140822-churn

GSMA Intelligence Mobile churn trends and customer retention strategies

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ANALYSIS

Mobile churn trends and customer retention strategies

August 2014

GSMA Intelligence gsmaintelligence.com [email protected] @GSMAi


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Contents

Executive summary ............................................................................................................................ 3

Introduction ......................................................................................................................................... 4

Global and regional trends ............................................................................................................... 5

Structural changes .............................................................................................................................. 8

Customer retention strategies ......................................................................................................... 9

Loyalty programmes ................................................................................................................................. 9

Shared voice and data plans ................................................................................................................ 10

Handset subsidies and flexible device upgrade programmes ................................................. 10

Unlimited voice and text ......................................................................................................................... 12

Multiplay offers ........................................................................................................................................... 12

Content bundling ....................................................................................................................................... 13

Mobile money ..............................................................................................................................................14

Insight: how will operators continue to fight churn? ................................................................ 15


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Executive summary

In the developed world, mobile markets have reached saturation point in terms of unique

subscriber penetration and connections growth. The challenge for operators has evolved

from attracting new customers to retaining existing ones. Various components have an

impact on churn and in this report we concentrate on the role of tariffs and services.

According to GSMA Intelligence data, global connections churn has been on a downward

trajectory since 2012. Yet, trends vary by region as churn has been declining in Asia

whereas in Europe and the Americas churn has remained somewhat flat. Our research

shows that of 130 operators who report churn figures on a regular basis, only 13 managed

to reduce total churn on a yearly basis since 2011. Most of these operators are based in

the developing world. The reduction in churn amongst these operators was either due to

structural changes in the market or retention strategies that operators have implemented.

Structural changes involve a number of market-level factors such as seasonality and SIM

registration or deactivation, which often imply a change in mobile operators reporting

policies. This has been the case in recent years for operators in countries such as Brazil

or India, while seasonality has created fluctuations in churn in certain countries such as

Russia.

Regarding customer retention strategies, our research shows that the most common

tariffs and services that helped to reduce churn included shared voice and data plans,

flexible device upgrade programmes, unlimited voice and messaging, multi-play bundles,

mobile money, content bundling and customer loyalty programmes.

As the industry is evolving towards data-centric tariffs and services, the biggest challenge

for operators is to engage with consumers and retain their loyalty by delivering more

competitive and innovative value-added services. While understanding consumer needs

remains essential to improve customer retention, other emerging tariffs and services are

likely to carry a long-term impact on churn, including new data roaming tariffs and mobile

authentication services.


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Introduction

Churn represents the proportion of SIM connections that are disconnected by an operator

for various reasons over a given period of time. This metric is expressed monthly and

is calculated by dividing gross disconnections by average total connections at the end

of the period. In this analysis, monthly churn figures reported each quarter have been

averaged to reach an average monthly churn for each year.

Churn is an important measure for demonstrating the stickiness of customers to their

mobile providers. Various components have an impact on churn trends, including quality of

service, device availability, pricing, upgrades and subsidies, as well as tariffs and services.

Average contract lengths and device subsidies are the two main variables that have

driven changes in churn levels over the past four years. In our report published in 2011,

we explained that operators in the developed world have been able to accelerate the

migration of prepaid customers to contracts (see Figure 1) and that the popularity of

smartphones has meant that operators have been able to lock-in customers to longer

contracts in exchange for larger handset subsidies. However, since then, the industry

has witnessed a widespread demand for contract-free offers and more flexibility around

device upgrades, while operators have been gradually rationalising and reducing handset

subsidies. These trends mean that the lifetime of the consumer is more challenging to

control and measure, forcing operators to seek innovative ways to retain customers. In

this context, the availability of relevant content and data services play an increasingly

important role.

In this analysis, we focus on how churn has been impacted by the introduction of innovative

tariffs and services, device upgrade programmes and structural market changes.

Figure 1: Contract and prepaid as % of total connections, developed world

Source: GSMA Intelligence

0%

40%

20%

100%

60%

80%

2008 2010 2012 2014

Prepaid

Contract


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Global and regional trends

Mobile connection churn figures demonstrate a shift in trend at the global level in recent

years according to GSMA Intelligence data. As shown in Figure 2, global connection churn

declined between 2012 and 2013, falling from the peak churn rate of 3.70% in 2012 to 3.12%

in 2013. This exhibits a change in connection churn rate pattern from the two years up to

2012, when the rate rose from 3.15% to 3.70%.

Figure 3 illustrates regional churn rates. A very similar trend to the global churn rate is

seen in Asia, where churn peaked at 4.53% in 2012 but has been on a downward trend

since then. In both Europe and the Americas, churn remained flat at the regional level

even though sub-regional trends varied.

Figure 2: Global monthly churn, annual average


Figure 4: Monthly churn, annual average, Europe


Figure 3: Regional monthly churn, annual average


Figure 5: Monthly churn, annual average, Americas


2010 2011 2012 20131.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Americas AsiaEurope

2010 2011 2012 20131.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Eastern Europe

Southern Europe

Northern Europe

Western Europe

2010 2011 2012 20131.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Latin America Northern America

2010 2011 2012 20131.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%


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Eastern Europe witnessed the highest level of churn in Europe between 2009-2013, as

shown in Figure 4. Despite the high churn rate at the sub-regional level, our data shows

that operators such as Globul (Telenor) in Bulgaria and MTS (Sistema) in Russia have

managed to reduce churn in Eastern Europe since 2010. Western Europe has the lowest

churn rate in the region whilst the churn rate in Northern Europe has been on a constant

downward trajectory since 2010.

Figure 5 shows a flat churn rate across Northern America with a slight reduction in 2011.

Also, despite the high churn trend in Latin America, our data shows that some operators

in this region have reduced their total or contract churn. For instance Vivo (Telefonica) in

Brazil has managed to reduce contract churn, which it attributed to improving network

quality and promoting innovative services.

Our analysis of the 130 operators who reported churn figures across developed and

developing regions indicates that 13 operators have clearly managed to reduce total

churn on an annual basis since 2011. The majority of these operators (8) are based in the

developing world (as shown in figures 6 and 7).

Figure 6: Monthly churn, annual average, selected operators, developing region


2013201220110%

2%

4%

6%

8%

10%

Armenia, OrangeArmenia, Beeline

Turkey, AveaRussia, MTSThailand, AIS

Latvia, Bite

Kenya, Safaricom

Malaysia, P1

Figure 7: Monthly churn, annual average, selected operators, developed region


2013201220111%

2%

3%

4%

Denmark, Telia

Norway, NetcomUK, Vodafone

UK, O2

Finland, Sonera


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Contract and prepaid churn

Our research shows that only 52 operators have reported contract churn on a quarterly

basis since Q1 2010, against 45 operators for prepaid churn. The annual weighted aver-

age of these figures (Figure 8), suggests that contract churn has remained flat between

2010-13 whereas prepaid churn peaked in 2012. The latter trend in prepaid churn is

mainly due to structural changes in mobile markets as explained in the next chapter.

201320122010 20110%

1%

2%

3%

4%

5%

Contract Prepaid

Figure 8: Prepaid and contract monthly churn, annual weighted average, selected operators


Overall, of the 52 operators that reported contract churn consistently each quarter, only

19 reduced their contract churn level between 2010-13 (Table 1). With regards to pre-

paid churn, of the 45 operators that reported prepaid churn, only 11 managed to reduce

churn each year (Table 2).

2010 2011 2012 2013

T-Mobile (Deutsche Telekom), Austria 1.10% 1.00% 1.00% 0.85%

Vodafone, Germany 1.43% 1.40% 1.36% 1.33%

Cosmote (OTE), Greece 2.18% 2.13% 2.00% 1.90%

Meteor (eircom), Ireland 2.46% 2.42% 2.38% 2.27%

Globe Telecom, Philippines 2.01% 1.84% 1.47% 1.42%

M1, Singapore 1.40% 1.35% 1.28% 1.25%

SingTel, Singapore 0.98% 0.95% 0.90% 0.85%

Orange, Spain 1.85% 1.78% 1.72% 1.70%

Far EasTone, Taiwan 1.71% 1.62% 1.57% 1.57%

AIS, Thailand 2.10% 1.93% 1.80% 1.68%

EE (Deutsche Telekom / Orange), UK 1.53% 1.35% 1.28% 1.20%

Sprint (SoftBank), USA 1.95% 1.86% 1.84% 1.83%

Table 1: Examples of monthly contract churn reduction, 2010-13 annual average, selected operators



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2010 2011 2012 2013

Cosmote (OTE), Greece 4.01% 2.42% 2.21% 1.83%

Idea Cellular, India 8.70% 10.40% 9.40% 5.18%

Bite (Mid Europa), Latvia 7.79% 8.67% 5.36% 4.96%

Orange, Poland 5.09% 5.29% 5.48% 5.00%

Cosmote (OTE), Romania 4.52% 4.38% 4.21% 3.84%

Movistar (Telefnica), Spain 3.97% 3.75% 3.28% 3.18%

AIS, Thailand 4.53% 4.60% 4.35% 3.15%

O2 (Telefnica), United Kingdom 4.08% 4.77% 4.42% 3.79%

Vodafone, United Kingdom 4.82% 4.90% 4.95% 4.01%

Cincinnati Bell Wireless, USA 6.20% 6.48% 6.18% 5.75%

T-Mobile (Deutsche Telekom), USA 7.31% 6.90% 6.40% 5.63%

Table 2: Examples of monthly prepaid churn reduction, 2010-13 annual average, selected operators


Structural changes

Structural market-level factors can drive fluctuations in churn trends. Such factors can

include seasonality, SIM taxation and changes in reporting policies such as a change in an

operators or regulators definition of active connections.

An example of the impact that SIM deactivation carries on churn patterns can be seen

in India over the period 2009-13. The churn fluctuations in India - the second biggest

telecom market in the world in terms of connections which are shown in Figure 9

weighed heavily on the global and regional mobile churn trends in the period of 2010-13.

The decline in churn noted in 2013 in the country countering the sharp growth in churn

rate that took place over the previous three years is mainly due to the change in the way

Indian operators defined active prepaid connections.

In 2010, the Telecoms Regulatory Authority of India (TRAI) changed the length allowed

for the activity period of each SIM connections to 90 days, from 180 days previously.

The TRAI calculates active SIM connections based on its Visitor Location Registry (VLR)

data, indicating substantial inactive connection bases when compared against operators

reported total connection bases.

Subsequently in 2011, TRAI reported that only 70% of the 850 million SIMs in India were

active hence an inactive SIM base in the country of nearly 250 million. As a result

the Department of Telecoms (DoT) revised its policy in terms of allocating the scarce

resource of new phone numbers to operators, with the offer of additional number series

to operators now based on the share of their registered connections that were actually

active.


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1%

2%

8%

7%

6%

5%

3%

4%

2010 2011 2012 2013

Figure 9: Monthly churn, annual average, India


This encouraged operators such as Bharti Airtel, Vodafone and Reliance Communications

to clean-up inactive SIMs from their connection bases, further contributing to substantial

declines in churn rates from 2012 onwards.

Similarly Thailands AIS has shown a significant reduction in churn since 2012, also mainly

due to changes in accounting policies. In their Q4 2013 report, the operator mentioned

the extension of prepaid SIM validity which was put in place by the regulator as the reason

behind the lower prepaid churn achieved in that quarter.

In parallel, market seasonality can cause fluctuations in churn trends. For instance, in

Russia, mobile operators explained that there is a high take-up of prepaid SIMs during the

third quarter of each year as a result of temporary workers migrating from CIS countries.

After the seasonal workers have returned to their home countries, Russian operators then

disconnect the inactive SIMs based on their prepaid activity period the definition of

which differs from one operator to another further leading to seasonal churn fluctuations.

Lastly, new regulations such as charging taxes on active SIMs can lead to SIM deactivations

that tend to trigger churn fluctuations. For instance, in Brazil, disconnecting inactive SIMs

was incentivised by the regulator through charging FISTEL taxes on all active SIM cards.

Customer retention strategies

By researching the operators who have managed to reduce churn in recent years we have

gathered a list of common successful retention strategies that are focused on tariffs and

services.

Loyalty programmes

In Kenya, Safaricom recently stated that their churn rate reduced as a result of rewarding

customer loyalty. They introduced a loyalty programme called Bonga for both prepaid and

contract customers in 2007. Through the Bonga loyalty programme customers can earn

Bonga Points as they use Safaricom services such as voice calls, data, text messaging and

M-Pesa mobile money transfer service. Bonga Points can be exchanged for rewards ranging

from voice minutes, data, SMS and MMS bundles to merchandise, and are redeemable at

any Safaricom Retail Centre countrywide.


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In Russia, MTS has witnessed a considerable improvement in its churn rate since 2010

by introducing different strategies to maintain its loyal subscriber base, as mentioned

in their Q4 2013 report. Tariff plans such as Super MTS, which include free calls to all

customers of MTS Russia with the option of having unlimited mobile Internet, have been

instrumental in creating and maintaining a loyal customer base though they were not

explicitly branded as loyalty programmes. Moreover, MTS is expanding its MTS-Bonus

loyalty programme through which Bonus points can be earned when customers buy a

phone from MTS shops, register with the programme, spend money with MTS, or invite

friends to register. These Bonus points can later be redeemed for packages of SMS, MMS,

voice or data, or gift certificates with some partners of MTS.

Shared voice and data plans

US operators such as AT&T and Verizon Wireless have noted an improvement in churn

since 2012, when they started offering innovative contract tariffs that allowed subscribers

to share minutes, texts and data allowances across multiple devices.

Verizon Wireless introduced its Shared Everything Plan in June 2012, which offered

unlimited voice minutes and text messages and a shared data allowance for up to ten

devices. Verizon has since upgraded and rebranded the Share Everything plan to More

Everything, adding new features such as unlimited international text messages and

cloud storage. 50% of the operators contract base adopted its More Everything plan as

reported in Q1 2014.

Similarly, AT&Ts Mobile Share Package offers unlimited voice minutes and text messages

and a shared data allowance for up to 10 devices. The operator mentioned shared plans as

a key driver for customer retention and reducing churn, claiming that about 90% of our

post-paid smartphone subscribers are on FamilyTalk plans (family plans), Mobile Share

plans or business plans, which provide for service on multiple devices at reduced rates,

and such subscribers tend to have higher retention and lower churn rates. AT&T reported

that in Q1 2014 nearly 33 million connections (about 45% of its contract base) were on

Mobile Share plans. They have also stated that the number of Mobile Share accounts

reached 11.3 million with an average of about three devices per account.

Shared data plans are also available in other markets, for instance through Teliasonera in

Sweden, EE in the UK, Telefonica in Spain and Brazil, and SingTel and Starhub in Singapore.

Handset subsidies and flexible device upgrade programmes

Handset subsides have traditionally played an important role in reducing churn, as well

as driving smartphone and technology penetration. Yet, device subsidies represent an

incremental cost that is weighing heavily on operator profitability, notably in the developed

region where smartphone penetration has reached high maturity levels.

Movistar (Telefonica) in Spain was among the first operators in Europe to remove handset

subsidies for new customers in Q1 2012 - a move that was only temporarily replicated by

its rivals. While the statistical correlation between handset subsidy cuts and an increase in


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churn or a reduction in connections market share cannot be demonstrated, it is believed

that the removal of handset subsidies negatively impacted Movistars churn initially.

Across the developed world, there is a clear trend that shows operators moving away

from subsidies, in most cases rationalizing subsidies towards high-end 4G devices on

contract offers, rather than eliminating it entirely. In the developing world, more operators

are seeking similar strategies, notably Oi in Brazil, which recently claimed that we have

pretty much removed handset subsidies. Meanwhile other groups such as Millicom are

rationalizing subsidies on par with the gradual availability of low-cost smartphones.

Managing churn whilst offering contract-free tariffs and reduced subsidies is a challenge

that operators have begun to address by introducing flexible device upgrade programmes.

T-Mobile US announced in March 2013 that it would no longer offer subsidized handsets

and would decouple the cost of handsets from its mobile tariffs. Furthermore, T-Mobile

introduced a service branded JUMP! that allows customers to upgrade their handsets

whenever they decide to. The operator recently announced that it has managed to reach

a record low contract churn rate of approximately 1.5% in Q1 2014, thanks to the success of

its Un-Carrier strategy. In Q1 2014, T-Mobile US stated that it had 5.3 million subscribers

signed up to its JUMP! programme.

In April 2013, O2 (Telefonica) UK introduced a new plan called O2 Refresh (Figure

12) which, similar to T-Mobiles plan, decouples device subsidies from service costs and

facilitates device upgrades. O2, which has the lowest churn rate amongst UK operators,

announced in their Q1 2014 report that the upgrade programme served as a retention

tool that led to a successful management of customer loyalty and a stabilization of

contract churn. In Q4 2013, O2 UK claimed that 56% of contract commercial activity has

been done under the Refresh proposition (+3 percentage points quarter-on-quarter).

Similarly, AT&T introduced a more flexible device upgrade plan branded Next - in Q3

2013 with a view to reducing churn. The operators Q1 2014 results show that its new

tariff accounted for more than 40% (2.9 million) of all smartphone gross additions and

upgrades.

Figure 10: O2 Refresh plan, UK

Source: Company data

02 Refresh

15.00Phone Plan

17.00Airtime Plan

+ = 32.00Monthly bill

Standard contract

?.00Phone Plan

?.00Airtime Plan


Phone PlanAll Paid

17.00Airtime Plan

= 17.00Monthly bill

?.00Phone Plan

?.00Airtime Plan


After

months24

We wont keep charging youfor your phone

Unlike a standard contract


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Unlimited voice and text

Offering unlimited calls and text messages along with several data allowance options is

a strategy that has been adopted by a number of operators to transition their business

model from a voice-centric model to a data-centric one. Operators such as Vodafone and

O2 in the UK see this as a way of hedging themselves from the threat of internet-based

messaging applications.

In March 2012, O2 (Telefonica) unveiled its On & On offering which included unlimited

mobile and landline calls as well as unlimited texts, along with 1GB of mobile data per

month. The offer was available for both contract customers and small businesses. O2

mentioned in its Q4 2012 report that the worry-free tariff of On & On is instrumental in

keeping churn low in the country.

Similarly, Vodafone launched its Red Plan in key markets such as UK, Germany and Spain

in the second half of 2012. In their Q2 2014 report, they announced that currently they

have 14.3 million Vodafone Red customers across 20 markets, which has helped them

improve their churn rate.

Vodafone first launched its new plan in the UK for contract customers as well as businesses

in September 2012. The Red contract plan included unlimited minutes and text messages

with data allowances of up to 2GB. As of March 2014, Vodafones Red connection base

reached nearly 2.7 million in the UK, contributing to a drop in churn to 2.70% in Q4 2013,

from 2.91% a year ago.

Multiplay offers

Convergence often helps to increase the lifetime of a consumer and trigger improvement

in churn trends. Multiplay offers help to lock-in customers on longer term contracts,

offsetting challenges in managing the lifetime of customers brought in by contract-free

offers and flexible device upgrade programmes.

In Spain, Telefonica launched its Movistar Fusin offer in October 2012, offering fixed

line, fixed broadband, IPTV and mobile voice minutes, SMS and data, all under a single

bill. Since then, the operator has witnessed a significant adoption of this bundle, and in Q1

2014, 50% of its mobile contract base was on Movistar Fusin tariff. The operator noted

that increased adoption of Fusin has led to a more sustainable revenue model, through

the continued improvement in our services lifetime thanks to Fusin churn, which is

notably lower compared to standalone services. Telefonica added that the lifetime of a

Fusin customer is much longer than customers on traditional mobile tariffs.

Similarly, in Thailand, TrueMove noted recently that its convergence campaigns

continued to receive strong market response, facilitating acquisition and retention in all

core businesses (Figure 11). TrueLife+ was launched in 2010 as the umbrella under which

True Group bundles its products and services. Over the past 12 months, TrueLife+ has

introduced several bundled packages and promotions, including free airtime, additional

and free TV channels, high-speed internet networks, unlimited free wifi and certain

discounts on services depending on eligibility.


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Figure 11: TrueMoves Convergence Index

customers (in 000s households)


Figure 12: KPN Groups multiplay customers

(in 000s)


0

1,000

500

3,000

2,500

1,500

2,000

Feb 12 Jul 12 Feb 13 Jul 13 Feb 14

2 products 3 products 4 products

0

200

100

800

500

600

700

300

400

Q1 2013 Q4 2013 Q1 2014

quad-play customers triple-play customers

Similarly, KPN Group stated recently that its focus on multiplay offers helps to increase

customer lifetime and to reduce churn, notably thanks to growth in the adoption of

quad-play offers (see figure 12).

Content bundling

Bundling mobile services with premium content is an innovative way of offering value-

added services and managing churn.

Singtel recently explained that one of the key initiatives that we will be rolling out

organically is in the video content distribution area, where we are working together with

our associates to come up with a video product for our smartphone customers in the six

geographies that we will be rolling out in the next financial year. Thats predicated on the

assumption, simple assumption, that if we give an affordable package of video content,

built through our postpaid and prepaid billing systems, we will be able to get traction and

market share.

In March 2012, KDDI introduced its au Smart Pass application and content bundles for

smartphone users - offering with the operator claiming that we are working to acquire

new customers and lower the churn rate as customers subscribe to cross-selling, thereby

expanding the customer base. As of Q2 2014, KDDI has reached 10.7 million au Smart

Pass subscriptions and has begun providing coupons and other benefits when customers

use au Smart Pass and au WALLET in combination. The operators au Smart Pass

includes a number of content bundles (music, video, ebook store, enabled by its secure

authentication system (au ID) charged for a fixed monthly fee).

In Sweden, Teliasonera started a partnership with Spotify - a leading provider of music

streaming in 2009, and has since expanded this offer across other markets such as

Finland and Denmark. The operators strategy was to generate an additional revenue

stream as well as building more customer loyalty. Telia (Teliasonera) in Denmark mentioned

that bundling offers with Spotify helped them reach an all-time low churn rate in 2012.


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Figure 13: KDDIs au Smart Pass ecosystem

Source: Company data (Q4 2013)

Moreover, Vodafone UK offered a range of premium content through partnerships with Sky

Sports and Spotify when they launched LTE services and Red 4G-ready plans in the UK in

August 2013. A free six-month subscription to either Sky Sports or Spotify Premium was

included in the Red 4G-ready plan. Vodafone reported 637,000 4G customers in Q1 2014,

of which 48% have activated the sport and music offers. They have recently partnered

with another well-known content provider, Netflix, offering Red 4G-ready customers a

free six-month access to a wide range of movies and TV series.

In Brazil, Vivo (Telefonica) stated that they have managed to reduce their contract churn

by promoting innovative services. They recently introduced two new content services -

Vivo Musica and Vivo Sync. The former is a music streaming service run by Napster,

which can be added on top of monthly bills and does not include advertising. Vivo Sync

is a service for storing, synchronising and sharing contacts list, photos, videos, calendars

and files among tablets and smartphones with the Android, iOS, BlackBerry and Symbian

OS, as well as Windows and Mac computers.

Mobile money

Mobile money enables customers to convert cash to and from electronic value (e-money)

as well as transferring or making payments. Vodacoms mobile money financial service,

M-Pesa, operates across several markets and reached close to 6 million customers in Q1

2014. The operator noted that financial services such as M-Pesa also keep customers on

our networks, which reduces churn. In Kenya, Safaricom saw its blended churn drop from

2.57% in Q1 2011 to 1.61% in Q1 2014.

In Somalia, Telesom launched its mobile money service - ZAAD - in June 2009. Various

types of transactions including transfers, purchases, fee payments, salary payments and

cash storage were facilitated via ZAAD. Telesom managed to reduce its customer churn

rate to 2% in 2013 from the high rate of 5% prior to launch of ZAAD in 2009.


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Insight: how will operators continue to fight churn?

In our 2011 report, we stated that demand for data services will trigger the introduction of

new tariffs and services which will have an impact on churn in the long-term. At the time,

we predicted that having the most competitive data package extends much further than

simply having the best value tariffs. As apps and other forms of data content become

increasingly important to subscribers, operators that are able to offer the latest killer

app or other value-added services could be in the best position to attract a competitors

subscribers to churn, especially those which can offer the content on an exclusive basis.

Reflecting back on these predictions, we believe that several operators have followed

the route described above over the past four years, considering data and content as key

differentiators. Some of the examples of new tariffs and services described previously

clearly illustrate this trend, and we expect that complementing tariffs and services with

localised content will continue to positively impact operators competitiveness in the near

future.

As an example, KDDI in Japan is focusing on its Smart Relations Concept aimed at

enhancing the relation between smartphones and real life. The operator added that

we will continue to propose a number of ways in which people can make the transition

from owning smartphones to mastering their use. We expect that more operators in

the developed world will continue investing in value-added services to boost the level

of consumer engagement with mobile applications and content, leading to improved

customer retention.

Similarly, we anticipate that the changes that operators are introducing to data roaming

tariffs are likely to play a role in competitiveness and can positively impact churn. Following

regulatory decisions in Europe, several operators have reduced roaming prices, e.g., Three

in the UK, which offers a Feel at Home data roaming tariff that lets its customers use

their home allowance of minutes, texts and data in 16 selected countries. T-Mobile US has

also introduced its Simple Choice plan, offering unlimited global data and texting across

100 different countries. Back in Europe, Orange recently explained that they are using

new roaming tariffs to stand out from competition to attract customers, and ultimately

fight churn.

Orange also stated recently that there is room for customers who want a different

service, who want a better product, who want more abundance, more flexibility, more

comfort, more user-friendliness, better connectivity, better network performance, who

want appealing rates, better roaming rates. This reflects the different components that

operators have to tackle to improve churn, showing the importance of innovative and

competitive tariffs and services.

In addition, the growth of connected devices within the internet of things (IoT) space

opens up new market opportunities for mobile operators. Embedded SIM provides a global

remote provisioning platform for the M2M technology, and this is likely to impact churn

trends in the M2M/IoT market as it will enable over the air installation and management

of operator profiles. Providing new internet of things services that can be tied in with

customers mobile contract is expected to influence customer loyalty and subsequently

could help to fight churn.


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Lastly, another trend related to tariffs and services that we believe will play a role in

improving churn rates in the near term is the introduction of mobile authentication services.

Orange recently claimed that an important emerging trend is the need for digitisation

and need for web-based relations with customers. Improving churn in the long-term

essentially means that operators have to stand out in this global competition, according

to the operator, and the fact that smartphones are considered to be the remote of life

shows the role that mobile identity services can play in achieving this goal.

Meanwhile, Axiata stated last year that utilising the Dialog identity across multiple

third party sites will contribute significantly to churn reduction. Dialog Connect is a

mobile authentication service launched by Axiatas subsidiary in Sri Lanka (Dialog), and

has amassed more than 400,000 subscribers since its launch in 2012. These services

notably supported by the GSMA-backed Mobile Connect initiative are expected to

become significant customer retention management for operators looking to invest in

safeguarding consumers personal data.

Similarly, KDDIs content bundle offering au Smart Pass - is relying on its authentication

system au ID to function. As of May 2014, au ID also enables the operator mobile money

service, au Wallet. The operator recently added that during the fiscal year ending March

31, 2015, we expect to cultivate a new value chain that will emerge via the convergence of

the Internet and physical worlds through links between au Smart Pass and au WALLET,

thereby contributing to the expansion of ID x ARPU. This shows the importance of

mobile identity and authentication services to improve customer engagement, retention

and ultimately improve revenues.


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About the authors

Nika Naghavi Analyst

Nika is part of the forecasting team, responsible for the modelling

of mobile operators connections and technology trends. Prior

to GSMA Intelligence, Nika completed her PhD at the Centre for

Telecommunications Research at Kings College London. She also

holds a BEng (Hons) in Telecommunications Engineering from Kings

College London.

About GSMA Intelligence

GSMA Intelligence is the definitive source of global mobile operator data, analysis and

forecasts; and a publisher of authoritative industry reports and research.

Our data covers every operator group, network and MVNO in every country worldwide

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GSMA Intelligence 2014. Unauthorised reproduction prohibited.

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