How Telefonica Reached 99.99% Tariff Prediction Accuracy in Their E-Plus Merger Using Clintworld
Germany’s Telefónica Deutschland , operating under the O2 brand, utilized Clintworld’s advanced simulation software and proven consultancy services to execute a vast forced migration and pruning project after an 8.6 billion euro purchase of rival, KNP’s E-Plus.
Thanks to the precision of Clintworld’s simulations, results were even better than expected:
The merger, bringing together Germany’s third and fourth largest mobile network providers (MNOs), would lead to a market structure with three remaining MNOs of similar size; placing Vodafone in third, Deutsche Telekom’s T-Mobile in second, and the newly merged entity in first with more than 42 million post and prepaid customers, representing 30% of national market share.
As the deal finalized, they knew they needed a common platform that could help combine the two telecommunication giants to form a single functional tariff portfolio—all while maintaining their existing customers, supporting plans for growth and providing an even better experience for everyone. After a review of the market, they decided on Clintworld.
In the course of the merger, the need to fully migrate each of the E-Plus contracts to O2 products and systems became increasingly apparent. The challenge was to find an appropriate alternative within the O2 product-portfolio for each and every E-Plus contract within both the B2C and B2B-unit.
With over 20 years of operation on the market, comprising of more than 4.5 million postpaid subscribers (B2C stream) and hundreds of thousands of mobile postpaid subscribers (B2B stream), the migration and pruning of E-Plus’ extensive catalog of tariffs, options and discounts made for an interesting task.
At the time, for example, the E-Plus B2B environment offered 382 tariffs, 2,150 products, and discounts of various sizes. This was to be consolidated into the O2 B2B environment, which included just 6 tariffs (5 voice and 1 data), 59 products, and 10 available options.
To make matters even more challenging, subscribers in the E-Plus environment enjoyed per-second billing, however O2 only allowed per-minute billing.
In addition, the merger had to adhere to a series of requirements:
- The Legal Requirement, dubbed equal-or-better, ensured that each subscriber would get more for the same, same for less or more for less. In other words, each subscriber was to receive a product which contained a minimum equal number of units, and pay the same amount or less for the product and each component. No questions asked.
- On the other hand, the Commercial Requirements, defined as no ARPU loss, no loss of customers, and minimized revenue losses, challenged the capabilities to fine-tune both the migration rulesets and target portfolio.
Telefónica needed a tool that could incorporate these requirements, handle hundreds of legacy tariffs, thousands of options and discounts to provide just one product recommendation within the O2 product-portfolio for each contract.
To meet this high accuracy challenge, Clintworld mobilized their all-in one pricing simulation software and expertise.
Armed with Clintview, an all-in-one simulation and analytics software, Clintworld provided proven consultancy services throughout the E-Plus/O2 merger. Here’s how:
In order to achieve an accurate migration simulation, the product catalogue, subscriber and usage data (CDRs) were imported from the E-Plus Data Warehouse and 100% matched against billed tariffs and services.
The complex migration rules, both technical (defining the relationship between price plans, options, discounts and costs) and decision functions (requirements equal or better, voice and data limitations as well as tariff migration rules), were then configured in Clintview.
Once done, all available products were simulated on historical data applying each of the simulation rules. For every single contract, the scenario provided all feasible solutions that satisfied each constraint into a report. Each result was logged with the addition of an ARPU, future basic charge and margin.
Lastly, for all contracts, only one migration proposition, chosen as the best from the list of all possible products, was decided by the sophisticated proposition rules (including business rules, defining revenue, margin and customer churn targets) and then exported.
In addition to calculating the original simulation, Clintworld ran weekly simulations on the full customer base with a changing, constantly optimized ruleset and portfolio. Since at any time of the migration project the rulesets required alteration (i.e. when APRU, margin or churn priorities have changed), Clintview had flexibly incorporated these changes to re-simulate a more desired result.
So, when finally equipped with simulated tariff recommendations, how did the migration perform?
As an acquisition, Telefónica had one shot to get the migration right or risk contractual customer churn. In just 8 months, the results for the B2B migration were in:
- Whole base of mobile postpaid enterprise customers / contracts simulated
- Found for each and every one a proper O2-product due to the migration-rules
- Product pruning from 2,000 to 59 products without inducing pricing churn
- Provide basis for up-selling new offers and services
- All results from the project are auditable
- ARPU loss after migration lower than expected by O2 (Reference Controlling)
- Prediction accuracy of new basic charge for migrated contracts: 99,99% (yes, we did it!)
- Contract invoice disputes after receiving first bill lower than <1%
A win-win approach, O2 Telefónica pulled off a successful migration, while their customers received the perfect offer and an improved experience—all made possible through Clintview.
Achieving similar results for your Telecom company is possible with the right tools and approach. If you would like to learn more about Clintworld, schedule a demo to speak with us. We’d be happy to discuss your needs and to see how Clintview could be an asset in your next migration and pruning project.