Mobile operators wasting billions on churn

Unnecessarily high customer churn is costing Europe's mobile operators billions in lost revenues, according to research from Analysys.

The analyst firm found that churn above best-practice levels in 2003 cost European mobile operators €4.5bn in unnecessary expenses and €5.6bn in lost revenues, equivalent to 8.6 per cent of total mobile revenues.

The Analysys report noted that a low churn rate relative to those of competitors in mobile markets is a crucial factor for successful mobile providers.

"We have observed churn rates as different as 17 per cent and 35 per cent in the same market," said report author Eddie Murphy. "Control of churn relative to the rest of the market will become a key differentiator between the successful operators and the 'also rans'."

With Western European markets becoming saturated, and many countries seeing the arrival of additional competition in the form of 3G entrants and/or mobile virtual network operators, the management of churn is more important than ever, Analysys said.

"How good operators are at retaining their existing customers will be critical to determining which operators will weather the storm and which operators will go into decline," concluded Murphy.