Mobile number portability (MNP) is expected to bring a major shift in the postpaid subscriber base. Industry veterans feel that MNP will lead to another tariff war in the telecom space owing to operators focusing on attracting postpaid subscribers. This is expected to result in higher churn in the postpaid segment, which currently stands as low as around 1% per month.
The current churn rate for the entire telecom industry stands at around 4-5%. ?Postpaid subscribers are mostly the ones who are quality conscious. These are high-paying customers who don?t want to shift their network because they would lose their numbers. With MNP and in-flow of great tariffs, it is very likely that these subscribers would move on to better networks i.e. either to other incumbent?s network or to a new entrant network,? said an analyst from Credit Analysis and Research Ltd (CARE).
While the ministry is busy chalking out the regulations for MNP, the delay in its implementation has led to mixed reactions within the telecom industry. While it has provided some more time for incumbents like Bharti Airtel and Vodafone to be better prepared in terms of their quality of service (QoS), it has denied the new entrants like SSTL and Tata Docomo of the high ARPU subscribers. New entrants are attracting the pre-paid subscribers and accumulating initial mass of subscribers. Even without MNP, India has a churn rate as high as 50% per annum (prepaid churn rate of 35-36% whereas postpaid churn rate in the range of 12%). MNP is a service that allows subscribers to retain their existing mobile telephone number when they switch from one service provider to another or from one technology to another of the same service provider.
?Post MNP, we expect RComm and Idea Cellular to target postpaid subscribers aggressively through their newly launched GSM operations. Aircel is also in the process of launching its operations in newer circles; this would intensify the tariff war further,? said an earlier report by Ambit Capital.
Existing telecom operators, who are facing QoS issues, are most likely to experience higher churn rate from their postpaid subscriber base. In a scenario where 2G spectrum auctions have been put on hold, incumbents like Bharti Airtel and Vodafone are facing spectrum constrains in circles like Mumbai and Delhi. Given the limited availability of the 2G spectrum, the operators are engaged in upgrading their network quality, which will incur high capex. Existing operators also have to invest heavily in network up gradation or secure 3G spectrum for better quality of service.
