Monarch Project & Finmarkets Ltd

MOBILE NUMBER PORTABILITY

05 OCT 2009. * For Private Circulation Only

Mobile Number Portability

-Keep Single Mobile Number Lifetime

Monarch Project & Finmarkets Ltd

 Mobile Number Portability
Mobile number portability enables mobile telephone users to retain
their mobile telephone numbers when changing from one network
operator to another. It is a very important concept that should be
implemented in India where total number of mobile subscribers cross
45 crore mark at the end of August 2009. Number portability is also
likely to help new entrants into the Indian mobile-services market,
such as the Indian joint ventures of Telenor and Etisalat. The move to
introduce the MNP comes as the country's mobile subscriber base is
expanding fast, sometimes having an impact on network quality.
Presently, MNP is already existing in many developing and developed
Number portability is countries across the world.
likely to help new
entrants into the Indian The MNP option will, however, not lead to a dramatic shift by sub-
mobile services market scribers from one operator to another, as quality of service and net-
work coverage are not significant differentiators in the Indian market.

The introduction of number portability in other countries did not lead

to a significant shift by subscribers from one operator to another, and
in India too there will be an initial churn of up to 20 percent of sub-
scribers, which will then taper off. Usually, customers do more likely
to shift if new operator will introduce new services or if another op-
erator introduces an aggressive tariff plan.

Types Of Number Portability

1. Wireless number portability relates to transferability between

wireless mobile lines only and not between fixed lines and wire-
less. In most of the country this type of mobile network portabil-
ity is existing.

2. Full number portability allows transfers between both fixed

lines and mobile phone lines. Iceland, Canada and United States
are the only country in the world that offers this type of services.

Unique ID likely to replace Mobile Number

After implementation of the MNP, ones mobile number can be recog-

nized as a unique identification number. As per the announcement by
government of India to introduce Unique Identification Number, MNP
will improve the system by allocating mobile number as a unique
identification. MNP and UID will make KYC and other identification
process easy and convenient to end user as well as authority.

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 It will be rolling out from December 31 2009

Mobile number portability (MNP) will be implemented from December

31 in metros and category 'A' service areas, and by 20th March,
2010, in rest of the country. MNP will come under Act
One can not keep their “Telecommunication Mobile Number Portability Regulations, 2009”
mobile number same and TRAI said the MNP facility shall be available only within a given
when moving to new licensed service area.
circle
Limitations to MNP

1. Consumers allowed to switch operators only 90 days after a con-

nection is activated.

2. Consumers allowed to change operators within their registered

circle only (i.e. if you are within the Gujarat circle you can’t shift
to a Karnataka circle and so on)

Charges of MNP

TRAI had issued draft guidelines on MNP but there has been no
information on the charges to shift one’s operator. There has been
speculation though which has ranged around 300 rupees. Even now
with the implementation announced in December there is no informa-
tion of what it would cost the subscriber to shift from one operator to
another. But one thing is for sure that subscribers will have to pay
operators non-refundable porting charges for shifting their number.

How many days it will take to switch operator

The operators to complete the porting of a subscriber's mobile num-

ber within a maximum of four days, with the exception of Jammu &
Kashmir, Assam, and the North East circles, where the process may
take a maximum of 12 days. However the regulator has committed to
bringing down the porting time.

Impact of MNP

Churn is expected to increase and also from the VAS players perspec-
tive wherein they could benefit due to this churn and could get better
revenue shares from operators for exclusive content that drives reve-
nues. We have also covered result of surveys conducted by Nielsen.

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Country wise MNP Implementation Date

Country MNP Implementation Date Time to Port (Days) Charge

Australia 2001 Free
Belgium Oct-02 Free
Brazil Sep-08 Free
Bulgaria Apr-08 2.56 EUR
Denmark 2001
Dominican Republic Sep-09 80.00 DOP
Ecuador Feb-09
Egypt Apr-08
Estonia Jan-05
France Jun-03 10
Germany Nov-02 25 EUR
Greece 2004
Hong Kong Mar-99
India Dec-09 4 to 12
Ireland 2003 Free
Israel Dec-07 Free
Italy Jan-02
Jordan Jun-10 1 TBD
Lithuania 2005
Luxembourg Jun-04
Macedonia Sep-08
Malaysia Aug-08 25.00 MYR
Mexico Jul-08
New Zealand Apr-07 Free
Nigeria 2007
Norway 2001
Oman Aug-06
Pakistan Mar-07
Peru Jan-10
Poland Feb-06 Free
Portugal Jan-02
Romania Dec-08 Free
Saudi Arabia Jul-06
Singapore Jun-08
Slovenia 2005 5 EUR
South Africa Nov-06
Spain 2000
Sweden Sep-01 21 Free
Taiwan Oct-05
Thailand 2010
Turkey Nov-08 Free
United Kingdom Free

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 Impact of MNP on Mobile Operators
Positives:
1. Operators who are having existing pool of strong customer base
will be able to retain customer by providing competitive services.
2. New telecom service providers can survive in the market by pro-
viding competitive tariffs and VAS.
3. ARPU is likely to improve as customer reduce number of active
connection of several operators.
Profit margins of the
operators are likely to Negatives:
erode Post MNP
1. Competition among telecom service providers is increasing.
2. Profit margins are likely to erode
3. Complex task to find out subscribers owns by operators as it can
change service providers when ones found better value for money
4. Cartel in the existing operators to form synergy lead to hard game
for rest of the players.

Situation of the Telecom Market post MNP

• All operators would be having the same kind of plans available to

Operators’ first priority retain customer, so customer can choose plan as per their re-
would be to focus on the
quirement and won’t switch to another operator.
volume driven business
to retain existing • If today anyone want to switch then TTML provides the best plan,
computer as customer has to pay 1 Rs. For the 10 minute.

• TATA - DOCOMO is providing GSM plan of pay per second (Pulse

rate of on second). So if person talk for one second then he need
not to pay for the whole one minute, which we are paying right
now.

• TATA-DOCOMO has launched SMS services like pay per character

rather than pay per whole message in the existing plans.

• All the operators are likely to focus on the competitive plan for the
basic services like calling and messaging rather than on value
added services. Currently Vodafone and Bharti Airtel are the
leader in the value added services.

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 Key takeaways from Nielsen Research Report conducted on
12,500 mobile subscribers across 50 centers in India

More than half (55%) of all respondents were generally satisfied with
TATA scores high on their mobile operator and 48 percent were satisfied with the network
network quality quality. Satisfaction scores on network quality dropped for almost all
operators, with Airtel, BSNL and Reliance registering the greatest
drops. 46 percent were satisfied with the network coverage area of
their operator and 43 percent were satisfied with the price they paid
for the mobile phone service by their operator.

Other areas of satisfaction included customer service experience and

Satisfaction Level quality of voice (both 42%), strength of signal, Voice & Data tariff
options and accuracy of bills (all 41%), indoor coverage (40%),
dropped calls (32%).

Loyalty to operators is seen to be higher among lower socio-economic

Loyalty to Operator groups, older age groups, and among females.

The circles in which subscribers are more likely to shift are Mumbai
Churning rate and Delhi Metro, UP East and West, Gujarat, Rajasthan, Andhra
Pradesh, Karnataka, Kerala, and Rest of West Bengal.

Circles in which subscribers show higher retention levels are Chennai

Retention rate By
Metro, Haryana, Himachal Pradesh, Punjab, UP East, Rest of Ma-
circles harashtra (does not include Mumbai Metro), Rest of Tamil Nadu (does
not include Chennai Metro), Bihar, and Jharkhand.

Who will Manage MNP Database

• Syniverse was selected to receive the license for Zone 1, which

The MNP implementation includes the service areas of Delhi, Mumbai, Maharashtra, Gujarat
will first focus on the and seven others.
larger metropolitan
service areas before • MNP Interconnection Telecom solutions was granted for MNP ser-
moving into the rural vice Zone 2, which includes service areas of Eastern and Southern
locations. India

6 Monarch Project & Finmarkets Ltd

 Introduction of MNP will not lead to swiftly changing the operators

Reliance, TATA, and BSNL Postpaid Subscribers are on top of

the list when it comes to making the best use of MNP facility:

Intention to Switch Operator

30
(
I
n 25

P 20
e
r
15
c
e
n 10
t
a 5
g
)

0
Total Bharti Reliance Vodafone BSNL TATA IDEA
Today Post MNP

Source: Nielsen Survey

Impact of MNP on Mobile Subscribers:

Positives:
1. Subscribers would likely to have efficient services at cheapest rate.
2. Can retain one number lifetime while choosing competitive plans
Subscribers can switch from other operators.
to the new network 3. CDMA users can switch to GSM network providers without changing
without changing the the handset, and hence subscribers need not to purchase the differ-
Handset. In India ent handset for the different network.
between CDMA and GSM

Negatives:
1. Fees for transfer is yet not decided as new services introduced it
will cost high.
2. A subscriber is eligible to make a porting request only after 90 days
of the date of activation of his mobile connection.
3. Subscribers transferring the mobile number with some balance
amount, no credit transfer would be allowed to the new account.
4. Consumers allowed to change operators within their registered cir-
cle only (So if you are moving to another city and want to retain
your mobile number, MNP is not the answer).

7 Monarch Project & Finmarkets Ltd

Mobile Network Portability will not likely to change churning
rate of Prepaid customer: Postpaid users were found to be more
overwhelmed by the MNP news that will help them switch networks
without their number being changed. Nielsen on Mobile Consumer
Insights indicates that business subscribers mostly from the postpaid
category are more likely to shift their service providers’ gears.

Classification By Connection Type

20%
17% 17%
19%
14%
15%

10%

5%

0%
Prepaid Today Post MNP Postpaid

Low and medium spenders are less motivated to switch

Classification By Spending
25%

20%
20%
17% 17% 17% 17%
16%
15%

10%

5%

0%
Low Medium High
Today Post MNP

Base: Over 12,500 mobile subscribers were reviewed across 50 centers in India.

Source: MNP survey result from Nielsen

8 Monarch Project & Finmarkets Ltd

 Post MNP Churning rate in the personal usage remain same

Classification By Usage
25%
22%

20% 19% 18%

17% 17%
15%
15%

10%

5%

0%
Enterprise Business Personal
Today Post MNP

Base: Over 12,500 mobile subscribers were reviewed across 50 centers in India.

Source: MNP survey result from Nielsen

One would switch service providers because of:

Most of the subscribers

shift to the new operators
because of the
competitive tariff rate
offered by new operator

Base: Mobile phone service subscribers who are likely to switch mobile phone operators

Source: MNP survey result from Nielsen

9 Monarch Project & Finmarkets Ltd

How one can Switch Operator without changing its number?

1. Every subscriber desirous of porting his mobile number shall make

a request in writing to the concerned Recipient Operator in such
format as may be specified by such Recipient Operator.

2. In the case of a post paid subscriber, an undertaking by the sub-

scriber that he has already paid all dues as per the last bill to the
Donor Operator

3. In the case of a pre-paid subscriber, an undertaking by the sub-

scriber to the effect that he understands and agrees that, upon
porting of the mobile number, the balance amount of talk time, if
any, at the time of porting shall lapse

4. The subscriber shall, with his request for porting, pay the porting
charge, if any.

5. The Recipient Operator, upon receipt of the porting request from a

subscriber, shall verify if the customer acquisition form is accom-
panied by all documents specified

6. A subscriber may, within twenty four hours of making a request for

porting, withdraw such request by informing the Recipient Opera-
tor in writing

7. The Donor Operator shall continue to provide all subscribed tele-

communication services to the subscriber who has sought porting
of his mobile number till the disconnection of the mobile number

8. The regulation envisage a maximum time period of four days for

the completion of porting process

9. Access Providers are required to implement All Call Query method

10. The Originating operator shall be responsible to route the call to

correct terminating network

10 Monarch Project & Finmarkets Ltd

Post MNP Scenario of the telecom operator

Bharti Airtel - Neutral

• Market leader in the wireless telecom segment and Most popular

among the high spending group.

• Least competitive tariff plans and it has been offering wide range
of value added services.

• All telecom growth comes from Rural India since urban India is 95
percent penetrated already, so Bharti just need to get out India if
it wants to grow.

• Now subscribers addition is no longer remain the driver for the

growth as Indian urban market is mature and price competition will
play the major role.

Idea - Negative

• As per the survey conducted by market research firm AC Nielsen

existing Idea cellular customer less likely to change its moods to
switching post MNP.

• Not providing any unique services to attract customers.

• Post MNP company is not likely to get benefited as it targets

specific group of customer.

• Follower in the GSM space.

Reliance Communication - Positive

• Leader in the CDMA telecom services

• Company’s presence in the CDMA and GSM segment enables com-

pany to retain existing customer.

• Best available tariff plans after TATA Tele services.

• Most popular telecom operator in the rural areas

11 Monarch Project & Finmarkets Ltd

 MTNL– Positive

• First one to launch 3G technology and 3G would enable consumers

to use video calling, high speed internet access on the handset it-
self

• Existing subscribers who wish to have 3G on their mobile can

switch to the MTNL as allocation of the 3G license to the private
players will take long time

• Bharti and Vodafone is having the higher spending customers and

these group can shift to the MTNL for availing the 3G services

• MNP implementation will turnaround the company as 3G demand-

ing customer switch to the MTNL

TTML - Positive

• TTML ranked #1 in the TRAI survey as it ranked No. 1 in the over-

all customer satisfaction. It scores at 96%, only operators who
scores higher than 95%.

• Most popular in the less spending subscribers group.

• Tata DoCoMo, the GSM brand by Tata Tele services and NTT
DoCoMo is working on implementing various strategies that defi-
nitely help it stand out from the crowd

• TATA Tele services offers cheapest plan in India, within TATA net-
TATA Tele services offers
work as well as outside the TATA network.
cheapest plan in India
• TATA - DoCoMo has started GSM services with the “pay per sec-
ond” plan and “pay per character” plan for the SMS.

• In latest month it has added 34 lakhs subscribers from its CDMA

and GSM operations.

• Existing customer is less likely to switch as company is providing

competitive plans and likely to offer value added services.

12 Monarch Project & Finmarkets Ltd


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