Factors Leading

Customers to
Switch Operators in
Moroccan
Telecommunication
Sector

Final Project
GBU 3401: Advanced
Quantitative Methods
Spring 2013
Done By:

Iname Msaidi
Zahya El Amrani
Saad Foukara
Supervised By:

Dr. Ahmed Baijou

Table of Contents
Introduction.....................................................................................................2
Literature review..............................................................................................3
Descriptive Data..............................................................................................4
Description of the population of Ifrane:...........................................................4
Methodology....................................................................................................5
Independent variables...............................................................................5
Dependent variable...................................................................................6
Analysis............................................................................................................6
Presentation of Estimation:..............................................................................6
Before we run the Regression (SPSS) we need to test for the following
assumptions:...................................................................................................6
1. Testing for Normality...............................................................................7
2. Testing for Linearity.................................................................................7
4. Testing for Multicollinearity.....................................................................8
3. Testing for Equal Variances or Homoscedasticity....................................8
Interpretation:..................................................................................................9
The significant variables :..............................................................................10
Significance of the model (R, R adjusted, and F-test).................................10
Significance of F test.....................................................................................11
Conclusion.....................................................................................................11
Recommendations:........................................................................................12
Appendices:...................................................................................................13
References:....................................................................................................17

Introduction
The most important assets of any company are customers. That is,
companies are trying to satisfy the needs and preferences of their customers
especially to keep them loyal to their products. Telecommunication sector is
a vivid sector where there is a fierce competition that can push a customer
to switch from an operator for a reason or another. In our research paper, we
are going to figure out the socio-economic factors that lead to churn a
telecommunication operator and that affect the customers satisfaction and
loyalty. In our paper, we are interested in Moroccan telecommunication
operators.
Many researches were conducted in this field such as a study done in
Bangladesh by Md. Rabiul Kabir, Mirza Mohammad Didarul Alam and Zahidul
Alam

called Factors determining the Customer Satisfaction & Loyalty: A

study of Mobile Telecommunication Industry in Bangladesh and another

study conducted in India by P.S.Rajeswari, Dr. Ravilochanan called Churn
Behavior of Youth on Telecom Mobile.
The aim of our research paper is to answer the following question:
What are factors chosen for our model that affects switching
telecommunication operators in Morocco?

Literature review

Concerning the study of mobile telecommunication industry in

Bangladesh (2009), a survey was distributed in order to determine the
factors that affect customer satisfaction and loyalty. The model of this
research was built to identify the relationship between service quality and
customer satisfaction also service quality, switching cost and trust with
customer loyalty. For conducting this study, 300 pre-paid mobile subscribers
perceptions were collected from three different operators which are Grameen
Phone, Bangla-link, and Aktel through a survey questionnaire. Based on their
regression analysis, they found that there is a linear relationship between the
service quality and customer satisfaction. Also, they found that 10.2% of the
variation in customer satisfaction is explained by the service quality. The
regression analysis showed also that there is a significant relationship
between the service quality and customer loyalty. It was found that only
4.6% of the variation in customer satisfaction is explained by the service
quality. Another linear relationship exists between the switching cost and the
customer loyalty. Only 5.4% of the variation in the customer loyalty can be
explained by the switching cost. The regression analysis indicated a linear
relationship between the trust variable and the customer loyalty. 38.1% of
the variation in customer loyalty is explained by the trust. This research was
helpful for researchers in Bangladesh since it allowed them to expect a
mobile operators explosion.
The second study conducted in India had a purpose of investigating the
operational factors that influence the loyalty of customers towards Indian
mobile telecom sector. Primary and secondary data were collected through
3

questionnaires, previous research findings and telecommunication reports.

The sample was composed by 200 respondents within the age group of 1834. Thanks to this research, they found that telecom marketers have to
improve the performance of Internet services and in designing tariffs plans
through conducting some differentiated marketing strategies. That is, the
study showed that Indian telecom operators should keep good quality of
phone call, coverage and quality of SMS.

Descriptive Data
Description of the population of Ifrane
Ifrane is one of the most touristic places in Morocco that is situated on the
Atlas. According to the statistics of Ministre de la sant in 2010 , the
population of Ifrane was 153.888 and it is expected to grow to 163.476 in
2015. (Ministre de la sant, 2010)
The data of our project was gathered in the region of Ifrane, mainly down
Town and near restaurants and cafeterias, March, and Ain Vitel. Surveys
were conducted during 3 successive week-ends from 10 am to 9pm.
Friday 26th, Saturday 27rd , Sunday 28th
Friday 3rd, Saturday 4th , Sunday 5th
Friday 10th, Saturday 11th , Sunday 12th
The sample size was 308, male and female who came to Ifrane from all
regions of Morocco to spend their week-ends and vacation holiday.

Descriptive Statistics is as Follows :

Mean
churnRate

Std.
Deviation

1.81

.392

308

Gender

1.6071

.48918

308

CurrentOperator

1.8636

.93131

308

MonthlyIncome

3.1494

2.04281

308

SatisfactionLevel

2.7305

1.13090

308

Tarrifs

3.2078

1.11066

308

NetworkCoverage
Quality

2.6104

1.22041

308

QualityofCustomer
Service

2.7013

1.30211

308

Methodology

Definition of variables:

Independent variables
1 Gender: male or female ( how can gender affect churn rate telecom
operators).
2 Current operator: how can the current operator that a customer is
using affects his/ her intention of switching his/her telecom operator.
3 Monthly income: how can the monthly income of a customer affect
his/her decision of switching from a specific operator to another.

4 Satisfaction level: it is a measure of how services that are provided by

a company meet the expectations of its customers.
5 Tariffs: how can tariffs charged to customers affect his/ her decision of
switching the operator.
6 Coverage network quality: refers to the quality of the network that
transports traffic if it is good or not.
7 Quality of customer service: refers to the provision of the service and
product to customer before, during and after the purchase.

Dependent variable
The dependant variable, the change of operator, is a binary variable:
-It will be coded as 0 if the customer will not switch the operator.
-It will be coded as 1 if the customer has an intention to switch the operator.
We will be based in our analysis on regression methods. We will first check
the following assumptions: linearity, normality, independence of errors and
the equality of variances. We will use the necessary test methods ( t- test
statistics or Z-test) to evaluate the relationship between the independent
and the dependent variables. We will need to use the SPSS to run the
multiple regressions.

The model:
Churn rate (change of operator)i = 0 + 1 Gender( X1)
+ 2 current operator( X2) + 3 monthly income( X3) + 4 satisfaction
level ( X4)+ 5tariffs ( X5) + 6coverage network quality ( X6)
+7quality of customer service service ( X7) +

Analysis
Presentation of Estimation
Before we run the Regression (SPSS) we need to test for the following
assumptions:

Normality
Linearity
Autocorrelation
Multicollinearity ( to test if predictor variables are themselves highly

correlated)
1. Testing for Normality : (Appendix 1)
H0: Residuals follow Normal Distribution
H1: Residuals Do Not follow Normal Distribution
The demonstration is based on SPSS output of K-S test, we found that
the residuals are normally distributed because of horizontal lines in the
graphs
2. Testing for Linearity :(Appendix 2)
H 0: Dependent and Independents variables are Not linear. (There is not
a significant relationship between Changing Operator, Maroc Telecom,
Mditel, Wana, and these factors:

Gender, Current Operator, Monthly

Income, Satisfaction Level, Tariffs, Network Coverage, and Quality of

Customers Service.
H1: Dependent and Independents variables are linear.
(There is a significant relationship between Changing Operator, Maroc
Telecom, Mditel, Wana, and these factors: Monthly Income, gender,

satisfaction level, tariffs, coverage network quality, quality of customer

service).
Excel was used to test linearity of every single independent variable (X) and
the dependent variable. After plotting the Y axis against each of the
independent variable we found that linearity is not achieved. To solve the
problem, we added a log, a square, or a square root. But still linearity is not
achieved because of the nature of our data, (we have dummy variables,
Gender,, etc) .
3. Testing for Autocorrelation : (Appendix 3)
H0: Residuals are Not correlated
H1: Residuals are auto-correlated.
In this model the Durbin-Watson equals to 2.560.
This means that, 2<D < 4; (2<2.560 < 4). Since Durbin-Watson is
slightly greater than 2 but close to 4. Therefore, we do not have
problem with Autocorrelation and there is a negative autocorrelation
between Residuals.
4. Testing for Multicollinearity:(Appendix4)
H0: No Multi-colinearity.
H1: Multi-colinearity.
From the table of linear regression we noticed that the VIF for each variable
is low than 20. Therefore, there is no problem of multicollinearity.
-For the variable Gender, the VIF is 2.133
-For Current Operator, the VIF is 2.565
-For Monthly Income, the VIF is 2.220
8

-For Satisfaction Level, the VIF is 7.176

For Tarrifs, the VIF is 3.729
For Coverage Network, the VIF is 3.786
For Quality of Customer Service, the VIF is 5.015
All of the obtained VIFs are less than 20, so there is no multicollinearity
among the variables, which is suitable for the model to be adequate (see
Appendix 6).

3. Testing for Equal Variances or Homoscedasticity: (Appendix 5)

H0:

1 = 2 (There is No Heteroscedasticity between dependent and

independents variables)
H1:

1 2 (There is Heteroscedasticity between dependent and

independents variables)
We run the white test of Heteroscedasticity and we Found R =100* 0.726 =
72.6 % d.f = 308 1 = 307 chi-square critical = 357.43 since (nR) =
223.608 < Chi Square critical = 356.35, We do not reject H0, and there is no
problem of Heteroscedasticity.
F-test for Goodness of Fit:
H0: The regression model is not a good fit
H1: The regression model is a good fit
We found p-value = .003 which is < = 0.05.
Therefore, we do reject H0; meaning that the regression model fits
well. Our model is as follows:

Y (Churn Rate) = 2.894 + 0.023 X1 0.103 X2 0.022 X3 0.056 X4 - 0.235

X5+ 0.013 X6 + 0.06X7 +i

SPSS Output (see Appendix 6)

Interpretation:
The interpretation of B0: if all other variables equal to zero; then, the
churn rate will change by 2.894. ( holding all other variables constants)
The interpretation of B1: if Gender changes from Male to Female or
the other way, the churn rate will change by 0.023 ( holding all other
variables constants)
The interpretation of B2: Current Operator affect the decision of people
to change their operators between Mditel, Maroc Telecom, and Wana
by -0.103 . ( holding all other variables constants)
The interpretation of B3: if Monthly Income change by 1 , the churn
rate will change by 0.022. ( holding all other variables constants)
The interpretation of B4: if operators tariffs change by 1 , the churn
rate will change by -0.235. ( holding all other variables constants)
The interpretation of B5: Satisfaction Level affect the decision of people
to change their operators between Mditel, Maroc Telecom, and Wana
by -0.056. ( holding all other variables constants)
The interpretation of B6: Network Coverage affect the decision of
people to change their operators between Mditel, Maroc Telecom, and
Wana by 0.013. ( holding all other variables constants)

10

 The interpretation of B7:Quality of Customer Satisfaction affect the

decision of people to change their operators between Mditel, Maroc
Telecom, and Wana by 0.06. ( holding all other variables constants)

The significant variables

1) Monthly Income (X3): Negative relationship
Monthly income has a great impact on the peoples decisions to
change their operator from one to the other. (Condition: Ceteris
Paribus)
2) Operators tariffs (X5): Negative relationship
Operators tariffs as well, have a great impact on the peoples
decisions to change their operator from one to the other. (Condition:
Ceteris Paribus)
3) Network Coverage (X6): Positive Relationship
Network Coverage also affects peoples decisions to change their
operator from one to the other. (Condition: Ceteris Paribus)

Significance of the model (R, R adjusted, and F-test)

(Appendix 3)
In our Model R is equal to 0.726 meaning that 72.6% of the variation around
the churn rate variable is explained by the variability of Gender, Current
Operator, Monthly Income, Satisfaction Level, Tariffs, Network Coverage, and
Quality of Customer Service and 27.4% of the variation around the churn
rate variable is due to other factors.

11

For our R adjusted, it is equal to 0,719 meaning that 71.9% of the variation
around the churn rate is explained by the multiple regression model adjusted
given the number of independent variables and the sample size n.

Significance of F test
If we look at F test in our Model, it shows that the model is significant which
is equal to 113.412
Therefore, the model is significant and it fits well.

Conclusion
After running the regression and checking the data in terms of the four
assumptions, we found that our main variable that is the churn rate between
the three operator, Maroc Telecom, Mditel, and Wana in Morocco ( given
surveys conducted during 3 week-ends in Ifrane), is mainly affected by the
Monthly Income of households, tariffs, and coverage network. This was found
in the study by Md. Rabul Kabir, Mirza Mohammad Adarul, Ahlam Zahidul and
the study by Dr. Ravilochanan and P.S. Rajeswari, (see literature review part).
However, in our findings we did not get exact same results for the other
variables, since we did not include variables such as Responsiveness to
complaints of the operators and the transparency about tariffs, prices of the
SIM cards, promotions, etc as this data was not available to us.
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Recommendations
What we recommend is that more surveys in different regions of
Morocco must be conducted taking into consideration other factors that we
mentioned before in order to get well-built studies and have more precise
results.

Appendices:
Appendix 1: Testing for Normality

Appendix 2: Test for Linearity

13

14

Appendix 3: Testing for Autocorrelation and R2

Appendix 4: Test for Multicollinearity

15

Appendix 5: Testing for Equal Variances or Homoscedasticity

ANOVAb
Sum of
Squares

Model
1

Mean
Square

df

Regressio
n

34.167

4.881

Residual

12.911

300

.043

Total

47.078

307

F
113.41
2

Sig.
.000a

a. Predictors: (Constant), QualityofCustomerService,

CurrentOperator, Gender, MonthlyIncome, Tarrifs,
NetworkCoverageQuality, SatisfactionLevel
b. Dependent Variable: churnRate

Appendix 6: Other Results

16

Coefficientsa
Unstandardized
Coefficients
Model
1

B
(Constant)

Std. Error

2.894

.049

.023

.035

CurrentOperator

-.103

MonthlyIncome

Standardize
d
Coefficients
Beta

Collinearity
Statistics
t

Sig.

Toleranc
e

VIF

58.814

.000

.029

.664

.507

.469

2.133

.020

-.246

-5.072

.000

.390

2.565

-.022

.009

-.115

-2.545

.011

.450

2.220

SatisfactionLevel

-.056

.028

-.161

-1.991

.047

.139

7.176

Tarrifs

-.235

.021

-.667 -11.427

.000

.268

3.729

NetworkCoverageQ
uality

.013

.019

.039

.669

.504

.264

3.786

QualityofCustomerS
ervice

.006

.020

.020

.291

.771

.199

5.015

Gender

a. Dependent Variable: churnRate

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Residuals Statisticsa
Minimu Maximu
m
m
Predicted Value

Mean

Std.
Deviation

1.14

2.25

1.81

.334

308

-2.024

1.322

.000

1.000

308

Standard Error of
Predicted Value

.025

.046

.033

.005

308

Adjusted Predicted
Value

1.12

2.26

1.81

.334

308

-.449

.864

.000

.205

308

Std. Residual

-2.164

4.163

.000

.989

308

Stud. Residual

-2.191

4.203

-.001

1.000

308

-.461

.881

.000

.210

308

-2.206

4.326

.000

1.005

308

Mahal. Distance

3.332

14.204

6.977

2.676

308

Cook's Distance

.000

.043

.003

.005

308

Centered Leverage
Value

.011

.046

.023

.009

308

Std. Predicted Value

Residual

Deleted Residual
Stud. Deleted
Residual

a. Dependent Variable: churnRate

References:
http://www.exclusivemba.com/ijemr/App_Themes/Theme1/Images/Raje
swari.pdf
http://www.asaub.edu.bd/data/asaubreview/v3n2sl12.pdf
http://www.sante.gov.ma/Departements/DPRF/OffreSoinsJuin07/FichiesP
DF/DonneesDetaillees/RepertoireOffreSoins/13-5-ProvIfrane.pdf

18