MNP to hit operating margins of telcos in short term:ICRA

Mumbai, Jan 18 (PTI) Implementation of the much-awaited mobile number portability (MNP) from Thursday will hitthe operating margins of service providers and those withdeeper pockets would be better placed to cope up (with the newscenario), ratings agency ICRA said today.

The nationwide implementation will increase churn ofcustomers, shoot-up the customer acquisition and retentioncosts, and lower the ARPUs (average revenue per user) ascompetitive tariff plans will have to be offered, the agencysaid in a note.

These factors are "expected to result in a decline inthe operating margins of the telecom operators especially inthe short term," the agency said, adding service quality anddifferentiated services will be the key for telcos goingforward.

On service quality, operators will have to focus onbetter customer care and network coverage while differentiatedservices like 3G can also swing customers towards a particularoperator, ICRA said.

The market reacts to tariffs very quickly by adjustingprices and hence, tariffs will not be a differentiatingproposition, it said.

Hence, "telecom operators with stronger financialprofile would be better placed to cope up with the increasingcompetitive intensity" once the regime starts.

Retaining the high-usage post-paid subscribers withhigher ARPUs will be the biggest focus area for telecomoperators post-MNP, ICRA said.

The MNP scheme was launched first in Haryana lastmonth and is to be implemented nationwide from January 20. PTIAA JJ ABC