Asian telcoms hit by 'revenue leakage'

Asian telcoms hit by 'revenue leakage'

HONG KONG (Reuters): Telecommunications firms in some Asian countries lose a higher percentage of their revenue through fraud, billing errors and poor credit management than world-class operators, PricewaterhouseCoopers said.

"Based on industry consensus from our own experience globally, we reckon on average annually (telecommunications operators) are leaking two to five percent of their revenue," Andrew Watkins, partner at PricewaterhouseCoopers, told Reuters in an interview on Monday.

"In certain parts of Asia and South America, we have found example of revenue leakage beyond that, up to 25 to 30 percent in a single operator," Watkins said. He did not identify carriers or countries with the biggest problems.

Inadequate billing systems, poor credit management, weak internal controls, fraud and bad debt were the main causes of "revenue leakage", according to a recent PricewaterhouseCoopers survey.

The consulting firm polled 20 telecommunications operators in the region, including Singapore, Indonesia, Taiwan, Malaysia, Thailand, Hong Kong and the Philippines.

Watkins said the reasons some Asian operators had higher revenue losses than top class carriers were because they had a smaller operation, ran an older network or had less investment available at their disposal.

However, he said although PricewaterhouseCoopers had yet to perform a full study on Hong Kong carriers, it believed revenue leakage was closer to world class operators at about two to five percent, rather than the 25 to 30 percent Asia maximum. Based on that percentage, local operators would be losing a combined US$46 million to US$115 million in annual revenues, he said, citing figures supplied by market research firm Dataquest Inc.

"What we have seen in the market here, the controls and practices are probably a little better than the worst case elsewhere in Asia," he said of Hong Kong.

Watkins said as the market became more competitive and the pace of technology development became faster, telecom operators needed to reduce revenue leakage in order to stay competitive.

"Aggressively managing revenue leakage means that you have a competitive advantage against competitors," he said.

"The thing is that it is going to be more complicated, more competitive, so it is essential that they put in place a proper framework for control."