Hongkong Telecom's new head of mobile services, Ross Cormack, could not have picked a more difficult time to take up the role. The company lost 30,000 subscribers between March and the end of September and faces the imminent challenge of the introduction of mobile number portability, something most observers reckon will be negative for Telecom. In his first public appearance this week, Mr Cormack came out battling. The customers lost were 'low-value' ones and overall the company's average revenue per subscriber remained the highest in the industry. 'We are focused on the needs of high-value customers,' he said. In any case there had been subscriber growth since September. Although tacitly rather than directly admitted, the customer loss comes from its 1+1 service, the no-frills D-amps network bought from First Pacific last January. Recent price cuts on the network are a testament to that. 1+1 is in the toughest low-end pricing market segment. Telecom's strategy in this highly competitive environment is not so much one of growth but of defending its market share. 'We will continue to be the market leader,' Mr Cormack said. It is difficult to see how. The likes of PCS-only operator Sunday have doubled subscriber bases in a little over six months; pretty much the same six months in which Telecom lost 30,000. But this is not necessarily a game of absolute subscribers but of how much they spend. Telecom's customers, especially in its GSM 1010 service, are premium customers, spending more on cellular services than anyone else. These are subscribers Telecom does not want to lose. That is why this week it made such a big noise about the cutting-edge technology of its new GSM-PCS dual-band network and its offers of rebates for calls dropped. The focus was on value, not price, said Mr Cormack. Just in case that is not enough, it is offering customers with the network for more than a year a 25 per cent discount on tariffs. Mr Cormack said this applied to more than 50 per cent of 1010's customers. In reality, the figure probably is closer to 100 per cent. This is the clearest move yet Telecom has made to help stave off the potential pain of mobile number portability. Free to move without the inconvenience of losing their existing number, most analysts reckon many customers will take the opportunity to trade down in costs. 'There will be churn in the market; we intend to gain by it,' Mr Cormack said. For many observers this amounts to wishful thinking.
