Negative churn?

A large part of what the GSMA Intelligence analysts strive to achieve is consistency and uniformity across our data sets for all operator reporting. This in turn provides a congruous and comparable set of metrics for our clients.

Often, we come across data that, while fascinating, we are unable to publish as part of our global metrics as their place in a country, regional or worldwide aggregation can produce misleading results. A series of blog posts here on GSMA Intelligence aims to address this issue, allowing us to provide commentary on data that does not necessarily fit the rigid confines of structured tables in the database.

The most recent case of such data is the negative 5.5% monthly churn rate published by Orascom's subsidary in Bangladesh, banglalink, for Q3 2009.

Typically, the churn rate represents the percentage of customers that disconnect from a given network, on average, over a monthly period. For an operator to have organic negative churn, this would require zero disconnections for the period and hence, 100% customer retention.

Looking more closely at the data given however, we see that the terminology here is slightly distorted. While definitionally inaccurate, banglalink have seen such a huge reactivation rate since Q2 2009 that they have classed their success as the equivalent of negative churn.

This fascinating effect is primarily a result of the termination of SIM tax subsidies in Bangladesh since April 2009. Despite most operators removing this subsidy, there has been no move by the government to withdraw the tax on SIM cards which is exercised in the form of a BDT900 connection fee despite an average SIM replacement cost of BDT75. banglalink was able to employ this price difference by aggressively offering a reactivation promotion, driving demand in the ex-customer base.

Organic net additions for the quarter plus banglalink's aggressive reactivation promotion has thus produced huge reactivation during Q3, which is classed in Orascom's report as faux-negative churn.