Over 100 million mobile phone subscribers changed their telecom operator using the mobile number portability feature in FY23, according to data provided by the Telecom Regulatory Authority of India (TRAI). If we assume that each subscriber changed their telecom operator only once in FY23, around 12 per cent of India’s mobile subscriber base switched their telecom operator during the 2023 fiscal.
The TRAI released the operators’ mobile subscriber numbers for March 2023 on Monday. Kotak Institutional Equities conducted an analysis of mobile number portability from March 2022–23 and found that, on average, around 10 million mobile subscribers were porting their number each month in FY23.
Subscriber poaching
Cumulatively, around 121 million instances of porting of mobile phone numbers were reported in FY23. This data alludes to the indisciplined and unscientific poaching of subscribers being done by the operators on the low-ticket prepaid plans. Telcos have been essentially incentivising third-party retailers to make prepaid subscribers switch mobile phone plans through commissions. These retailers are consequently urging subscribers to switch operators at a heightened frequency since they receive a commission for every switch.
“Since all of the operators are participating in this, this has no real effect on changes in the number of subscribers experienced by the operator. With the participation of every operator, the net effect is still zero,” an expert explained. However, he added that, as a result, the cost of acquiring a customer is needlessly rising as these commissions to retailers are not providing any tangible benefit to the subscriber numbers overall.
The recent rural survey conducted by the financial services company IIFL, however, found that the overall subscriber churn might start trending down in the coming months as the operators exert more discipline on how they acquire subscribers. This survey was conducted in Mumbai, and nearby rural and semi urban districts
Trade payout
“Trade payout (comission given to the retailer) on MNP has come down in recent months, especially in areas where it was elevated. Some retailers that we spoke to said that all telcos now pay ₹250–280 per port-in to the retailer vs. ₹300+ a few months ago. In some micro-markets where Jio is strong, we were told that the latter’s payout of approximately ₹210 per port-in is approximately 15 per cent lower than peers. This suggests that telcos set MNP payouts based on their strengths and weaknesses in a micro-market rather than adopting a district- or cluster-wise approach,” the IIFL report observed.
According to the report, the biggest takeaway was a significant (15–25 per cent) reduction in trade payouts by telcos on new SIM activation and Mobile Number Portability (MNP).
During the earnings call for Q4FY23, Bharti Airtel also mentioned reducing commissions by addressing subscriber churn more scientifically: “...area is sales costs where we are taking actions to lower the reliance on inefficient channels that either have a high cost per gross edition or higher early churn. Massive data science is being deployed to identify the early churn right down to a single outlet at the retailer level.”