers, whose business was dependent on it.

With MNP kicking in, the first to leave will be the dis-satisfatied postpaid users. Although they account for less than 10% of the total subscriber base but the ARPU from such users is about 3 times the overall avg. It will hit the bad service providers where it hurts most. The pre-paid customers already have a high churn rate but now given the choice of sticking with your old number, this will rise even further.

What will change with Mobile Number Portability? (Read: How MNP Works and FAQs)

1. Growth rate of subscriber base – The regular news that we get of telecom adding 10Mn+ subscribers every month will slow down. Now most of the growth will come from more people taking up SIM than same people taking up more SIM.  This also means ARPU will rise. (Read: Indian Telecom- Misunderstood Benchmarks and Growth Potential?)

2. Avg. acquisition cost of customer – The acquisition cost set by telcos will go down as the avg. life of SIM would decrease from 6 months(your SIM is de-activated if you do not recharge once in 6 months.) to 3 months (the minimum you need to stay with existing operator before porting.)

3. More Margins for retailers – The local panwala where you bought your mobile talk time from has seen a margin of 13% back in 2005-06 which came down drastically when Hutch limited margins to below 5%. The market is now somewhere around 3-5%. What kept them going was that telecos decreased the entry barrier for subscribers (Lifetime validity SIM was launched at Rs.1000, now it is even available for free) and started paying more to panwalas for acquisition. Industry is now again in talks for increasing the margins on recharge to keep a positive WoM going.

4. Better Service – If a service provider ever had to choose between quality and cost, and they chose the earlier, now is the time that it pays off. Now that everyone is at the same price point, the key differentiator would come from quality of service.

5. Sales of Dual SIM phones – Most people have 2 SIMs to retain their old numbers for incoming and new number for better outgoing call rates. Now that number retention is addressed, Dual SIM handsets may see a drop in the long run.

Idea, the leader in Harayana, has already launched an aggressive campaign to make sure it is the destination post MNP. Docomo has also launched campaign and is working on user education. Whereas the larger players are still silent.The new entrants and smaller players will now get a chance to acquire customers that were out of their reach. Whereas, players like Loop Mobile (Mumbai Only) who have been banking on their age old subscriber base may even have a threat of being wiped out.

Do you think numbers will be traded like domain names now?

What do you think of MNP, big enough to make a change? Which operator are you switching to?

All answers on how to Switch using MNP?

[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]

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