Number portability to impact telcos' profits: Study

By siliconindia   |   Friday, 12 June 2009, 16:05 IST   |    5 Comments
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Number portability to impact telcos' profits: Study
Bangalore: The excitement surrounding mobile number portability (MNP) seems to die down as a study shows that the telecom service providers may be affected once it is operational. Angel Broking, an analyst firm had conducted a survey that showed the Average Revenues Per User (ARPUs) of the mobile operators would be affected by around five percent. Telecom companies' margins would also plunge by 100-150 basis points and even earnings per share (EPS) estimates would drop by 9-21 percent. By the end of the year, MNP can be a reality and the service will be provided by Telcordia and Syniverse. This facility will enable the subscriber to change their operator, while retaining the same number. Telecom companies' financials would be under stress, as churn rates (a customer moving from one operator to another) are likely to increase. At present, the industry has a 4-5 percent churn rate for pre-paid subscribers. An increase in subscriber acquisition and retention costs, higher capital expenditure to improve service quality and a likely drop in rates are also expected to exert pressure on margins and earnings growth, the survey said. According to Meridian Telecom (makers of 'Fly' brand handsets) CEO Prem Kumar, even though MNP would be good for customers, this would pull down ARPUs. At present, the ARPU of GSM (Global System for Mobile communication) users is Rs 220 and that of CDMA (Code Division Multiple Access) players at Rs 111 per month. The ARPUs were as high as Rs 400 in 2005, the Business Standard reported.

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