Quantitative Credit Risk Management for Credit Limit Control of Subscribers to Mobile Communication Services

Protecting the base of existing customers from churn is a strategic lever for revenue protection of mobile communication service providers. Understanding customers' sensitivities to changes in billing amounts creates an under-valued opportunity to reduce customer churn for non-payment. Leveraging credit risk techniques from the financial industry, a framework for customer segmentation based on spending behaviour is presented. By significantly improving best-in-class credit risk models, more refined credit limits can be set and the profitability of customer relationships be maximized.