Subscribers leaving Hot Mobile
Hot Mobile has by far the highest churn rate among the mobile carriers.
Golan Telecom won a crushing victory in July, recruiting a net 10,200 subscribers, compared with 3,000 net new subscribers by Hot Mobile. Hot Mobile’s serious problem is the size of its churn rate, because it is actually able to win slightly more subscribers than Golan Telecom. The churn rate is very serious, and it seems that the carrier has been unable to deal with the problem, which has lasted since the beginning of the year.
Hot Mobile attributes the churn to the efforts by the veteran carriers, which contact every subscriber who leaves with win-back offers. But even if this were true, it cannot explain why the churn rate at Golan Telecom and the other carriers is so much lower, since the veteran carriers target win-back offers at them as well.
It is hard to avoid the impression that the decline lies in Hot Mobile’s quality of service, following the merger process with its parent company, Hot Telecommunication Systems Ltd. (TASE: HOT.B1), and that the huge organizational change that the companies are undergoing following the cutbacks in staff and managers is reflected in the high churn rate.
There was a major change in the movement of subscribers among the veteran carriers, especially at Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), because Israel Corporation (TASE: ILCO) is switching from Cellcom to Partner. The result is that Cellcom had a net loss of 12,700 subscribers in July, and Partner had a negligible net loss of just 330 subscribers. Israel Corp. and Partner’s ability in keeping subscribers through 012Mobile, greatly reduced its churn rate. 012Mobile executives say that it has become the biggest subscriber recruiter in the business: only 30% of its subscribers are Partner subscribers, and the rest are external subscribers. Since Partner does not officially disclose 012Mobile’s figures, it is hard to confirm the claim, and the other carriers cast great doubt on it, saying that the proportion of 012Mobile’s subscribers who are Partner customers is much higher.
Pelephone Communications Ltd. did well in July, and apparently stemmed its rising churn rate of the preceding months. The carrier claims that it succeeded in stopping fictitious switches to other carriers, which had affected it in the preceding 2-3 months. It only lost a net 1,600 subscribers in July, no small achievement.
Among the MVNOs, the trend in July was about the same as in the preceding months. YouPhone gained a net 3,000 subscribers, and Rami Levy Communications lost another net 1,100 subscribers. Home Cellular lost a net 100 subscribers.
All in all, notwithstanding the continued competition in the mobile market and the very low prices, there has been a marked slowing in the rate of customers switching carriers. The churn rate at Hot Mobile stands out, because at the current rate, the carrier will find it very difficult to return to its recruitment levels of the last few years, which means that it is highly doubtful if the carrier will reach its target of one million subscribers.
Another point which should be taken into account is the total number of subscribers at each carrier, which is not reflected in the churn rate. Some carriers emphasize total recruitment rather than switches from other carriers, because this lets them show that their total number of subscribers at the end of quarter is fixed; in other words, they are recruiting new subscribers, but not from other carriers. This claim is mainly made by Cellcom, which says in quarterly notices to the TASE that it is the carrier which recruits the largest number of new subscribers, so subscribers switching from other carriers are less representative of the true situation at the company.
Published by Globes [online], Israel business news – www.globes-online.com – on August 1, 2013
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