Mobile Number Portability: Quality will survive

While mobile number portability would help harassed subscribers to change their operators, for the mobile services providers it will result in high churn of subscribers

Finally, mobile subscribers across the country will be able to keep their 'beloved' number unchanged despite changing their service provider. Following an order by telecom regulator Telecom Regulatory Authority of India (TRAI), from 31st December onwards, mobile subscribers would be able to change their operators while keeping their number intact. However, according to some media reports, the move may be delayed due to technical issues like network up-gradation.
Mobile Number Portability (MNP) allows subscribers to retain their existing mobile telephone number when they move from one access provider to another, irrespective of the mobile technology—or from one cellular mobile technology to another of the same access provider—in a licensed service area. This means a CDMA subscriber can opt for other a GSM or CDMA service providers and vice-versa.

For subscribers harassed by their current mobile operator, this has come as a blessing. From next year they can simply hang up on their current operator and choose another one—whom they think will provide better services and lower tariffs. However, the subscriber must have stayed with the service provider for at least 90 days before he can transport his number to another service provider.
According to the TRAI notification, subscribers changing their services provider will have to pay Rs19 as porting charge to the recipient operator. However, TRAI has said that operators are free to charge any amount lesser than or equal to this charge. This would prove to be another headache for mobile operators, already reeling under pressure due to the tariff war. Many operators may provide this service free in order to increase subscriber base.

Although MNP is beneficial for both post-paid and pre-paid subscribers, according to analysts, lower porting charge would give further impetus to prepaid churn.

“The TRAI-notified porting charges (PC) is lower than our—and industry—expectations and this would boost higher uptake of MNP among the low average revenues per user (ARPU) segement, mostly prepaid subscribers, leading to higher churn rates than current 4.5%-8.0% per month at least in the short run,” said Anand Rathi Financial Services Ltd, in a report.

The regulator feels that the facility of retention of existing mobile telephone number despite moving to a new telecom service provider would help in increasing competition between the service providers and act as a catalyst for the service providers to improve their quality of service.

This also means that incumbent mobile operators would have to upgrade network quality and customer services which may result in higher capacity expansion and operating expenditure.

However, the ongoing tariff war has discouraged fresh investments from operators, except new players, due to longer payback periods. Many incumbent mobile service providers (MSPs) have not only put on hold their expansion plans but have also reduced capacity expansion (capex) provisions.

The aggressive launch and lower tariff plans from new entrants are not only snatching away customers but are also hurting the top and bottom line of incumbent MSPs. During the recent quarter, all mobile operators have reported a sharp fall in ARPU and minutes of usage (MOU).

Although MNP may prove to be more beneficial for both post-paid and pre-paid subscribers, the question over service quality of almost all mobile operators remains a pertinent one.

According to TRAI, during the April-June quarter, the performance of wireless service providers has deteriorated as compared to the previous quarter, in respect of call set-up success rate, call drop rate, response time to the customer for assistance, complaints and percentage of complaints resolved within four weeks.
So before being wooed by a lower tariff plan or offer, subscribers going in for MNP need to check with existing subscribers of the new operator about the service and network quality. Of course, the subscriber has got an option to switch back to his original operator, once this 24-hour period gets over, he will have to wait for another 90 days before going in for another switch.
-Yogesh Sapkale [email protected]




7 years ago

Yes, both post-paid and pre-paid subscribers can go for MNP.

Arvind Pawaskar

7 years ago

Can pre-paid mobile subscriber also avail of facility of Mobile Number Portability?

Iron ore prices set to go up

Strong Chinese import demand overcomes fears of global steel oversupply

Iron ore prices have begun soaring since September 2009 from a bottom of $80-$84 per tonne and are now nearing their recent peak of $110-$112 per tonne of early August 2009. The cash prices for Indian iron ore exported to China have been hovering above $100 per metric tonne on higher freight costs, increased Chinese demand and disruption in Indian supply.

Even the China International Capital Corporation (CICC) comments that steel demand in China may consume 12% of iron ore next year thanks to booming property and auto demand. CICC expects China’s domestic crude steel consumption to increase to 606 million metric tonnes in 2010. India-China freight charges have shot up to $24 per tonne from about $16 per tonne. 
In India, the Orissa government has ordered to halt work in 50 mines because they did not have proper documentation and did not meet environmental norms. This has severely affected Indian supply. If the Indian bottleneck continues, iron ore prices are expected to hit higher levels. As per market sources, the cash price for Indian iron ore exported to China is expected to rise by about 4% by the end of November 2009.
In the first 10 months of 2009, total iron imports by China rose 37% from a year earlier despite a lull in October 2009. According to China customs data, year to end-October 2009 iron ore imports were 514.8 million tonnes (MT), compared to 469.3MT between January 2009 and September 2009. China’s iron ore imports fell by almost 30% in October 2009 from September 2009. It imported 45.5MT of iron ore in October 2009, 19MT less than the record 64.5MT imported in September 2009. Meanwhile, imported iron ore inventory at China’s major ports fell to 65.74MT as of 16 November 2009 from 66.96MT as of 9 November 2009, indicating strong demand.
But the major concern has been the steel oversupply scenario. China Iron and Steel Association (CISA) has warned that oversupply in the Chinese steel sector could worsen in the fourth quarter and in early 2010. China’s crude steel output was 420.40MT, up 7.5% year-on-year in the first nine months of this year. In October 2009 alone, Chinese crude steel production growth has sharply grown by 42% year-on-year to 51.75MT.
Meanwhile, the entire year’s output is estimated at 550MT, up 50MT or 10% from 2008. China’s apparent steel demand rose 20% year-on-year in the first nine months, to 421.80MT, mainly driven by the government’s expansion of fixed asset investment, and the growth is predicted to sustain into the fourth quarter and early next year. Surprisingly, in October 2009, the investment in China’s fixed assets and real estate has been below expectations. Investments increased by 33.2% in the first 10 months, but were down by 13.2% monthly, which is the largest monthly reduction over the past decade.


Bond markets not taking talks of PSU divestment at face value

Apprehensive of high government borrowings and widening fiscal deficit, bond markets are looking for some respite from PSU divestment funds but see no chance of yields falling significantly

Talks of the government’s burgeoning fiscal deficit have now reached a high pitch, giving vent to speculation on the direction of interest rates and bond yields. The government’s dose of fiscal and monetary stimulus measures, to revive an economy caught in the clutches of a global slowdown, have come somewhat at a cost. Now, with economic recovery slowly taking a more visible shape, the government has already given indications of withdrawing its supportive monetary stance in favour of a tighter, more aggressive interest rate regime.

In the midst of all this, the bond market has been waging a losing battle versus a euphoric equity market; it fears piling government borrowings and fears of monetary tightening. Bond markets have come under pressure because of the government’s borrowing habits. Yields on 10-year government securities (G-Secs) had almost touched 7.5%. The government’s talk of PSU divestment had come as a respite. However, there is still a degree of uncertainty regarding the government’s action in this regard. In an earlier interview with Moneylife, K V Kamath, chairman, ICICI Bank Ltd, had said, “The government is not articulating the wealth we have mainly in the form of public sector investments. Once the government hints that even a small part of this wealth can be monetised, nobody will then talk of deficit.”
Now that the government has articulated precisely that by sending equities higher, why are bond traders not at ease? Speaking exclusively to Moneylife, RVS Sridhar, senior vice president, treasury head, markets of Axis Bank, said, “In the first place, there was no target worth mentioning in the divestment space. A paltry Rs1,000 crore was budgeted and they have already achieved much more than that. This particular intention of selling these PSUs in smaller or larger tranches has been there for many years. I think today the government is coming out with a more comprehensive strategy, saying they will amass several tens of thousands of crores. I think they can deliver at least to some extent. So it could definitely lead to infusion of funds into the system, and thereby help to reduce the pressure on the bond market.” However, the bond market was being cautious on this front. He added, “Even in the case of 3G spectrum auction, it is not something which is taken seriously by the markets. We have seen that it has been postponed twice.

Now hopefully it will happen within the financial year. Some of these issues are not entirely easy to follow through. Making a statement of intent to sell some shares of a PSU is one thing. Pulling it off in large numbers is another matter, because these are under public scrutiny. There is a process of arriving at a consensus and then coming to a decision. It is a long process. What the bond market does not have today is 100% confidence that this money will come within the financial year. Yes, on the equity side we have seen better numbers than what was estimated. On the 3G side we are feeling more confident that the money will come at least before March. But again, how much will come is still an uncertainty.”
Mr Sridhar said that the RBI’s stance in the past four-five months signalled a call to reality. He explained, “We have realised that so much of liquidity in the system may not prove beneficial to the asset markets, like real estate, commodities and equity. The surplus liquidity lying around may get into these markets and we might have a sort of asset price inflation. Central banks of economies who have escaped the worst effects of the aftermath, are now considering whether to continue with stimulus measures, monetary or fiscal, or whether to correct it, so that we don’t get such a situation. In that sense, clearly signals have been given to the market. Along with that, the fear that inflation is rising has become a reality. Concerns have been expressed that we should not lower our guard, but actually bring back our guard. RBI’s statements convey to the debt markets in no uncertain terms that they should be on their guard, and hence the first reaction would come from the G-Sec market. Central banks may not always act through measures; they can act through statements and indicators. So the impact on G-Sec yields can only be negative as we go along.”
According to him, yields are going up because one is not investing for the sake of selling tomorrow. “We are forced to hold these papers because these are part of statutory liquidity reserve (SLR) requirement. The government does not issue papers of short duration; it issues papers of 10, 15, 20 or 30-year duration. So when interest rates go up, we demand a price for the future as well. And as inflation expectations have gone up, RBI cannot stay away from hiking rates. If it hikes rates, what would happen to our cost of funding and G-Sec yields at that time? So markets make estimations. I think there is no chance of G-Sec yields falling significantly,”  added Mr Sridhar.
Sanket Dhanorkar [email protected]


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