Telecom Providers Expect Increased Revenue Leakage due to Emerging Technologies: KPMG Survey

NEW YORK, March 27, 2012 /PRNewswire/ -- The coming data explosion including the shift to mobile commerce (m-commerce) services and other transformative technologies is expected to have a big impact on revenue leakage among the world's major telecommunications companies, according to a global survey from KPMG International. Ninety-four percent of operators surveyed expect revenue leakage to increase as a result of these rapidly emerging technology trends and nearly half believe the impact will be significant. 

Seventy-four percent of respondents said that the transformation to m-commerce such as mobile banking is the trend most likely to impact the telecoms industry, followed closely by converged services (71 percent). New independent revenue streams and the associated network and billing systems for these services will be a chief source of leakage, said respondents. Those areas most vulnerable to leakage and fraud are the revenue streams with the largest volume of payments including prepaid, roaming and postpaid plans.

"The pressure on the revenue assurance function to detect and prevent leakages and recover losses has never been greater," said Carl Geppert, Global Telecommunications & Advisory Lead and a partner in KPMG LLP, the US member firm of KPMG International.

Yet only half of telecom companies globally have tied revenue assurance performance to senior management pay. A fact Geppert said needs to change.

"If we want revenue assurance to be taken seriously at the very highest levels, we must be prepared to incentivize senior executives for targets such as leakage prevention, detection and recovery," said Geppert. "Currently, most organizations have established leakage thresholds with the associated key performance indicators at the operational level, but that accountability has yet to be fixed at the management level."

Survey data for Europe and the Americas, both of which have seen an increase in prepaid and data services, reveals that leakages of over 1 percent of revenues have more than doubled from the 2009 survey, while globally the number of telecom companies reporting that amount of  leakage has declined.

"Currently most revenue assurance teams ultimately report to the CFO, who is a powerful sponsor to get things done," said Geppert. "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 organization."

The revenue assurance function's success rate at identifying leakages varies from region to region: 41 percent of respondents saying that they failed to identify more than half of total leakages, with Europe and the Americas ranked highest in spotting leakages. Asia Pacific was the lowest with 26 percent spotting less than 10 percent of leaks. The rate of recovery is nearly the same with just 40 percent of respondents successfully retrieving more than half of all losses from subscribers and suppliers.

KPMG Global Revenue Assurance Survey
The survey consisted of 137 executives from telecommunications companies in 62 countries spanning Africa and the Middle East, Asia Pacific, Europe and the Americas. For more details on the survey and 10 steps to improve revenue assurance, please read KPMG's survey report, Entering a New Era – Are new opportunities opening up for revenue assurance functions? The report is available upon request today, or, online as of March 28, at: http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/global-revenue-assurance-survey/Pages/default.aspx

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International.") KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.

About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 152 countries and have 145,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

SOURCE KPMG LLP