Блог Никсейл
February 2017
Margin analysis
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Nowadays, every mobile operator is going through hard times. The market of cellular communication is saturated as never before. A number of active numbers is often higher than the country's population. Over-the-top players are aggressively taking over the market for voice services and SMS. The rise in the dollar in the CIS results in an increase in capital and operating costs. But the shareholders require an annual increase in the dividends.

These are not easy times, and the question of the maximum efficiency of services arises in the first place. And one of the main tools for achieving this goal is the margin analysis.
The margin analysis itself is not new, and at a first glance, it is not particularly difficult. We need to take the revenue amount, then take away the sum of all costs from it and here is the margin. It seems that in order to solve this problem the Excel spreadsheet will be just fine. But practice shows that even a small operators must take into account such amount of data that its manual collection and processing will require so much time that the results will no longer be relevant. Not to mention the fact that achieving the granularity needed to understand the problem will be almost impossible. Therefore, we need a new approach in the process of calculating margin. But first things first.

Get precise information on the margin is not an easy task. To do this, you need to consider many factors such as:
service multi packages where the subscriber receives several different service packages for a single fee;
services with a cumulative package for multiple devices;
specifics of billing to subscribers of the postpaid system;
step-charging for content providers (e.g., the more SMS, the lower the cost of each message);
preferential roaming tariffs;
indirect costs, such as advertising costs, the cost of equipment, remuneration of dealers, etc.
and much more.

To operate properly, the control needs to receive and analyze data from a plurality of sources. In our practice, the most suitable for this task are storage of FM&RA divisions, as they contained virtually all the necessary information in a purified and normalized form.

At the same time, in some cases up to date information for the calculation of the margin can be received in a considerable amount of time after the event. When we were developing margin control for FM&RA division of one of the mobile operators, we faced with the fact that the reduced rates of settlements with operators belonging to a group of companies for the current month are known only at the beginning of the next month. In this regard, it was decided to do the monthly revaluation of the cost of calls made in the connected operators' networks.

Modern margin control system must meet the dozens of criteria. First, the margin data should be presented in a variety of cuts such as regions, roaming partners, interconnect partners, content providers, type of service, call direction, service plans, services, subscribers. In addition, each high-level layer must be able to "fall" to the lower layers of details down to the subscriber. Reconciliation should be carried out in the near-real-time mode with the ability to create alarms based on user-defined rules, for example, to monitor trends and in the case of margin falls below a certain threshold to issue a warning. And of course, the system needs to provide informative, intuitive, graphical reports.

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A well-designed system can be useful to financiers, marketers, FM&RA specialists and other divisions of the operator. Everyone will find something for themselves in it. The financial unit may find opportunities to reduce costs. Marketers will be able to identify areas that have the potential for development, assess the available space to maneuver. Also, they can see the detailed results of launched initiatives and make the following products even better. It will be easier for RA units to monitor the presence of profit with launched proposals, to initiate changes in the conditions in time to prevent the company's losses. Fraud managers will find in the reports the crooks who generate and terminate international traffic.

Today we offer to reflect on whether or not all your services bring the expected profit and if the margin control methods that you use are effective enough?

Author: Rustam Nosov