Consumer Issues Relating to Cellular Services Talaat Laham CEO & Chairman 5 November 2002.
5 November 2002 Public hearing: Consumer issues relating to cellular
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Transcript of 5 November 2002 Public hearing: Consumer issues relating to cellular
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5 November 2002Public hearing: Consumer issues
relating to cellular
Phuthuma Nhleko
CEO: MTN Group Ltd
Sifiso Dabengwa
MD: MTN (Pty) Ltd
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Contents
A. MTN Group Ltd
B. Focus on customer services
C. Decreasing trend in cellular tariffs
D. Network performance
E. In summary
F. The way forward - MTN Recommendations
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A. MTN GROUP LTD
Name change on 14 October 2002 MTN Group common bond/vision within group companies MTN Group Ltd - holding company with 3 divisions
Mobile Telephone Networks (South Africa) MTN International Strategic investment division
MTN Group provides a varied basket of communications services in 6 countries across Africa African multinational in tune with the communications needs of the 21st century
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MTN’s Other Networks(Total Pop = 202m, 30% of the continent’s population)
40m
120m
16m
23m
8m
1m
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MTN’s Impact in Africa (Teledensity)
29.9%0.83%$ 480 Million
as at 31 March 2002MTN NIGERIA
41.4%3.18%$ 100 MillionMTN CAMEROON
55%9%$ 35 MillionMTN SWAZILAND
71%1.06%$ 35 MillionMTN RWANDACELL
52.9%1.78%$ 95 MillionMTN UGANDA
27%32%$1,4 BillionMTN SOUTH AFRICA
MTN’S CONTRIBUTION
TOTAL
TELEDENSITY
Cumulative Investment
MTN OPERATION
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Contributions to the SA economy
MTN’s contributions to fiscus and economy 1995 - 2001
Licence fee R100m Annual NOI licence fee R 883m Annual Spectrum fee R42.7m Taxes R2bn JEDP R22bn Corporate Social Investment R80m__ Total R25.2bn
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B. Focus on customer services
MTN SA vision
Measuring customer
satisfaction
Taking complaints seriously
Customer care facilities
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MTN South Africa
VISIONTo be the industry leader through customer intimacy First for customer service Deliver above average returns South Africa’s most admired
brand Employer of choice
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MTN South Africa subscriber numbers
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
1995 1996 1997 1998 1999 2000 2001 2002
Pre-paid
Contract
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Measuring customer satisfaction
Customer Satisfaction Index (CSI) Measured by Proactive (independent company)
Computer Assisted Telephonic Interviewing
1 500 randomly picked subscribers interviewed quarterly
Respondents asked to rate services on 10 point scale, converted to a percentage
Continues process to improve customer satisfaction
Independent survey shows MTN customer satisfaction performance more than 85%
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Complaints are important
Formal structure for dealing with customer complaints Complaints Management Process Root Cause Analysis Process
MTN employs more than 1 000 customer service agents
Ongoing assessment of all our customer facing process Continuous process re-engineering Three call centers
– Gauteng– KZN (recent addition)– Limpopo (recent addition)
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Customer care facilities
24 hour, 7 day available customer care facilities Problem resolution
Information provision on handsets, products & services
Complaints management
Billing and account inquiries
Service activation
Directory enquiries
Emergency services
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C. Decreasing trend in cellular tariffs
MTN tariffs have decreased in real terms over time
Annual tariff increases Tariffs in context MTN - average prepaid prices Internal input costs External input costs Macro economic conditions influence
foreign & local investor confidence Tariffs versus services SA mobile market compares
favourably
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MTN tariffs decreased in real terms
CPI vs. Annual Average Increases (AAI)
0
2
4
6
8
10
1999 2000 2001 2002
Year
%
CPI %
AAI %
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Annual tariff increases
Annual tariff increases approved by
ICASA
Increase in tariff basket no more than
year on year CPI
CPI linked to inflation
Actual increases below CPI
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Tariffs in context
Tariffs should not be looked at in isolation, but should be seen in the context of Total customer satisfaction - cost, quality & coverage
area
Total cost of ownership - handsets, line rental & airtime
Basket of services available
Capital invested
Tariffs are cost based but also reflect market dynamics Investor/shareholder expectations
Competition & regulation
Customer expectations & affordability
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Internal input costs (more controllable)
Network costs Service Provider discounts Connection incentives COS (mobile phones & SIM cards) Opex:
Salaries & staff costs Site build leases Leased transmission costs (Telkom) Maintenance Marketing costs Sales costs Travel Training
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External input costs (less controllable)
Licence fees (up-front & annual) Spectrum fees (e.g. 1800) Interconnect rates Rates & taxes Roaming costs Universal service obligations Contributions to USF Emergency centres & free emergency calls Devaluation of the Rand against the US$ &
€ Cost of handsets Compliance with regulatory requirements
(not only telecommunications)
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Tariffs versus services
Mobile information value added services have become numerous and varied
50 ICE consumer services eg:– Ringtone & logo– Voice chat– ICE man menu– SABC competitions
10 MTN branded VAS services eg:– Directions – Legal assist– Tax assist– Wake up call– Computicket
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0
100
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300
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500
600
700
800
900
Cze
ch
Hun
gary
Mex
ico
Por
tuga
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Pol
and
Irel
and
Japa
n
Fra
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Tur
key
Aus
tral
ia
Can
ada
S/A
fric
a
Kor
ea
New
Zea
land
Aus
tria
OE
CD
Ger
man
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Gre
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UK
EU
Bel
gium U
S
Spa
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s
Sw
itzer
land
Luxe
mbo
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Ital
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Nor
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Sw
eden
Fin
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Usage
Fixed
OECD basket of consumer mobile phone charges - August 2000
SA assumes business time package, 25min per month each on peak and off peak.
OECD basket assumes 50min per month
*Source: OECD Cellular mobile pricing structures and trends, May 2000
Comparison to tariffs with OECD
US
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The South African market compares favourably with those of other equivalent economies, with significantly lower barriers to entry and tariffs
than most emerging economies.
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D. Network performance
Network coverage Network quality External influences on network
quality RF interference problems MTN SA subscriber numbers Overview - network quality
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MTN Coverage (October 2002)Country Area - 1 225 020 km2
Total Coverage - 885 666.85 km2
Land Coverage - 794 104.71 km2 (70% of land)
Sea Coverage - 91 562.14km2
Total Population - 44 million
Population Covered - 39 724 548 (96% of pop)
70% of land area covered.
96% of the population.
4000 sites.
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Mobile penetration by country
Country GDP US$ bn Population PenetrationRSA 1,968 44 million 22%
Mexico 6,304 101 million 23%
Venezuela 6,957 25 million 26%
Brazil 2,742 172 million 17%
Thailand 1,919 63 million 15%
Egypt 1,260 66 million 6%
China 909 1,290 million 13%
Globalweightedaverage
6,213 4,529 million 21%
Merrill Lynch Wireless Matrix - 1Q02 - 7 June 2002
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MTN Network Performance All hours
0
0.5
1
1.5
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2.5
Ma
y-0
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Jun
-01
Jul-
01
Au
g-0
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Se
p-0
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Oct
-01
No
v-0
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De
c-0
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Jan
-02
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b-0
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Ma
r-0
2
Ap
r-0
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Ma
y-0
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Jun
-02
Jul-
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g-0
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Month
Pe
rce
nta
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Call set up failures
Drop calls
Congestion
Licence obligation “at least 2% grade of service”
Network quality
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Busy hour drop call rate
Drop call rate reduced by 233% over 9 years. (25% per year)
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Busy hour Radio Congestion
Congestion sustained for last 18 months at 0.2%. (90% lower than license requirement)
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External influences impacting on network quality, no of dropped calls, interference & congestion
Site acquisition is becoming increasingly difficult Lack of infrastructure
Electricity - Eskom can’t always supply in rural areas Transmission - obliged to use Telkom fixed links Access - access roads in deep rural and hilly/mountainous
areas prohibitively expensive Interconnection - Suitable Points of Interconnect not
always available from Telkom Spectrum costs & availability
900 MHz allocation inadequate given size of subscriber base Need for 1800 MHz but prohibitively expensive & still used
by others Continuous rise in network & equipment costs as R
depreciates against US$ & € Handset quality (grey products & illegal imports)
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RF Interference Problems Various external RF interferers
Cellular jamming devices Cordless phones Remote security video cameras Mobile pay point systems Various still to be identified (in hand with ICASA) Shielding by large structures e.g. trucks
Difficult and time consuming to trace MTN has no legal right to shut interferers down Report interference problems to ICASA
Lengthy process ICASA under staffed in many areas – could take up to 6 months or
more to resolve cases ICASA depend on legal system to gain access to sites – court orders
etc. Low percentage of reported cases resolved to date
Control on importation of illegal equipment very difficult Expensive test equipment required to perform
interference investigations
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Overview - Network quality
All hours%
Busy hour%
Paging Success 95.6 95.5Location Update performance 98.9 98.1Random Access Performance 99.0 99.0SDCCH Drop Rate 0.78 0.93TCH Assignment Success Rate 99.7 99.7TCH Dropped Call Rate 1.75 1.76TCH Erlang Minutes Per Dropped Call 63 65TCH Congestion 0.26 0.27Handover Success Rate 95 95
Network quality key performance indicators
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E. In summary
Tariffs & handset costs have decreased in
real terms while the range of applications &
solutions have increased
MTN network quality & coverage is world
class
Customer satisfaction is of paramount
importance to MTN
Operational success despite challenges
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F. The way forward - Recommendations
Industry standards & benchmarking by ICASA Consumer protection regulations Strengthen ICASA - capacity & financial Enhance consumer awareness with all
constituencies eg: Telecommunications operators ICASA DoC
Develop a national legislative framework to alleviate excessive site approval constraints
Accelerate ICT strategy implementation in especially local manufacturing
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Mobile “the African solution”