Telecom users may have seen bills drop after switching operators in their own circles.But the government's plan to take mobile number portability (MNP) nationwide – where a user would be able to retain the number while switching from one circle to another-- may lead to inflated bills.
According to the Cellular Operators Association of India (COAI), the industry will have to bear a minimum back-haul cost of Rs 300 crore to 400 crore post the implementation of a nationwide MNP. It will add more pressure on the balance-sheets of the telecom operators which only recently started showing improvements in their profit margins.
"It would impact the operators in the costs involved in implementing this. According to the estimates of our expenditure during the intra-circle MNP, it would cost not less than Rs 300 crore to Rs 400 crore," Rajan Mathews, director general, COAI, told dna.
"Whether the operators hike tariffs thereafter will depend on the market forces but it will definitely increase the pressure on their margins," he said.
MNP was launched across the country on January 20, 2011, and so far over 100 million subscribers have opted for the service. The country has around 900 million telecom subscribers.
Although cumulatively 100 million is quite an impressive figure and talks a lot about the popularity of the service, experts feel this is still not at par with the monthly churn statistics of countries like the US or the UK.
"While in India monthly churn will be around 1%, that in the US or the UK is 3% to 4%," Mathews said.
Talking about the tariff hike, telecom analysts said if it input costs go up, another round of tariff hike will likely be seen.
However since there is an intense competition in the market the hike would be not very significant, they said.
"We will see some increase but not that significant. There is a clear competition in the market place. Nobody has the pricing power suo moto," Hemant Joshi, partner at Deloitte Haskins, told dna.
The Telecom Commission on Friday gave an in principle approval to nation-wide MNP. However, the commission still needs clarification on a few issues, including performance bank guarantee and financial bank guarantee with respect to existing MNP licences.
"Benefits of nationwide MNP will largely for the extreme-end migrant workers," Mahesh Uppal, Director ComFirst told dna.
Talking about the successful acceptance of MNP countrywide, he said one of the foremost factors driving MNP is cheap rate of porting and a wider dissatisfaction with service quality, specially issues like call drops. So unlike other countries India sees a significant number of requests.
More than a dozen players in the market too is a huge riding factor for MNP in India.
In India the porting charge prescribed by Trai is Rs 19, however operators let go of this charge at times while adding value customers.
In countries including Australia, Hong Kong, Malaysia, Singapore and even Pakistan porting is free of cost officially.
According to different studies, there is a high variation of MNP across different markets. While it was at the rate of 0.36% in Portugal till a couple of years ago, in Hong Kong it was estimated to be 14.76%.