A study on the customer Preference of Prepaid and

Postpaid mobile Connection in Chennai

Article Project
Done by

Abhishek sharma
Register No .07MBA005
Under the Guidance of
B.Saju

Assistant Professor

MAY 2009

VIT Business
School
fostering
innovation
 ABSTRACT

1. TRAI on quality of service and customer satisfaction (Quarter

Oct 2006 to Dec. 2006)

This Report has given the detail information about the quality parameters like customer care
services, network availability , response rates , call rates etc .by comparing the major telecom
players on these parameters , this report has carried in metros and have seen some of the new
facts like customer are not very happy with the customer care services and for some players the
network availability is a major issue.

2. Report by Gartner Inc. (April 2008 ) on Indian Telecom Sector .

Total cellular services revenue in India is projected to grow at a compound annual growth rate
(CAGR) of 18 per cent from 2008-2012 to exceed $37 billion, says Gartner, Inc. The India
mobile subscriber base is set to exceed 737 million connections by 2012 growing at a CAGR of
21 per cent in the same period. This growth is poised to continue through the forecast period, and
India is expected to remain the world's second largest wireless market after China in terms of
mobile connections.

''The growth in the mobile subscriber base is on the back of a rapidly proliferating rural market,
lower handset costs, and low tariff rates in the Indian market,'' said Madhusudan Gupta, senior
research analyst at Gartner. ''Rural telephony will continue to trigger growth and is expected to
grow fourfold during the forecast period. Call rates have further dropped to about 1.5 cents per
minute narrowing the gap with fixed-line rates. These factors along with an increasing
competitive landscape will fuel market growth and encourage the adoption of wireless services
in the rural and semi urban provinces of India.'' Cellular market penetration is projected to
increase from 19.8 per cent in 2007 to 60.7 per cent in 2012. Gartner analysts said this growth
could be primarily attributed to the increasing focus on the rural market, local consumer durable
and electronic companies entering the domestic mobile handset segment, and lower handset
prices. Vendors will continue to focus on sub-25$ handsets to capture market share.The revenues
from data services will significantly contribute to the growth of overall cellular services revenue
in India, with a CAGR of 26.3 per cent in the forecast period.

3. Report by IIM Kolkata by consulting club on Indian Telecom

Sector
The Indian telecommunications has been zooming up the growth curve at a feverish pace,

emerging as one of the key sectors responsible for India's resurgent economic growth.

India has surpassed US to become the second largest wireless network in the world with a
subscriber base of over 300 million in April, 2009 according to the Telecom Regulatory
Authority of India (TRAI).

India is likely to be second largest mobile market in the BRIC nations, with 560 million mobile
users representing the next great growth curve for both mobile and interactive marketing
industries, according to a report by eMarketers (an Internet Portal for Marketers).

The booming domestic telecom market has been attracting accelerating amount of investment.
During April 2000 to March 2008, cumulative FDI inflows into the Indian telecommunications
sector amounted to US$ 3.84 billion, accounting for 6.81 per cent of the total FDI inflows into
the country. In fact, the surge in mobile services market is likely to see huge amount of
investment implying a mobile in the hands of every second person in the country.
Key Points from Articles -

India is a second largest and fastest growing telecom market

India is highly price Sensitive market and has lowest tariff rates in the world .

Presence of 14 Cellular service Providers makes into a highly competitive Market

The growth engine for Indian cellular service provider is rural market in coming years

Which is highly price sensitive market due to vendors will continue to focus on below

$25 cost handset

Indian mobile connection market continues to be dominated by prepaid subscribers. Prepaid

connections accounted for more than 89 per cent of all mobile connections in 2007 and are
expected to grow to more than 92 per cent of the connection base by 2012.

The total services revenue for prepaid connections is expected to grow at 18.9 per cent CAGR
for the period 2008 - 2012 and the total services revenue for postpaid connections is expected to
grow at 15 per cent CAGR during the same forecast period. By 2012, the prepaid subscriber base
will cross 683 million and postpaid subscriber base will exceed 53 million subscribers.

Prepaid subscribers are expected to adopt data services faster than the post-paid segment. Data
revenues for the prepaid segment are projected to grow at 29 per cent CAGR during the forecast
period as compared to 22 per cent CAGR for the post paid subscribers during the same period.
 INTRODUCTION

A mobile connection in which one uses a mobile connection with a SIM card and pay the
monthly bill at the end of the month is a Postpaid mobile connection. In this mobile connection
one uses the SIM card to pay monthly bill based on rentals, plan charges and the usage charges.
In the case of a prepaid mobile connection a person first pay by card and then uses the phone for
general utility. While on the other hand postpaid accounts are referred as use and pay type.

In a Postpaid connection one can find two types of components: The first component is the
monthly rental that the subscriber pay to the mobile service provider and the other component is
the usage charges. The uses charges generally vary from the kind of that have been used by the
customer.
Competitive plans are very evenly introduced by the service providers so as to attract the
maximum number of customers. An engagement with corporate for closed user group
connections allow for subsidized calls to the other group members. For this purpose generally
lower tariffs on monthly rentals and usage fees are taken. Why people choose to have a Postpaid
Plan? Generally because of the reason that the benefits of a prepaid connection are very limited.
In prepaid one pays the advance for a specific number of minutes, once the time run-out of hands
the phone is needed to be recharged for the next number of days and the due balance is needed to
be increased in amount. While in case of a postpaid plan one is needed to pay after the end of the
month. There is no time limit in case of a postpaid plan. No contract is signed for any particular
period of time and one can talk endless without giving an account to the balance remaining-due.
The prepaid mobile bills are just the formalities as voucher cards while the post-plans are bill
like, where one pays after the end of month for all the minutes which one has used. Most of the
postpaid mobile plans connection provides unlimited minutes for talking whether one is talking
just on nights or only on nights and weekends.

RESEARCH METHODOLOGY

Method of data collection

Primary data collection

The primary data collected through well designed questionnaire. The questionnaire through
which data was gathered and collected consisted of questions which were mostly objective in
nature.

Secondary data collection

The secondary data for the study got from visiting Cellular service Providers outlets and
gathering informative materials and published information. Current information regarding the
subject and company will be getting from newspapers, business magazines, customer care
executives, journals, internet, and by referring certain books on Indian Telecom Sector.

Method of sampling

Sampling technique
Sampling procedure: Probability convenience sampling method

Sample size: 200 respondents were selected for analysis.

Method of sampling
The method used for sample technique was non Probability convenience sampling method. This
method is used because it is known previously as to whether a particular person will be asked to
fill the questionnaire. Convenient sampling is used because only those people will be asked to fill
the questionnaires who were easily accessible and available to the researcher.

Frame work of Analysis

The collected data was to be analyzed by using statistical technique like Percentage Analysis.
The data was to be analyzed by using Statistical Program for Social Sciences (SPSS) software.

Type of Study
The study conducted is a conclusive descriptive statistical study; by this study I come to the
decision which is precise and rational. The study is conclusive because after doing the study I
come to a conclusion regarding the position of the mobile connections in the minds of
respondents of different groups. The study is statistical because throughout the study all the
similar samples are selected and group together. All the similar responses are taken together as
one and their percentages are calculated.

Thus, this, conclusive descriptive statistical study is the best study for this purpose as it provides
the necessary information which is utilize to arrive at a concrete decision.

Limitation of the Study

The research will be conducted in a limited area , so the respondent will be limited so cannot be
treated as a whole population and the respondent may be biased.
 Test Results
Mobile Connection type in Chennai and Expense Per Month Cross tabulation

Expense Per Month

More than
upto Rs.500 Rs.501-1000 Rs1001-1500 1500 Total
Mobile Prepaid
Connection type 90 61 17 11 179
in Chennai Postpaid
7 8 4 2 21
Total
97 69 21 13 200

Inference : From the table it be shown that about 90 out of 97 are spending less than
Rs.500 and have Prepaid connection and just 7 out of 97 are spending less than
and have Postpaid connection.

Mobile Connection type in Chennai and Network Availability Cross tabulation

Network Availability

Very Good Good Satisfied bad Very bad Total

Mobile Prepaid
Connection 22 62 79 11 5 179
type in Chennai Postpaid
1 6 10 2 2 21

Total
23 68 89 13 7 200

Inference : From the table it be shown that about 79 out of 89 are satisfied with
Network availability and are having prepaid connection and 10 out of 89 have
postpaid connection.
Mobile Connection type in Chennai and Customer Profession type Cross tabulation

Customer Profession type

Service business
Person man student Housewife Total
Mobile Prepaid
Connection type 100 21 52 6 179
in Chennai Postpaid
11 1 9 0 21
Total
111 22 61 6 200

Inference : From the table it be shown that about 100 out of 111 are service Professional
with having prepaid connection and 11 out of 111 are having postpaid connection.

Mobile Connection type in Chennai and Rating on Call charge rate Cross tabulation

Rating on Call charge rate

Very Good Good Satisfied Bad Very bad Total

Mobile Prepaid
Connection type 35 41 89 10 4 179
in Chennai
Postpaid
3 3 13 1 1 21

Total
38 44 102 11 5 200

Inference : From the table it be shown that about 89 out of 102 are satisfied with the
charge rates with having prepaid connection and 13 out of 102 are having postpaid
connection.
Mobile Connection type in Chennai and Reason for Choosing a particular connection
Cross tabulation

Reason for Choosing a particular connection

Usage switching cheaper call Less hassle

control cost freedom charges involved Total
Mobile Prepaid
96 70 9 4 179
Connection type
in Chennai Postpaid
11 7 1 2 21
Total
107 77 10 6 200

Inference : From the table it be shown that about 96 out of 107 are opting the particular
connection with having prepaid connection and 11 out of 107 are having postpaid
connection.
Findings:

It is found that Aircel is the Market Leader in Chennai with 32% market share and Lowest
market share is of BSNL with just 5% .

It is found that majority of respondents about 89.5 % using prepaid connection and just 10.5% of
the respondents is using Postpaid connection in Chennai among the respondents.

It is found that more than 50% of the respondents believe that the customer care Executives
Behavior is Warm and Helpful and just 1.5 % of the Respondent believes that they are lazy and
very Slow in Responding .

It is found that about 44.5 % of the respondents are satisfied with the customer care services
Provided by their Cellular Services

More than 49 % of the respondents spend Less than 500 Rupees per month and just 6.5 % of the
respondent spend above 1500 Rupees per month

It is analyzed that about 44.5 % of the respondents are satisfied with the Network Availability by
their service Provider.

It is found that more than 50% of the respondents are service Professionals and second largest
respondent Group is of Students.

About 52% of the respondents are satisfied with their service providers call rates and just 3%
respondent says its very bad.

More than half of Respondents ( 53%) are using their particular connections to control
cost of mobile usage.

It is found that about 67 % of the overall respondents are satisfied with their service
providers and just 2.5% says they are not happy with their service providers.

It is found that about 69 % of the respondents prefer GSM Technology service providers.
It is found that 56% of the respondents uses their connections for 1-2 years and there are 1.5% of
the respondent uses the same number for more than 3 years.

It is found that about 40% of the respondents are satisfied with the Value added services
provided by their service providers.
Suggestion

It is seen that just 44.5 % of the respondents are Satisfied with the customer care services so
there is room for improvement in the customer care services for cellular services as the
customer care services are the pillars which play a very vital role in the cellular
services, the company which provide the best customer service will the winner at the
end.

It is seen that about 49% of the respondent spend less than Rs 500 on the cellular service , that is
the reason that ARPU (Average Revenue Per User ) of the Cellular service Providers
are very Low now , so to increase the ARPU , the cellular service providers needs to
bring More VAS to increase ARPU .

It is observed that about only 45% of the respondent are satisfied with the network availability
by their service provider , the network quality is one of the primary reason of the aircel
being a market leader in Tamil Nadu , so for competing with aircel other service
providers must enhance their network quality .

It is observed that just 40% of the respondent is satisfied with the value added services provided
by their service providers it means there is still a lot of room for the new innovative
VAS services which can increase the service providers revenue and attracting new
subscribers.
Conclusion

Thus, Based on the literature findings, it is possible to prepare an instrument to measure

the preference of customer in term of prepaid and postpaid connections .Customer service
and Value added Service (VAS) are Critical in Mobile services which act as a
differentiator for Service Provider and help customer in deciding about the mobile
connections type ,Total cost of Ownership (TCO) is a major factor in deciding about the
type of connection and that is the Reason that Mostly customer prefer Prepaid
connection as the TCO is less in prepaid compared to Postpaid connection . With the
launch of the 3G Technology the VAS will be the dominant factor in future to decide
about the type of connection that will be chosen by the customer . People Prefer Mostly
the GSM Technology because of the facility to change the SIM Frequently whereas this
facility is not available in CDMA. The high ARPU (Average Revenue Per User ) can be
achieved only by Providing the new innovative services like Nokia Weather service for
Farmers in India which cost just Rs.2 / Per day only which they Provide with the
Collaboration of different service Providers .