US customer management solutions provider Amdocs (NYSE: DOX) is increasingly targeting Latin American telecoms operators in a region where it sees an increasing level of consumer sophistication and demand for value added services, Patrick McGrory, president of Amdocs' network business unit, told BNamericas.
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The company has been focusing a lot on providing innovative solutions to telecoms operators in developing markets where ARPUs are very low, meaning that secure billing methods and mechanisms to minimize revenue leakage are key for survival of the business model. The company uses SS7 and SIP connected real-time charging systems.
In Latin America, Amdocs is already working with several customers in Central America and Guyana, along with América Móvil's operations in Brazil (Claro), Puerto Rico (Claro), the Dominican Republic (Codetel) and in Argentina (CTI) as well as with Uruguayan state telco Antel.
Mexico's Telmex (NYSE: TMX) is currently using Amdocs' A-CRM solution to cover publishing business processes such as sales campaign planning and customer care in Mexico and other parts of the region.
"We see great growth opportunities and significant potential with the products we're bringing into the market and the reception we're getting. We have a lot of work going on in the Dominican Republic and Puerto Rico - definitely the wheels are turning, there's positive momentum," McGrory said.
The company is particularly pushing its network connected solutions, which provide complete services as well as the IT equipment.
The types of solutions provided in Latin America have tended more towards managing the cost of customer care, as operators tend to spend heavily in call centers and staff.
Amdocs sets up systems that guide customers to lower cost channels, which can provide answers to queries without the need to speak to someone over the phone. One solution is directing people to websites, but even websites require maintenance costs. Another method is interactive voice response, a phone technology that allows a computer to detect voice and touch tones using a normal phone call. But this is also expensive, says McGrory.
There are cheaper options such as using what is called unstructured supplementary subscriber data, which uses bandwidth going from the base station to the subscriber's handset to put a menu on the handset, allowing users to carry out simple tasks such as balance enquiries, change plans and top-up prepaid accounts.
"By providing that kind of customer experience and being directly connected to the network we can help operators to be intimate with their customers and help them get business outcomes like reducing the cost of customer service," McGrory said.
LOW ARPU DOESN'T MEAN NO BUSINESS
The challenges of running a telecoms operation in many developing markets with a low GDP means that consumers have very small amounts of money to spend on their phones and the top-ups are going to be much lower than in developed markets.
But low ARPU does not mean that telecoms operator business models cannot be made viable. Just some innovative engineering is needed, according to McGrory.
For example, a basic recharge card may be as low as US$0.79. Operators need to take into account factors such as card printing costs that may be US$0.10, therefore, reducing their return. Topping up balances using phones is one solution.
However, many developing nations are cash economies with "unbanked" consumers and finding addresses to send bills may be difficult. As such, other prepaid billing solutions are needed.
Amdocs has found many people in emerging markets spend more on telephony in proportion to their incomes than in developed markets. In addition, as these countries grow, consumers that are already converted phone users become more sophisticated and look to spend more on value added services.
"As we go to the bottom of the pyramid and we get phones and handsets into the hands of people that have never used them before, that are making very little money, what it means is the volume goes up. So they're recharging three times a week, whereas someone in the US may recharge only once a month," McGrory said.
"It's not a zero sum game. In Indonesia five years ago things were very unsophisticated, and then income levels started to go up, entrepreneurs started little businesses and people started topping up using their handsets."
"That means we have to push continually engineering boundaries and push the price performance around the engineering to be able to deal with this volume, and bring it to the market at a point of price per performance that allows the operator to get a return," McGrory said.
Amdocs also offers solutions geared to eliminate revenue leakage that often comes from incorrect billing or unpaid bills with mechanisms that can cut off calling once credit runs out.
