Mobile operators have slashed dealer commissions in a bid to bring down subscriber churn through Mobile Number Portability (MNP).
MNP requests grew from 11.84 million subscribers in June 2024 to 14.66 million subscribers in August 2024, with a slight dip to 13.32 million subscribers in September 2024, as per the Telecom Regulatory Authority of India’s (TRAI) subscription reports. Telcos have been incentivising third-party retailers to make prepaid subscribers switch mobile phone plans through commissions. These retailers then push subscribers to switch operators at a heightened frequency since they receive a commission for every switch.
However, the mobile operators have now cut down the payouts given to retailers to ₹200-210 per port in recent months, compared to the ₹250-280 per port during the same time last year, reported IIFL Securities in their rural telecom survey.
“During our last rural visit in 3QFY24, most retailers reported that all telecom operators now pay between ₹250-280 per port-in, down from ₹300+ previously. In our current rural visit, this has further decreased to ₹200-210 per port-in, provided the number of port-ins exceeds 50,” the report stated.
Commission rates
Overall, Jio offers the highest commission of 3 to 4 per cent on top-ups, while Airtel and Vodafone Idea offered 2.5-3 per cent commission, said the report. BSNL provides the lowest commission to retailers. In contrast the paper reported in July that telcos were incentivising third-party retailers to make prepaid subscribers switch mobile phone plans through commissions.
When asked about possible reason for such changes in trend, Mahesh Uppal, Director of Com First (India), said that the lack of aggression in the market may be driving down retailer value.
“Operators, particularly private ones, seem to not consider the role of the dealer as significant as they used to, partly because the market is less competitive. The level of aggression between the players is also a lot less. So, companies rely less on dealers to churn their users and which is reflected in the slightly lower outgoes to dealers,” said Uppal. Payouts to retailer could surge if the MNP trend reverses but only if there is a significant change, he added.
Similarly, Parag Kar, an independent telecom expert, said that dealer payouts are decreasing despite higher MNP numbers because the market has become more monopolistic, cutting down on price competition.
In November, Vodafone Idea in its second earnings call for FY25 reported that the subscribers who had switched to BSNL following tariff hikes were returning to the private operator. Another telco on condition of anonymity said that customers returned to their service in recent months citing poor quality of service from BSNL.
