Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Telecom: Your number's portable... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 14, 2007

    Telecom: Your number's portable...

    ...atleast if you are residing in any of the four metros - New Delhi, Kolkata, Mumbai or Chennai. This decision from the Indian Department of Telecommunication (DoT) shall come into effect in a year's time, and has been an outcome of last 2-3 years of discussions and confusions amongst the industry associations (COAI and AUSPI), regulator and the government.

    While such a move shall benefit mobile subscribers, it shall impact the service providers' profitability, considering the costs involved in implementing the technology, attracting new subscribers and more importantly retaining existing ones from being poached by competitors. After being introduced in the four metros over the next 12 months, this service will then be extended to other parts of the country.

    For beginners, Mobile Number Portability, or MNP, esentially enables mobile users to retain their existing mobile numbers when changing from one mobile network operator to another. All these years, since the indroiction of mobile phones in the country, and the emergence of mobile numbers as one important identity, the inconvenience of having to change numbers and then informing friends, relatives, colleagues and business partners of new numbers has prevented subscribers from switching to another service provider even if the existing operator is providing inefficient services. Now, the introduction of MNP shall change all that, although at some cost to the subscriber (the customer will also have to incur a fee for switching over to another operator). As for companies, the fact that MNP shall require expenditure towards the required technological setup, might lead to some impact on profitability, atleast for the mid and small size players.

    Subscribers can also expect improvement in service quality as, considering that competitors will be preying for another's subscribers, an operator is expected to be more proactive in the way it services its subscribers. To start with, MNP can have an impact on the churn rate of companies, with the impact being greater in the small ones like Idea and Spice. As seen from the adjacent chart, these companies already have higher churn rates as compared to market leaders like Bharti and Reliance. Readers should however note that the churn rate in Reliance not really comparable with Bharti's as the former's subscribers have the handset as a 'liability' while considering any shift in operator.

    Reactions from the industry
    While the CDMA faction (led by Reliance Communications, of course) has welcomed the DoT's decision with respect to MNP, the GSM body - COAI - seems visibly disturbed. The COAI chief has fairly indicated that the timing of the MNP implementation coincides with a large CDMA player (Reliance Communications) getting the nod for GSM spectrum throughout the country, thus having the potential to poach existing GSM operators' subscribers.

    What to expect?
    Discussions, confusions, counter attacks, legal suits and more. Considering the kind of favoritism shown by the government on a particular lobby, do we expect anything else till the time MNP actually gets implemented? On the operational front, as we have indicated above, MNP can impact margins of smaller companies considering the costs of technology implementation and subscriber retention. As for the bigger players, we believe that they have the necessary scale to atleast maintain margins at the current levels. The movement of subscribers from smaller players to pan-India operators shall also benefit the latter.



    Equitymaster requests your view! Post a comment on "Telecom: Your number's portable...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Which Gods Will Bring Down the US Empire? (Vivek Kaul's Diary)

    Aug 17, 2017

    Mr Trump is in the White House and the gods are in their heavens; what's not to like?

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 17, 2017 (Close)