Financial Damage of Grey-Market Handsets Underestimated by African Mobile Operators

WDSGlobal has published a report that suggests grey-market mobile phone ownership will present an increasing challenge for African mobile operators in 2009, despite a global drop in their circulation.

The report states that while reduced import taxes and component costs have moderated demand for low-cost grey-market handsets across the continent, African consumers are showing increased demand for high-end feature phones. Such devices often can't be accurately identified, supported or configured to access data services on an operator's network. This immediately threatens subscriber profitability concludes WDSGlobal, a provider of mobile device management and support services for the mobile industry.

"Grey-market handsets are defined as those sold through unofficial and unauthorized channels," explains Brett Thomas, Regional General Manager, Africa, at WDSGlobal. "The demand for high-end feature phones on the grey market is being fuelled by substantial savings of up to 50 per cent and a desire to own a handset not available locally. Many are sourced from Europe and North America and sold through high street retailers, markets and online retailers."

The report cites four key areas of concern:

• Support calls may not be resolved effectively, either because of internal policy or because the operator does not have the knowledge to resolve a problem.
• Grey-market handsets may not be correctly configured for high-margin data services such as mobile Internet. These handsets are typically limited to basic voice and messaging services.
• A parity of service is hard to achieve across the installed base of subscribers. Grey market handsets may not feature an operator's branded firmware or bundled applications.
• An operator may not detect a grey-market handset attaching to its network or a subscriber making a handset switch. This can lead to incorrect CRM data.

Each of these areas can have a negative effect not just on profitability but also loyalty, suggesting that mobile operators need to build strategies and implement processes that allow them to cost effectively manage grey-market handsets on their network.

The way in which consumers acquire and share handsets is changing and mobile operators must decide where their support for the end-user finishes, the report warns. The grey-market for mobile phones is prevalent across Africa and many parts of Asia. In some countries up to a quarter of all mobile users own grey-market handsets. Many handsets enter the grey market from overseas recycling schemes or distributors looking to offload unsold stock.

Download the report for free at http://www.wdsglobal.com/grey-market/

Posted to the site on 3rd February 2009