Prepaid scratch cards are most probably the most expensive friend a mobile operator can have
|– New research from Strand Consult shows that the prepaid mobile phone top-up market is facing large changes.
|The prepaid mobile telephony market is both globally and in most countries over 60% – in other words, over 60% of the airtime and SMSs sold by operators, is sold as prepaid traffic.
For the past two years Strand Consult has had two employees assigned on a large research project, where we have analysed the prepaid mobile telephony market across a number of countries and continents around the world. The results show that there are a great number of possibilities to optimise the mobile operators’ prepaid business case.
The result of our research is very clear; many operators can significantly increase their earnings if they choose to discontinue the traditional scratch cards that are currently being used by many customers to top-up their mobile account. The scratch cards can quite simply be replaced by topping up electronically.
The traditional scratch card has historically played a central role in the distribution of airtime, but on the other hand also has several financial and security costs and aspects that allow operators to increase their EBITDA margin by 3 – 5 percentage points without having to increase their sales volume, market share or in any other way change their current competitive situation on the market they are doing business on.
In practice, an analysis of the costs an operator has on producing, marketing, distributing and selling prepaid scratch cards results in most operators using between 18 and 27% of their sold airtime revenue on production, distribution and commission costs, every time they sell a prepaid scratch card.
An analysis of airtime distribution via electronic topping up shows that costs vary from between 3 – 12%, depending on the type of electronic top up being used. The cheapest type of electronic topping up is achieved by using bank cards, credit cards and ATMs and the most expensive via convenience stores, supermarkets and other retail channels.
On many markets, operators distribute between 20 – 40% of their airtime via scratch cards. Our research shows that if operators choose to replace their traditional scratch cards, they can easily significantly reduce their top up costs and at the same time increase their EBITDA margin by between 3 – 5 percentage points.
Based on our research Strand Consult has developed a workshop concept, where we together with the operator’s strategic personnel and product managers examine the many opportunities operators have to optimise their revenue within the prepaid business area.
We have identified over 100 initiatives that operators can implement without any greater costs, initiatives that can help reduce an individual operator’s costs and significantly increase their revenue.
To receive more information about how operators can optimise their prepaid activities and about the 10 Mega-trends we have identified in the prepaid area, please request more information about Strand Consult’s unique prepaid market workshop by clicking here:Next Generation Prepaid