Monarch Project & Finmarkets Ltd MOBILE NUMBER PORTABILITY

05 OCT 2009.
* For Private Circulation Only

Mobile Number Portability

-Keep Single Mobile Number Lifetime

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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 subscribers from one operator to another, as quality of service and netmobile services market 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 subscribers, which will then taper off. Usually, customers do more likely to shift if new operator will introduce new services or if another operator 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 wireless. In most of the country this type of mobile network portability 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 recognized 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 Telecommunication Mobile Number Portability Regulations, 2009 and TRAI said the MNP facility shall be available only within a given licensed service area.

One can not keep their mobile number same when moving to new circle

Limitations to MNP
1. Consumers allowed to switch operators only 90 days after a connection is activated. 2. Consumers allowed to change operators within their registered circle only (i.e. if you are within the Gujarat circle you cant 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 ones operator. There has been speculation though which has ranged around 300 rupees. Even now with the implementation announced in December there is no information 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 number 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 perspective wherein they could benefit due to this churn and could get better revenue shares from operators for exclusive content that drives revenues. We have also covered result of surveys conducted by Nielsen.

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Country wise MNP Implementation Date Country

Australia Belgium Brazil Bulgaria Denmark Dominican Republic Ecuador Egypt Estonia France Germany Greece Hong Kong India Ireland Israel Italy Jordan Lithuania Luxembourg Macedonia Malaysia Mexico New Zealand Nigeria Norway Oman Pakistan Peru Poland Portugal Romania Saudi Arabia Singapore Slovenia South Africa Spain Sweden Taiwan Thailand Turkey United Kingdom
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MNP Implementation Date Time to Port (Days)

2001 Oct-02 Sep-08 Apr-08 2001 Sep-09 Feb-09 Apr-08 Jan-05 Jun-03 Nov-02 2004 Mar-99 Dec-09 2003 Dec-07 Jan-02 Jun-10 2005 Jun-04 Sep-08 Aug-08 Jul-08 Apr-07 2007 2001 Aug-06 Mar-07 Jan-10 Feb-06 Jan-02 Dec-08 Jul-06 Jun-08 2005 Nov-06 2000 Sep-01 Oct-05 2010 Nov-08 10

Charge
Free Free Free 2.56 EUR 80.00 DOP

25 EUR

4 to 12 Free Free 1 TBD

25.00 MYR Free

Free Free

5 EUR

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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 providing competitive tariffs and VAS. 3. ARPU is likely to improve as customer reduce number of active connection of several operators. Negatives: 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.

Profit margins of the operators are likely to erode Post MNP

Situation of the Telecom Market post MNP

Operators first priority would be to focus on the volume driven business to retain existing computer All operators would be having the same kind of plans available to retain customer, so customer can choose plan as per their requirement and wont switch to another operator. If today anyone want to switch then TTML provides the best plan, 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.

Satisfaction Level

Other areas of satisfaction included customer service experience and 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 Operator

Loyalty to operators is seen to be higher among lower socio-economic groups, older age groups, and among females. The circles in which subscribers are more likely to shift are Mumbai 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 Metro, Haryana, Himachal Pradesh, Punjab, UP East, Rest of Maharashtra (does not include Mumbai Metro), Rest of Tamil Nadu (does not include Chennai Metro), Bihar, and Jharkhand.

Churning rate

Retention circles

rate

By

Who will Manage MNP Database

The MNP implementation will first focus areas on the larger service locations. metropolitan before rural MNP Interconnection Telecom solutions was granted for MNP service Zone 2, which includes service areas of Eastern and Southern India Syniverse was selected to receive the license for Zone 1, which includes the service areas of Delhi, Mumbai, Maharashtra, Gujarat and seven others.

moving into the

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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. Subscribers can switch to the new network without changing the Handset. In India between CDMA and GSM 2. Can retain one number lifetime while choosing competitive plans from other operators. 3. CDMA users can switch to GSM network providers without changing the handset, and hence subscribers need not to purchase the different handset for the different network.

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 circle only (So if you are moving to another city and want to retain your mobile number, MNP is not the answer).
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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% 15% 17% 17% 17% 16%

10%

5%

0% Low Today Medium Post MNP High

Base: Over 12,500 mobile subscribers were reviewed across 50 centers in India. Source: MNP survey result from Nielsen

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Post MNP Churning rate in the personal usage remain same

Classification By Usage
25% 22% 20% 15% 10% 5% 0% Enterprise Business Today Post MNP Personal 19% 15% 18% 17% 17%

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

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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 subscriber 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 subscriber 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 accompanied 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 Operator in writing 7. The Donor Operator shall continue to provide all subscribed telecommunication 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

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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 Companys presence in the CDMA and GSM segment enables company to retain existing customer. Best available tariff plans after TATA Tele services. Most popular telecom operator in the rural areas

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MTNL Positive First one to launch 3G technology and 3G would enable consumers to use video calling, high speed internet access on the handset itself 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 demanding customer switch to the MTNL

TTML - Positive TTML ranked #1 in the TRAI survey as it ranked No. 1 in the overall 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 definitely help it stand out from the crowd TATA Tele services offers cheapest plan in India, within TATA network as well as outside the TATA network. TATA - DoCoMo has started GSM services with the pay per second 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.

TATA Tele services offers cheapest plan in India

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