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Classification: Restricted DOING BUSINESS 2016 - GETTING CREDIT

IMPORTANCE OF ALTERNATE DATA SOURCES IN CREDIT REPORTING INFRASTRUCTURE

Copyrights© SIMAH - 2017 Classification: Restricted TABLE OF CONTENTS • SIMAH Overview

• Saudi Telecom Sector Overview

• Telecom Sector Strategy

• Members of SIMAH

• Data Quality & Inclusions

• Enhanced Behavior and Delinquency

• Doing Business Index 2014

• Telecom Sector value-add

• Scoring & Risk decision

• Conclusion Classification: Restricted Path of Success

3 3 Classification: Restricted Telecom Industry overview

• The Saudi telecom sector is the largest in Middle East with over 54.0 million mobile user subscribes and over 66.0 billion in revenue. • Total mobile penetration reaching 188% at end of 2011 , higher than the GCC average. • The industry is regulated by The Commission of Information Technology and Communication (CITC) • Sustainable growth after liberalization of the sector since 2013. • They aim to provide “universally available, high quality and affordable communication and information technology services.

4 4 Classification: Restricted Saudi Telecom Statistics

Telecom’s Operator Revenue 140,00

120,00 Telecommunications companies achieved a total revenues of SR 72 100,00 53,00 53 54,3 53,7 49,00 billion at the end of 2016 and a decrease of 1.1% compared to the 80,00 48 previous year 2015. Mobile services revenues account for about 75%

60,00 of total revenues. While fixed telecommunications services account for Revemue about 25% 40,00 71,03 71,31 72,40 71,63 65,76 60,10 20,00

0,00 2011 2012 2013 2014 2015 2016

Revenue Users Total subscriptions to mobile services 80,00 70,00 The number of subscriptions to the mobile telecommunications service reached 60,00 about 47 million subscribers by the end of 2016. The penetration rate of mobile 50,00 telecommunications services at the population level decreased to about 151% 47 40,00 51 53 53 compared with the decrease in the total number of subscriptions due to the 54 53 implementation of some decisions and regulations such as linking the segments 30,00 with the fingerprint and canceling the inactive segments. The CITC grants have 20,00 contributed to the licenses of the mobile operator of the mobile network, Number of Suscriptionsof Number 10,00 20 % 17 % 14 % 15 % 6,60 % 7,30 % 0,00 2011 2012 2013 2014 2015 2016

PostPaid Service Total Subscription

5 5 Classification: Restricted Telecom Industry overview

CITC

• Awareness (On-Boarding, Invoicing, and Collection) • Privacy- implementing customer consent • Fair Competition • Dispute Resolution within 24 hours Telco

• Credit Check 24/7 and Hit rate 95%. • Data contribution (upload/download) 99.99 availability. • Default Collection improvement. • Data Analytics. • Increase the minimum disconnected service

6 6 Classification: Restricted Telecom Industry overview

• Telecommunications Companies

Company Is a member Consumer Commercial Offer B2B Credit STC 2008 Yes No Yes Mobily 2010 Yes Yes Yes Zain 2010 Yes Yes Yes Membership with SIMAH: • Internet and Landlines Serveries • Telco and Saudi Credit Bureau- SIMAH has a relationship over 8 Company Is a member Consumer Commercial Offer B2B Credit Bravo (STC JV) 2011 Yes No Yes years. Go (Atheeb) 2011 Yes No Yes • All type of Telco companies has full engagement with SIMAH • Virtual Telecommunication Companies (Service Provider only) Company Is a member Consumer Commercial Offer B2B Credit

Virgin 2013 Yes No Currently No Lebara Potential

7 7 Classification: Restricted Telecom Industry overview

How Being Part of Credit Bureau Supported The Telco Sector :

SIMAH accumulated Standardized knowledge it built over the years Realize the data market size • support their data Collect billions • standardizing the management operations and the definition • apply the best practice of bad debut • various industries read methodologies. growth/shrink the shared information and understand it trends regardless of their back ground

8 8 Classification: Restricted Telecom Sector - Data Quality Overview Overview for 2017: At the beginning of 2015, the members in telecommunication sector have some reporting issues that violated SIMAH’s data quality standards, but with a bit of help, the members in this sector were able to improve and meet SIMAH’s minimum quality score of 99.90%. Telecom Data Quality Overview 99,89% 99,95% 99,87% 99,88% 99,87% 99,90% 99,82% 99,82% 99,83% 99,85% 99,80% 99,79% 99,80% 99,80% 99,73% 99,75% 99,70% 99,65% 99,59% 99,60% 99,55% 99,50% 99,45% 99,40% MAY/16 JUN/16 JUL/16 AUG/16 SEP/16 OCT/16 NOV/16 DEC/16 JAN/17 FEB/17 MAR/17 APR/17 May/16 Jun/16 Jul/16 Aug/16 Sep/16 Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17 Apr/17 Telco QS 99,87% 99,80% 99,79% 99,80% 99,82% 99,82% 99,83% 99,59% 99,88% 99,73% 99,87% 99,89%

9 9 Classification: Restricted Telecom Sector - Data Quality Overview

- Post-paid services for all Telecom sector in Saudi Arabia has grown by 132% after collaborating with Saudi Credit Bureau. - Likewise active population has similar effect of growth by 63% - Active products all post-paid “Mobile, Broadband, and Landline” POST-PAID SERVICE GROWTH IN SAUDI ARABIA 10 000 000 9 000 000 - Post-paid services for all Telecom sector in Saudi 8 000 000 Arabia has grown by 132% after collaborating with 7 000 000 Saudi Credit Bureau. 6 000 000 - Likewise active population has similar effect of 5 000 000 growth by 63% 4 000 000 - Active products all post-paid “Mobile, 3 000 000 Broadband, and Landline” 2 000 000

1 000 000

0 2012 2013 2014 2015 2016 Post Paid Account 3 376 303 8 578 495 7 460 801 7 804 278 9 393 895 Individuals 3 373 801 7 497 629 6 344 050 6 669 537 7 998 446

10 10 Classification: Restricted Enhanced Telecom Behavior & Delinquency

Detailed level of Product Status Accumulated tell end of 2016 9 000 000 8 523 709 8 000 000 7 000 000 6 455 556 5 982 583 6 000 000 The Telecom statues accumulated tell end of 2013 to 2016 5 000 000 3 873 269 4 000 000 3 000 000 2 000 000 1 426 408 From these both chart we can see that the number of 1 000 000 534 364 381 911 337 413 active accounts have increased by 106% which is a good 0 0 F 1 2 3 4 5 6 thing. For the delinquent accounts have been decreasing

Detailed stats of product status count Details stats of product Delinquent by 42% and the written off accounts also decreased by 52% which is a good development through out these years. Detailed Default level of Product Status Accumulated tell end of 2016 25 000 000 21 672 531 20 000 000

15 000 000 9 098 432 10 000 000

5 000 000

0 R W

16 Classification: Restricted Sample Credit Report - Demographics information 1/4

12 12 Classification: Restricted Sample Credit Report – Precuts & Services Summary 2/4

13 13 Classification: Restricted Sample Credit Report – Precuts & Services Details 3/4

14 14 Classification: Restricted Sample Credit Report – Court, Narratives & Public Notices 4/4

15 15 Classification: Restricted SIMAH Value-Add to Telecom Sector:

• Collection Analysis

• The process of collection in telecom companies :

• Data cleanser.

• Segmentation and this depend on demographic and credit bureau data.

• Homogenous characteristic.

• Recovery forecasting .

• The timeline of collection process in STC depend on the number of day’s.

Category Impact on Recovery

• SIMAH Score Low High

• Time since Default Low High • Total Default amount non- Low High Teleco • %Active at SIMAH Low High

Annual Collection by Telecom Sector 1- Apply for grow from 35M - 500M Loan 900 000,00

800 000,00

700 000,00

600 000,00 529 374,00 2- Declined due 4- Update Collection to outstanding 500 000,00 credit report Improvement default 357 648,00 400 000,00 Report 300 000,00 175 708,00 200 000,00

100 000,00 35 145,00 3- Settle payments ,00 within 60 days 2011 2012 2013 2014 2015 2016 2017 2018

• Finical institutions (SIMAH Members) has played major role for enforcing Telecom debt collection • Telecom sector debt recoveries increased from 35 million annual to 529 million. • The credit bureau had contributed effectively in creating collaboration spectrum between all active members.

 Predict the clients credit behavior to avoid future defaults.

Packages of Credit Limit International SIM. management roaming  To gain further insight into the profile of its portfolio from a risk perspective.

High range of Annual contract Packages packages

 Will help to have a deeper understanding of their customers and make better decisions.

loyalty programs customers rights  Enhancing credit strategies and reorganizing credit management and processes such as credit policy.  Improve the collection strategy model and building segments for collection until  Reduce Fraud and credit risk by sharing and contributing data between Telecom’s and banks “Reciprocity”

• Earn demographic and behavioral score,for No credit history (“inactive customer” or “thin file”) KYC • Enhance future default likelihood prediction. • Understand changes in non financial behaviour • Link the Mobile informations with financial behaviour

Apply to Bank No Credit New Demographi Predictability applicant (no score for History client) c scoring of default is high

Telecom Behavioral score New Behavioral & Demographic Predictability of Credit applicant score default is low History score

• Link the Mobile informations with financial behaviour

19 19 Classification: Restricted Conclusion

• Telecom data inclusion was perceived as positive and actually resulted in grate contribution and valuable to credit industry.

• Its proven that Telecom behavior is predictable in the credit scoring models.

• Credit Bureau smart analytics will support Telecom steady growth and informed decision.

• Regulatory agencies have Neutral, Accurate, and Up to Date view of Telecom sector performance.

• The Credit Bureau will enhance public awareness towards Telecom financial commitment and positive behavior.

20 20 Classification: Restricted

Finance & Markets World Bank Group