Churn high in new mobile users?

Posted on | April 17, 2006 |

ET does a speculative story quoting unnamed industry sources that the churn rate in the new user additions may be as high as 20-30%. It then goes on to quote other unnamed industry sources putting the rate as low as 3-4%.

Thankfully, this kind of a story does not mean anything. Otherwise, a defaulters rate of 30% in new subscribers could ring alarm bells for the industry. This kind of a rate of attrition would mean that the market is nearing its peak and that majority of new users are not worth having.

The story does have some valid points worth covering.

As telcos target new subscribers across new market segments with lower disposable incomes, they often end up enrolling subscribers who either cannot afford a mobile phone, or do not think of the mobile phone as an essential item.

While the additions to the cellular numbers are published every month, companies do not disclose the number of subscribers churned out.

Due to the keen competition, with five to six players in most circles, telcos lure customers by advertising low tariffs. “But when first-time users get to know the other costs from initial bills, like clip charges, service tax, education cess and itemisation charges, they are shocked at the amount they have to pay.

Further, there is no screening process to determine users who default and then switch over to another operator. “These defaulters sign up for a new telco after defaulting. There should be a mechanism for filtering out such users to avoid frauds,

Category: General

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