montydimkpa:
XtraTime Offer Rakes In 321.2bn Naira for MTN Annually, Increases Recharge Card Purchases by 6%, Congests Network

A series of recent high-powered simulations carried out by Lagos-based think-tank MDS Research, has revealed that the MTN XtraTime offer, which allows customers to borrow airtime in order to make calls, boosts actual recharge card purchases by up to 6%, leading to a 16 Naira per-diem increase in average recharge value, which amounts to 321.2bn Naira in additional revenue annually for the telecom group, when spread over its 55 million customers.

MTN customers deserve to know just how much they are actually paying for the convenience of borrowing from the network, which is why the following report was prepared by Lagos-based MDS Research:

The Simulations

The simulations were carried out in a Network-Neutral Simulation Engine which simulated 1,000 cycles of 10 consecutive days each for an automated customer making between 1 minute and 30 minutes of calls per instance with the ability to purchase recharge cards of value 100 Naira, 200 Naira, 300 Naira and so on up to 2000 Naira from the Network, while paying tariffs of between 18 Naira and 30 Naira per minute depending on 2 network segments and 3 time periods. The automated customer was simulated initially without the option to borrow and could only make a call when available airtime met or exceeded the required tariff for the call - but had the option to recharge a denomination that would allow him/her complete the call if cash was handy (availability of cash was random). To further improve the accuracy of results, calls were given random priorities of 0 (casual) and 1 (important) as a customer will naturally choose to purchase airtime if the call is important.

In the first scenario (without the option to borrow), the automated customer made 1 call every 53 minutes, spending an average of 255 Naira Daily on recharge cards and an average duration of 3 minutes and 55 seconds spent on calls.
For this scenario, the average airtime balance for the automated customer was 43 Naira.

The second scenario introduced the option to borrow, which on the MTN network is subject to the following conditions: 1. Recharge balance of more than 500 Naira per month 2. a 10% service charge, i.e. customer will pay 20 Naira more (total 220 Naira) on next recharge if 200 Naira was borrowed, and 3. the proviso that the customer has settled outstanding debts.

These same conditions were programmed into the simulation to create the possibility of borrowing. The simulation then ran for another 1,000 cycles of 10 consecutive days each for an automated customer making between 1 minute and 30 minutes of calls per instance with the ability to purchase recharge cards of value 100 Naira, 200 Naira, 300 Naira and so on up to 2000 Naira from the Network, while paying tariffs of between 18 Naira and 30 Naira per minute depending on 2 network segments and 3 time periods, as well as the ability to borrow as much airtime from the Network as was needed to make the next call.

The results:

1. Higher Network Load - the automated customer is now able to make 1 call every 45 minutes as opposed to 1 call every 53 minutes in the initial scenario (there is increased possibility of network congestion with the XtraTime offer)

2. Longer Call Times - the automated customer can now make an average of 4 minutes and 36 seconds of calls compared to only 3 minutes and 55 seconds in the initial scenario (this can cause quality of service issues on the network)

3. More Residual Airtime - the average airtime balance for the automated customer is now 73 Naira, 30 Naira more than the initial scenario without the ability to borrow. This means the customer is spending more money on airtime with the XtraTime offer than is actually needed by the customer.

4. Higher Per Diem Recharge - the automated customer now spends an average of 271 Naira per day on recharge cards, a 16 Naira per-diem increase from the former value of 255 Naira daily.

Conclusion:

We know that the multinationals exist to make profit, but at what cost? Is it justifiable to launch a product (MTN XtraTime) that sells the seeming convenience of being able to 'make calls anytime even when you're broke' to customers while secretly milking over 320bn Naira annually from the same customers? Are Nigerians cash cows for MTN? Is the MTN XtraTime scheme a rip-off?

Well, We've done our part. Let the court of public opinion now decide the true merits of the MTN XtraTime offer.

Article by:

Chidiebere Dimkpa

MDS Research
Lagos

Email: cmdimkpa@gmail.com
Phone: 08129835251