Half of MEA telcos post ‘1% revenue leakage’

Nearly half of telecom companies in the Middle East and Africa have reported revenue leakages of up to 1% in a global revenue assurance (RA) survey conducted by audit, tax and advisory firm, KPMG. New independent revenue streams and the associated network and billing systems for these services will be a chief source of leakage according to respondents. Areas most vulnerable to leakage and fraud are the revenue streams with the largest volume of payments including prepaid, roaming and postpaid plans, KPMG said. According to Gopal Balasubramaniam, partner (audit) KPMG in Qatar, complex pricing models, high cost of operations and lack of fraud awareness are the main reasons why telecom operators do not make the most of their RA functions. “Data and procedural inconsistency across different systems, non availability of requisite skill sets, absence of automated tools, and non availability of accurate and timely information are some of the challenges which need to be confronted by the telecom operators in the region,” Balasubramaniam said. The level of influence that the RA function wields in the organisation remains a topic of much consideration according to the report’s findings. Although the majority of the respondents either report to the chief financial officer (CFO) or a dedicated RA head, only 21% of respondents report to the board indicating limited influence. Further, less than one quarter has centralised control, a condition which hampers the implementation of consistent RA practices across the organisation. “Currently most RA teams ultimately report to the CFO, who is a powerful sponsor to get things done,” said Carl Geppert, global telecommunications & advisory lead and a partner in the US firm. “However given the volume of fraud and revenue leakage in the industry, the function should also have broader visibility at the very top of the organisation.” Yet still, most telecoms operators have yet to put the RA function as a top boardroom priority. Over half (52%) said their senior management is not measured and rewarded against performance of the RA function, the cost of leakages or the amount of revenue recovered. “If we want revenue assurance to be taken seriously at the very highest levels, we must be prepared to incentivise senior executives for targets such as leakage prevention, detection and recovery,” Geppert said. “Currently, most organisations have established leakage thresholds with the associated key performance indicators (KPIs) at the operational level, but that accountability has yet to be fixed at the management level.” Automation can save time and resources and free up RA personnel to spend more time on strategic issues, 78% of the companies involved in the survey use some kind of RA/fraud management tool, the report said. Also, 73% of respondents say their companies have defined KPIs and threshold limits at an operational level for their RA function, which brings greater accountability for revenue prevention, identification and recovery. RA is in an ideal position to look at the entire revenue cycle and identify cost savings and revenue enhancement. Through data analytics and modelling, RA professionals can make an important contribution to marketing and the customer experience – a big area of focus for the sector. The survey has incorporated feedback from as many as 137 executives from telecommunications companies in some 62 countries. from gulf times.