Rating agency Fitch Ratings has said mobile number portability (MNP) is unlikely to hit operators, considering the dominant pre-paid nature of the market and high churn rate, and opined that India will not behave too differently from rest of Asia on this matter.
"MNP is unlikely to have any significant negative impact on operators, considering the dominant pre-paid nature of the market and high churn rate," Fitch said.
However, it said, MNP, which allows a subscriber to change his/her operator but retain the number, is likely to intensify competition on the postpaid front, but this segment represents only 5 per cent of the 600-million subscribers.
Postpaid subscribers will display a certain level of brand loyalty, and hence they are unlikely to switch due to minor pricing reasons, considering that the differential in calling expenses will be negligible, the rating agency stated.
But it said price pressure, which has so far been more on the prepaid segment, will spread to the postpaid category with MNP, though to a lesser extent.
Fitch also expects only limited impact of higher subscriber acquisition and retention costs on overall operating margins.
After much dilly-dallying, the Telecom Ministry rolled out MNP in Haryana on November 25. Originally the scheme was scheduled for 2009. Yet, the rest of the country will not have this facility before January 20.
However, the agency says MNP will be a welcome relief for the new entrants and smaller operators, as they will now get a better chance to compete against the incumbent leaders in the postpaid segment, where the annual churn rate is only 12-24 per cent compared with 50-70 per cent in the case of the prepaid customers.
The post-paid segment boasts an approximately 40 per cent higher average revenue per minute (ARPM) than the pre- paid one.
While subscriber acquisition and retention costs may increase in this segment over the next 12 months, Fitch anticipates that it will normalise over the medium-term.
The sectoral regulator Trai had announced details of MNP way back in November 2009, and set the maximum porting charge at Rs 19 (paid by the subscriber to the recipient operator).
Even though this is only 10-20 per cent of the current average revenue per user (ARPU), the operators, however, can choose to charge a lower price. Trai initially set the porting time to a maximum of four days, but has now extended this up to seven days except for J&k, Assam and the Northeast, where it will be 15 days.
Globally speaking, Fitch pointed out that the impact of MNP has been moderate to low across the Asia-Pacific markets.
While competition intensified in Malaysia and South Korea, there was a low impact in Singapore, Japan and Taiwan. Airtel currently leads the revenue market share pie at 31 per cent, followed by Vodafone (21%), Reliance Comm (14%) and Idea (13%) as of September end.