Cell C bullish on MNP

By Damaria Senne, ITWeb senior journalist

Johannesburg, 10 Jul 2006

Cell C is challenging a report that says it will be the biggest loser when mobile number portability (MNP) is implemented in SA.

Last month, Synovate released a research report which stated that 21% of cellphone users believed they will change their networks once MNP is implemented.

The report also predicted Vodacom will gain more customers in the prepaid market than it will lose, with the majority of those who migrate going to MTN. MTN`s gains in the contract market are expected to exceed its losses by 2%, and Cell C will suffer a large loss on its contract customer base, with the losses exceeding overall gains, the report noted.

Cell C says its own research, which was conducted twice over an 18-month period, consistently revealed it would be the net gainer from MNP, in both the prepaid and postpaid markets. Although the third mobile operator would not reveal statistical data findings, it noted the research was based on a combined sample size of more than 7 000 interviews, compared to Synovate`s sample of 892.

The Synovate report did not take the impact of Virgin Mobile`s entrance onto the South African market into account, as the study was done ahead of the group`s local launch.

Price war?

Another prediction being challenged by mobile operators and analysts is whether there will be a price war once MNP has been implemented.

While the ICT market has already seen some form of price competition emerge, an all-out price war sparked by MNP is unlikely, says BMI-TechKnowledge analyst Richard Hurst.

Mike Falconer, Cell C`s carrier relations senior manager, says the operator also does not expect a price war, but sees a churn of between 3% and 5%.

International experience supports this view, with Hong Kong, where churn increased the most when MNP was implemented (from 3.9% to 9%), reverted to 3.9% within a three-month period.

A price war would not benefit operators in the long run, as they would have to increasingly cut their margins, says Brian Seligmann, senior manager of MTN`s data and messaging services.

The cumulative effects of a price war would be that operators have less money to invest in infrastructure and value-added services, making the customer lose out as service is degraded, he says.

Vodacom was not available for comment at the time of publication.