Cash saver

With ARPUs falling and competition growing, operators are increasingly looking at retaining existing customers, as well as winning rivals’ subscribers, as a means of growing their business.

Allowing for the confusion caused by individuals with two or even three handsets each, and holiday makers and visitors who have long since discarded their Sim cards, the number of new mobile customers left for operators to fight over is, on average, decreasing.

Mobile penetration levels in the Middle East are well documented, widely discussed and often disputed. Despite quibbles over the exact numbers of mobile phones per head of population, one fact appears to be inescapable – saturation levels for GCC countries have either smashed through the 100% mark, or they are about to breach it.

The dearth of new connections has prompted a surge in overseas activity, with Middle Eastern giants Zain and Etisalat both expanding into Africa where penetration rates remain as some of the lowest in the world.

New products, such as mobile broadband devices have also given networks an additional revenue stream, now that the traditional area of growth of mobile has slowed down.But despite the distractions of the scramble for African and moves towards mobile computing, operators cannot afford to neglect their home market, where competition continues to heat up.

“This year is about waking up. [Consumers] are more conscious of what they can ask for and what they can get,” says Philippe Vogeleer, chief strategy officer for Jordan Telecom Group, an arm of French group Orange.

Customer retention has become more of an issue, Vogeleer says, particularly in the Jordanian market where churn levels have increased “dramatically” – by as much as 5% over the last year.

“Customers in the market are much more conscious today. People understand that products are comparable, and unless you add something, they judge on price,” he says.

While churn levels are still some way off those experienced by European operators, network operators in the Middle East acknowledge it is becoming more of an issue as the market matures.

Chief marketing officer for Saudi operator Mobily, David Murphy, says churn in the GCC region currently averages around 13%. “The Middle East and North Africa region is at around 31%, compared to a world average of around 30%,” he says. “Next year we expect it to go up to around 20% in the GCC. In Saudi Arabia, we’re seeing around 10% in 2008, and we expect it to rise to 18% in 2010.”

Peter Kaliaropoulos, CEO of Batelco, claims it is not a problem for incumbent operators. “If you are a new player, most likely you will experience a lot of churn - people will try your product and they will move away if they don’t like it. If you are an older player and people don’t like they will already have moved away,” he says.

Monitoring churn

Although Murphy describes the Saudi Arabian market as “skewed” by the 5m people that he estimates visit the country for the annual Hajj pilgrimage, Mobily takes the job of monitoring churn seriously.

“We’ve identified an algorithm that spots a trend in reduced activity, which causes a flag to go up in the system,” Murphy explains.

By identifying trends of customers who have left the network in the past, staff at Mobily can spot a customer that is likely to leave the network and offer them a retention deal to persuade them to stay.

“A lot of the time, they say I’m moving out of the region, or they may say they want this or they want that, and the customer service advisor can work something out with them,” Murphy adds.

For operators in other, less saturated Middle Eastern countries, monitoring customer’s behaviour appears to be less of a priority. Ross Cormack, CEO of Omani operator Nawras, says his company prefers to focus its energies elsewhere. He says: “What we’ve concentrated on is increasing the level of service we provide, so that people don’t feel the need to leave, so we measure in great detail the quality of service that we offer.”

Operators in the region say that, rather than customers abandoning their network for a rivals’, a more pressing concern is maintaining the business of customers who use multiple Sims.

Cormack thinks it is a trend that needs to be addressed as it is here to stay. He says: “I think that is going to be the most likely model in the future - people are likely to have different Sims from different providers for different types of service.

“The jobs of companies like ours is to make the services, and they way we deliver those services, compelling enough that people want to pop your Sim in their phone,” he adds.