My momma always said, “Life was like a box of chocolates. You never know what you’re gonna get.”
Yes, Forrest Gump’s momma was right about life and its unpredictable nature. Life has ups and downs with full of surprises. If it is so, how a person can measure success or failure and what he/she can do to be successful in life? The answer lies in understanding life, looking for right chocolate, doing right things at right moments and patience to reap in the long run.
Most of us are familiar with seasonality impact on different businesses. To mention one, clothing or gift shops during festivals like Christmas. There are some uptrend cycles in businesses as well as downtrend. But what differ in telecom are its ever-varying business components. These are so dynamic (and of course complex) that game can change overnight, and we are bound to call market competition a game. Components that we are talking about are new subscriber addition, churn from existing subscriber base, re-activation from churn, subscriber ability, events/festivals, new offers, macro-economic/national/political environment, legal environment etc. Trend variation becomes more intense with varying subscriber demographics and blend of income and age groups.
If we consider increasing number of new subscribers in a particular month due to an event or festival, we cannot be so sure how other components will behave. Churn and re-activation might be high or low depending on the nature of the event or festival. In cases, distributor or retailer commission for new subscribers may vary also and it can go either way. Churn is also related to new subscriber addition of earlier third month (if activity is defined by subscriber activity within 90 days) considering the fact that most of churn (normally more than 50%) come from low tenured subscribers.
During events or holidays people tend to change behavior and it can go either way. An ideal example can be Ramadan and Eid of Muslims. To take example from one of the most densely populated area in the world, Bangladesh, Ramadan slows businesses as people remain busy in religious activities while Eid gives a surge. It is better explainable if we mention that one month of Ramadan is followed by 1 day Eid every year. Effect of other factors also demand some analysis. We see increasing usage at the beginning of the month when people have cash in hand but it decreases gradually at the end. Network busy hour also varies with subscriber income cycle.
So, what is the magic formula to predict future in telecom industry? Answer lies in the quote of Forrest Gump’s momma. In next article, we hope to explain how we can forecast revenue considering all these factors.
Hasan
Telecom Analyst
