Telecoms Loyalty and Churn

Trends from European Markets

Thierry Dieu, ETNO

Moscow, 5 December 2012

Telecoms loyalty: growing churn rate in Europe

/GSMA

Higher churn rate than for other utility sectors

Number of customers who changed operator in the past year

/GSMA

The European context

Highly competitive telecoms markets

Pro-competitive and consumer-friendly policy

Rapidly changing consumer habits/ crisis?

The European context (2)

Highly competitive telecoms markets and wide consumer choice• More than one hundred mobile network operators + mobile

networks virtual operators (Germany: 150/ France: 42/ UK: 60)*

• More than a thousand fixed voice and Internet Service providers

• Competition from alternative platforms (cable) and online platforms (VoIP)

Source: GSMA

EU Legislation encouraging competition and consumer choice

Number portability: A right of European consumers to change, in 1 working day, fixed or mobile operator while keeping their old phone number.

Contract terms: Maximum initial duration of a contract signed by a consumer with an operator will be no longer than 24 months. Operators must also offer consumers the possibility of agreeing to a contract with a maximum duration of 12 months.

Consumer information: consumer contracts must specify information on the minimum service quality levels, as well as on compensation and refunds if these levels are not met, subscriber's options to be listed in telephone directories and clear information on the qualifying criteria for promotional offers.

Consumer satisfaction elements

Basic requirements• Coverage• Security• Quality of service/ delivery

Competitive advantages• Customer care• Tariffs • Rewarding loyalty

Offers adapted to consumer trends

Bundling: Link/ access to favourite services/ contentMobility/ convergenceQuality of service

43% of EU households subscribe to bundles

Future trends

Energy efficiency

CSR

Bundling with own apps

**

* Includes Orange Polska **Includes Deutsche Telekom, Hrvastki Telekom, Magyar Telekom, Makedonski Telekom and Slovak Telekom *** Includes Telefonica Czech republic

*

ETNO observers:

***