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The convenience of retaining the mobile number while having the liberty to move to the network of choice promotes and protects the interests of subscribers. It also reinforces the availability of a wide range of high quality, efficient, cost-effective, and competitive telecommunication services and promotes rapid modernization of telecommunication systems and services. Mobile Number Portability (MNP) also allows the new market entrants to compete with the incumbent operators on a level playing field. Due to these benefits of MNP, two new entrants in Pakistan's mobile market, Telenor and Warid, constantly advocated the introduction of this service.

According to Telenor and Warid, Pakistan was an ideal case for MNP. “For growing markets like Pakistan, MNP implementation can stimulate a noticeable change to the offerings of the mobile industry by virtue of flexibility, which is subscriber-oriented, enabling the subscriber to switch their mobile network service provider without requiring a change in their existing mobile number, thereby promoting a competitive environment,” says Omer Haider, general manager, Govt Relations and Regulatory Affairs, Warid Telecom. “The presence of six mobile operators-with different market share and network coverage and a diversified set of value-added services with highly competitive tariff packages-has the potential to attract the subscriber to switch to network that offers the best combination to suit the subscriber's requirements. MNP can generate a stir in the overall quality of service (QoS) offered by the players in the cellular network industry of Pakistan,” he further adds.

Syed Hasnat Masood, director, Corporate Communications, Telenor Pakistan, also echoes the same tune. “The primary intention behind MNP was to provide customers the liberty to choose any network without letting go of a particular mobile number, including the code. That makes the competitive environment fairer than before, since now the customer is not forced to stay with an operator because of the number consideration,” says Masood.

MNP Makes an Entry
MNP was introduced in Pakistan on March 23, 2007. Pakistan Telecom Authority, the regulatory body for the telecom industry, announced that if subscribers port their number, they would have to stay with the new operator for a minimum period of six months. For every number ported out from a donor operator to a recipient operator, the recipient operator pays Rs 500 as inter-operator settlement.

Realistically speaking, it takes about 3-4 days in the case of a prepaid number to be ported out and ported in; and in the case of a postpaid number, it takes, on average, 9-10 days due to related financial settlements. Besides, the user has to complete certain formalities such as filling out a form at the walk-in-centers or franchises at the end of the recipient operator, submitting NIC copy, paying a processing fee, and additionally clearing dues in the case of a postpaid number. “Once acceptance is received from the donor operator‚ subscribers will be able to port their number within a few hours, or few days. Normally, donor operators will be able to send acceptance for prepaid numbers in about a day. But, actual porting time may depend on the type of connection and any contractual or financial obligations customer may have to fulfill toward the donor operator,” says Haider.

After the introduction of MNP, Pakistan's operators formed a consortium and promoted a company, Pakistan Mobile Database, to handle porting requests. The operators invested around $1.54 mn (about Rs 6 crore) in establishing the system.

Before and After MNP
Pakistan is one of the fastest growing mobile markets among the emerging telecom markets. According to a study by Deloitte, the mobile sector contributed a total of Rs 312 bn to the economy in 2006, representing more than 5% of the GDP. Deloitte further explores that mobile communication in Pakistan has raised the GDP growth rates by 0.12% for every 1% increase in penetration. As a result, the increase of about 28 mn in mobile subscriber base in 2005-06 may have contributed 1.7% of the country's GDP growth. During this year, the mobile sector grew by 80% whereas the average growth rate in the last four years has been over 100%. The total mobile subscriber base till August 2007 was 68.5 mn as compared to 34.5 mn and 12.7 mn in 2006 and 2005, respectively. This growth is attributed to many internal and external factors like deregulation, implementation of mobile number portability, etc.

Pakistan's mobile industry is witnessing increasing net additions to the total subscriber base for the last five years. According to a Pakistan Telecom Authority (PTA) report, the net addition was more than 21 mn in 2006, indicating 1.75 mn average additions per month. In 2007, the net addition was more than 27 mn. In terms of revenue, with 78% increase in subscriber base and 95% increase in investments, mobile revenue grew by 48% in 2006-07. The mobile industry was growing at an average rate of 80% till 2006; however, the growth rate dropped in 2007.

Following the normal trend, the industry is moving toward stability and the cost of attracting and retaining subscribers is increasing. Telenor and Warid have witnessed huge growth in their revenues, which have grown by over 200%. Revenues of Mobilink and Ufone grew at a proportional rate. Despite this, Mobilink sustained its position as a major contributor to the total revenue of the industry, with almost 50% share due to its sizeable presence. There was a decline in Instaphone's revenue for another year in a row. Out of the total industry revenue, more than 90% came from voice services and almost 5% from data services.

For analyzing the after effects of MNP, we will have to look at the statistics in a different way. Out of the total 68.5 mn mobile subscription, 66.6 mn are prepaid users and only 1.8 mn are postpaid users. This ratio is acting as a big deterrent for MNP.

In general, postpaid users are considered to be serious users since they are fixed customers for any operator. They have fewer tendencies to change their numbers in comparison to prepaid users. In terms of individual performances of the companies, the total number of subscribers of Mobilink, the largest operator, increased by 50% (9 mn). Despite such a substantial rise, the total subscriber base of Mobitel decreased from 50% in 2006 to 41% in 2007. This clearly indicates that Mobitel acquired new customers but also lost a good chunk of its existing customers, and a part of this can be attributed to MNP.

Ufone, the second largest operator, has seen an increase in subscriber base by 85% in 2007 but its market share remained constant at 22%. There are two operators in Pakistan that started their operations in 2004 and have grown remarkably during the last three years. Telenor not only added almost 7 mn subscribers in 2007 but also improved its subscriber share to 17% in 2007. It seems obvious that Telenor acquired maximum customers lost by Mobilink. Telenor offered better quality of service and features like fast Internet access through their networks. At the time of introduction of MNP, Telenor was the only company with its whole network completely EDGE-enabled. The company has largely attracted the upper-level business users by these offerings. Undoubtedly, Telenor is the largest beneficiary of MNP.

The second operator in question is Warid Telecom. Like Telenor, Warid also registered high growth after commencing services in the Pakistani market. The market share of Warid stood at 17% in 2006-07, up from 14% in 2005-06. In 2006-07, these two were the only operators that increased their subscriber base. They added more than three million subscribers in the last six months alone.

Low on Expectations
The first six months after the introduction of the MNP is considered to be the deciding factor for any market because this is the time when maximum users port their number. For obvious reasons MNP has made a transformation in the market but against the normal expectations, it has not happened in a big way. In a market of more than 60 mn subscribers, the transfer rate has been less than 1%. Operators blame this on the low awareness about MNP in the market. “Customer awareness remains very low as no mass awareness and effective advertisement campaigns have been executed by the regulator or the operators. Without public awareness, the true potential of MNP has not been fully realized,” says Haider. “With increased awareness about MNP, we will see greater impact on porting, quality of networks, and customer services,” agrees Syed Hasnat.

The immediate effect of MNP is the improvement in the quality of service of all the providers. To compete with new players like Warid and Telenor, Mobilink has improved its quality of service exceptionally. The focus has shifted from addition of new customers to retention of existing customers.

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