For those waiting eagerly to migrate to a new mobile operator while retaining the same number, there is some bad news. According to industry experts, mobile number portability will not be implemented before the 3G rollout
Mobile number portability (MNP), which allows subscribers to retain their existing mobile telephone number when they move from one access provider to another, may not see the light of day in the near future, given the high stakes in third generation (3G) and broadband wireless access (BWA).
According to the Department of Telecommunications (DoT), MNP is expected to be implemented by 30 June 2010. This is the third time MNP has been delayed. There were plans to implement MNP by December 2009, which was later postponed to 31 March 2010 and now the same is expected by 30th June. The question, however, is whether MNP will the light of day by June-end or will once again be postponed, till operators start 3G services.
Earlier Moneylife had reported on how mobile number portability may be delayed due to the 3G auction
(read here: http://www.moneylife.in/article/8/3065.html). The article was written before the start of the 3G auction. The 3G auction is finally over and auction for BWA is going on, but there still is no clarity regarding implementation of MNP. DoT has cited 'technical' problems for the delay in implementation of MNP. It said Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL), and a new operator Uninor, are not ready with equipment required for MNP. This will further delay MNP implementation as testing of the equipment takes a minimum of one month.
But is this the only reason? According to industry experts, implementation of MNP will not happen before 3G. They say with 3G, all major operators would upgrade their existing networks, technologies and prevent high-value subscribers from migrating to other operators. If MNP is implemented before the 3G rollout, then there is a bigger risk for operators of losing subscribers to other operators, who may be offering better services.
Global precedents indicate that onset of portability leads to high churn rates, loss of market share by incumbents and a cut in average revenues per user (ARPU). Much of these effects have been present in India for the past five quarters. Portability may be favourable to incumbents in India due to extensive network coverage, distribution reach, customer service and brand, investment bank Avendus said in a report.
Mobile operators have been losing on the ARPU front. For the quarter to end-March, ARPU on a pan-India basis declined 3.45% to Rs150.23 compared with Rs155.6 witnessed during the quarter that ended in December. The overall telecom industry is going through an unprecedented phase of hyper-intensive competition resulting in a sharp fall in operating metrics and slowing down of revenue growth and declining profitability.
Almost every telecom operator has witnessed flat realisations in the post-paid segment that till now has remained insulated from the savage tariff war and which will have to be ready to face the heat from MNP. Post-paid subscribers usually do not change their mobile number and operator. But with MNP, this segment may also come under attack from other operators.
IDFC Securities Ltd said it expects a sharp drop in post-paid pricing post-MNP as new operators and incumbents step up their marketing efforts in a tussle to attract this clutch of subscribers. "We estimate 15%-20% drop in post-paid pricing could lead to about 3%-4% drop in wireless revenue and around 200 to 300 basis points erosion in wireless margins," the brokerage said.
"We believe the post-paid segment of all circles would be most at risk post the implementation of MNP later this year. Assuming 5%-6% of the post-paid base accounts for 20%-25% of circle revenues we estimate about 6%-8% of Bharti Airtel’s wireless revenue is at risk," IDFC Securities added.
The story is the same for Vodafone Essar. In its results for the quarter to end-March, Vodafone Group PLC mentioned that its post-paid yields in India have so far been completely insulated from the price war. It said, during past seven quarters its post-paid yields were stable at Rs0.75 to Rs0.77 per minute compared with 29% decline in pre-paid yields.
IDFC Securities in a note on Vodafone results said, “We believe this sticky high-margin post-paid base of incumbents is most exposed to the vagaries of number portability. We estimate a 15%-20% decline in post-paid tariffs could lead to 200-300 basis points wireless margin erosion."
Tata Teleservices Ltd (TTSL), the first operator to start the tariff war in the mobile industry, had launched new initiatives like Customer Service Charter. TTSL said it would compensate its subscribers if the company fails to meet the pre-determined levels of service standards, a move that would help retain customers and force competitors to respond.
While MNP implementation and new launches could lead to some further market disruption and lead to an increase in competitive activity, final outcome of the 3G and BWA auctions and final policy on 2G spectrum allocations would increase visibility in these key regulatory issues.
Mastek Ltd said its US-based unit MajescoMastek has collaborated with Genpact to bring new model to help transform insurance carriers operations, leveraging both business process management and technology solutions.
Both the companies are also planning to develop innovative platform-based business process management solutions across the industry value chain including policy services, billing, claims, distribution management and new business and underwriting, Mastek said in a regulatory filing.
Mastek shares ended Tuesday 2.29% down at Rs229.95 on the Bombay Stock Exchange, while the benchmark Sensex closed 2.71% down at 16,022.48 points.
Gayatri Projects Ltd said its unit Gayatri Energy Ventures Pvt Ltd will set up a 1,320 MW (660 x 2 MW) phase I supercritical technology based thermal power plant, worth Rs6,869 crore, at Krishnapatnam in Andhra Pradesh, in a joint venture with Sembcorp Utilities Pte Ltd.
The project is being implemented by a special purpose vehicle called Thermal Powertech Corporation India Ltd. The estimated cost of the 1,320 MW (Phase I) project is Rs6,869 crore. The debt component would be Rs5,151 crore and the equity would be Rs1,178 crore. According to the agreement, Sembcorp Utilities, a wholly owned subsidiary of Sembcorp Industries Ltd, will be investing about Rs1,100 crore in Phase I of the project.
On Tuesday, Gayatri Projects ended 7.59% down at Rs418.40 on the Bombay Stock Exchange, while the benchmark Sensex closed 2.71% down at 16,022.48 points.