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Thursday, July 12, 2007

Prepaid and postpaid

Being a postpaid user usually means being second class. And I can understand why...

There are about 12 million prepaid users in Malaysia (shared between the 3 Telcos - Maxis, Digi and Celcom). The prepaid market is a very volatile market. These are the group of people who can change from one service provider to another at anytime. From a business point of view, this means they have to really take care of this group of customers. Otherwise, it is bye-bye... So, its no surprise to see concerts, freebies, free SMS, etc being given to prepaid users.

Assuming the average balance on each prepaid user is rm5, and if a service provider manages to have 2 million prepaid users, the Telco would already have ‘spare money’ of rm10million. Put this amount in a fixed deposit at a 3% interest rate, a service provider earn about rm25k per month in interest (or ‘free money’).

Postpaid users, on the other hand, are liabilities. In some cases, these postpaid users have ZERO deposit and use the service first, paying only at the end of the month (actually after 2 months since you have another 1 month after the billing date to settle your bills).

Assuming a Telco has 100 000 postpaid user and each have used about rm50 of their service, they would already have a ‘loss’ of rm5 million. Is it any wonder now why mobile service providers don’t really have loyalty programs for their postpaid users?

And if you ever want to be in a business, you should look at starting something similar to our Touch N Go (with auto-reload). Auto-reloads are usually done once your balance goes below rm100. This means, at any one time, a user’s balance is about rm100. If you’re Rangkaian Segar, the Touch N Go operator, and you have 100 000 auto-reload Touch N Go users, you stand to earn rm25k of free money every month!

Labels: misc, thoughts

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