MOBILE OPERATORS FAILING TO COLLECT 5 % OF CUSTOMER BILLINGS
UNPAID BILLS MEAN $26 BILLION WRITTEN OFF EVERY YEAR
Mobile Operators Failing to Address Revenue Management and Collection Issues
Bristol, UK, 20 February 2006 – Unpaid bills and defaulting customers are costing mobile operators around $26 billion* every year with around 5% of total billings being written off annually, a survey of operators around the world has revealed. This is one of the main findings of research Talgentra has conducted in conjunction with telecom analysts, Analysys, into customer revenue management and debt collection at mobile operators around the world.
“Customer Revenue Management and Debt Collection: a global survey of telecom operators” also showed that operators would benefit from the development and use of country-specific databases of defaulting customers. This would enable operators to identify persistent “won’t pay” defaulters who know that taking legal action would cost the operators more in legal costs than the amount due.
One of the key reasons identified for the high write-off figures is that the collection of monies due on unpaid bills often falls between the responsibilities of different departments within an operator - which indicates that a cohesive revenue management strategy is not in place. This uncoordinated approach is directly affecting the bottom lines of operators.
The survey was conducted in December by independent research company Analysys Research and Talgentra, a specialist in customer management, billing and revenue collection systems. A copy of the report can be found at
Luc Altmann from Analysys, said: “Traditionally the telecoms industry has tried to recover monies owed by relying on traditional mail and phone techniques followed by contract cancellation and disconnection. This approach is becoming untenable - in deregulated markets and with mobile phones often replacing fixed lines, the threat of disconnection is no longer as strong as it was. It is easier than ever before for customers to switch between providers, leaving a trail of debt in their wake.”
With this in mind, the survey aimed to examine the effects of defaulting customers.
The results were analysed to assess debt and write-off rates as well as the revenue management strategies of operators - and to see if there are any significant differences between types of operators.
Analysys also undertook five in-depth interviews with revenue management specialists at various mobile operators to explore some issues in more detail.
Key findings/conclusions of the survey:
Level of debt write off
- 90% of the mobile operators questioned admitted to having some level of debt write-off.
- The amount written off every year in unpaid bills averages 5% of total billings.
- In the developing market the level of debt being written off is between 5 and 9% of total billings.
Internal Operator Attitudes to Bad Debt
Write-offs of bad debt are approved at company corporate level at only 39% of operators, with 53% of write-offs being approved by the finance department. This could indicate that either boards do not appreciate the scale of the write-offs or that a certain level of loss within the business is acceptable to the management.
Responsibility for Collections
The survey showed that at many operators the responsibility for chasing unpaid bills is spread across a variety of departments which could include billing, IT, fraud, credit management, customer service, collections and the finance departments.
At many operators there does not seem to be a co-ordinated approach to tackle the growing numbers of customers who are defaulting and a general lack of awareness of proven collections techniques.
Collection Techniques
Traditional methods to collect debt are most widely used – phones, letter, litigation and door-to-door visits.
Only 54% of mobile operators use SMS or email to contact customers whose payments are overdue.
Only 37% of operators employ staff outside normal office hours and only 10% of staff have remote access. This shows that collections departments are not calling customers in the evenings or at weekends.
Use of Specialist Technology to Improve Collection Rates
Only 38% of the operators questioned used specialist revenue management issues with the majority relying on inadequate functionality in the billing system or on proprietary collections systems that have evolved over time are unsuitable for current market conditions.
Awareness of revenue management systems is low and operators are not aware of the ROI and customer relationship benefits
This lack of awareness could be because, as discussed above, responsibility for unpaid bills is spread across departments, each of which might be using other specialised systems eg billing.
Operators in Developing vs developed markets
Operators in developing markets – and operators with fewer subscribers –experience more serious revenue management and debt collection challenges.
Operators in developing countries experience greater revenue management problems and are keener to invest in specialist revenue management systems in the future than those in developed markets.
Operators from developing markets use more collection strategies and make much more use of personal visits, than operators in develop markets.
There are significant differences between strategies used in developing markets and those in developed markets – sometimes attributable to cultural differences between geographies and regions. Operators in developing markets are more likely to employ staff outside regular office hours and to give them remote access to customer details.
Brian Dewis, CEO of Talgentra, commenting on the results of the report, said: “It is surprising how many operators are still using obsolete credit management systems. It seems that revenue management and collection strategies invariably play second fiddle to the billing process. However, operators who implement specialist customer revenue management and collection systems report significantly improved cash flow, reduced debt write-off, improved productivity and stronger customer relations - with ROI typically achieved in less than 12 months.”
About The Survey
Thirty six mobile only and mobile and fixed operators (50 respondents in total) were questioned. The sample was balanced in terms of operator size, market development status and use of dedicated revenue management systems. No significant differences in responses was observed between operators who are mobile only and those who also have fixed operations. Five in-depth interviews with operator revenue management executives explored some issues in more detail.
** Analysys estimates that turnover of mobile operators globally was approximately
$ 500 billion +/- 10% in 2005. If operators are failing to collect 5% of total billings then the amount actually billed was $526 billion. The difference between the amount billed and collected is therefore $26 billion.
About Talgentra
Talgentra provides customer revenue management and collections systems specifically developed for the telecommunications market.
Operators using Talgentra’s systems to manage and collect money from customers in arrears include Vodafone, SingTel in Singapore, Maxis in Malaysia and Tata Teleservices in India.
Talgentra’s flagship product - Tallyman - significantly improves the bottom line of operators by collecting revenue that would otherwise have been written off. It also limits manual processes and thus reduces operating costs.
Tallyman automates the collections process by consolidating all customer communications relating to payment arrears including phone calls, emails, letters and faxes into a single database. However, its unique value lies in its ability to segment customers in arrears in the same way marketing departments segment customers and prospects using CRM systems – which is particularly vital in countries where each case of arrears needs to be managed in an appropriate and sensitive manner
Talgentra has offices in the UK, and throughout Asia Pacific. It is a member of the Alchemy Partners Investment Portfolio.
For more information about Talgentra please visit or
contact its PR representative, Bridget Fishleigh on +44 7946 342 903, skype: bridgetfishleigh or
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