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."