By Craig Palmer, Chief Executive Officer at VAS-X
Mobile network operators (MNOs) in Africa face immense opportunities and challenges, primarily the pressure to minimize costs to stay competitive. Unfortunately, many are hindered by outdated and inefficient back-end systems, resulting in unnecessary waste and increasing costs. Modernizing these systems can be less painful than expected and can optimize costs while enhancing agility and competitiveness.
To understand the issue, let’s examine how many MNOs provision SIM cards and the resultant wastage. Traditionally, mobile operators purchase SIM cards in bulk, pairing them with mobile number ranges upfront. This model requires pre-provisioning an entire batch of SIM cards onto the Home Location Register (HLR)—the centralized database that stores subscriber information such as unique IDs, locations, and authentication keys—as well as their Charging System.
MNOs typically incur licensing fees on all numbers provisioned in these systems, regardless of whether they have been activated and sold. This leads to paying for unused numbers, resulting in significant wastage. For example, if a mobile operator licenses 3 million SIM cards but only has 1 million active subscribers, they are effectively paying for 2 million numbers that are not generating any revenue.
The irony of this situation is that, despite the need to control costs, MNOs must continually purchase new batches of SIM cards, especially as existing inventory becomes obsolete. However, they cannot simply cancel unused SIM cards, as their status is unknown—some may still be on the shelves awaiting sale.
The solution lies in a provisioning-on-demand approach. Operators should only provision SIM-number pairs when a customer activates a SIM card during the onboarding process. This modern approach, enabled by agile architecture, ensures MNOs only pay licensing fees for numbers that are actively in use and generating revenue, not for idle numbers linked to SIM cards scattered across various vendors.
Switching to an effective provisioning-on-demand software solution could lead to estimated savings of up to 50% or more on system licensing and regulatory number plan costs. Operators that adopt this modern approach benefit from direct cost savings, streamlined subscriber activation processes, reduced customer acquisition costs, and optimized asset and inventory utilization.
Perhaps the most exciting aspect of this paradigm shift is its potential to enhance competition in the mobile market, allowing smaller operators to be more agile and aggressive in pricing and service offerings.
For MNOs, it is crucial to seek technology partners who understand the industry and offer a proven provisioning-on-demand solution tested across tier-one networks. This partnership ensures reliability with minimal disruptions, ultimately enhancing efficiency and reducing costs by eliminating wastage from SIM card licensing fees.
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