The 30% Leak: Why Telcos Lose Revenue During Identity Verification

Revenue loss rarely comes from a single, visible source. Instead, it leaks silently across systems, processes, and digital journeys. Telco operators invest heavily in network infrastructure, customer acquisition, digital channels, and fraud systems, yet a significant portion of revenue erosion happens at one of the earliest touchpoints with the customer: identity verification.

What may appear as separate issues: subscription fraud, onboarding drop-offs, low eKYC conversion rates, rising acquisition costs, and compliance friction are deeply interconnected. They form a structural problem where security controls, user experience, and business performance intersect.

Optimizing identity verification is therefore not just about preventing fraud, but rather about protecting growth, improving conversion, and building digital trust at scale. In this article, we examine how fraud operates in telecom, the hidden costs of weak verification, and strategies to increase eKYC conversion rates while strengthening telco fraud prevention.

Subscription Fraud in Telco: How It Actually Happens

Subscription fraud has become highly organized, automated, and scalable. Fraudsters use stolen identities, synthetic profiles, automated scripts, and compromised datasets to create accounts and subscriptions at scale. They exploit SIM registration flows, promotional campaigns, device offers, and subscription models to extract value quickly. Access to telecom infrastructure can be monetized in several ways, including resale of subscriptions or devices, network abuse, service exploitation, and account farming. This makes telco ecosystems attractive targets for organized fraud.

As digital onboarding becomes more automated, weak identity verification flows become even more valuable to fraud networks. Without adaptive, intelligent systems, telcos risk both direct revenue loss and inefficiencies in operations.

The 30% Leak: When Fraud Becomes a Structural Business Risk

For many telcommunication companies, financial loss is still recorded in isolated categories: fraud losses in one report, onboarding conversion in another, churn in a third. Customers and fraud networks, however, experience the system as one continuous journey.

Revenue disappears when:

• fraudsters successfully onboard and monetize access
• legitimate users abandon complex verification flows
• digital channels fail to convert visitors into customers
• operational costs rise due to manual checks

These losses compound over time. Each failed onboarding attempt reduces acquisition efficiency. Each successful fraud case increases future exposure. Every drop in eKYC conversion rates increases customer acquisition costs. Together, these factors form a systemic revenue leak rather than isolated operational problems. In some markets, subscription fraud has reached measurable industry-level impact. Research shows that in South Africa alone, subscription fraud contributed around 30% of total revenue loss across the telecom industry. This is a clear illustration of a structural risk model relevant globally.

The False Solution: More Friction, More Controls

Many telcos respond to fraud by adding additional steps to verification, such as longer forms, extra document uploads, manual reviews, or in-store verification. However, adding friction does not equate to improving security.

Heavy onboarding friction lowers trust, frustrates legitimate customers, and drives them away from digital channels. At the same time, professional fraud groups adapt and automate around complex flows. The result is a cycle where higher friction reduces conversion, lower eKYC conversion rates increase acquisition costs, and exposure to fraud remains. Without intelligent verification, both revenue and customer experience are compromised.

Where Identity Verification Breaks Down

Identity verification often fails when it is fragmented, rigid, and disconnected from real-time intelligence. Many businesses rely on multiple systems for onboarding and verification that do not communicate with each other, and that depend on static rules instead of adaptive, risk-based decision-making.

When identity checks are treated as a one-time hurdle rather than an ongoing process, the system loses visibility into user behavior, context, and emerging risk patterns. Verification becomes slow and costly, frustrating legitimate users and increasing abandonment. Meanwhile, fraudsters exploit gaps in the system to access services, abuse promotions, or commit account takeovers. Processes designed to protect revenue can inadvertently create losses through inefficiency, missed conversions, and fraud exposure.

KYC and eKYC processes are also often designed primarily to meet regulatory requirements rather than optimize business performance. This results in verification flows that feel like obstacles, causing users to drop off at critical points during digital onboarding.

When identity is treated as a box to tick, it becomes a burden rather than an asset. Customers experience friction, operational teams face increased manual workloads, and revenue suffers from both abandoned sign-ups and fraud that slips through weak checks. Identity verification should function as both a protective and enabling infrastructure, not simply a procedural requirement.

How Telcos Can Close the Leak

Addressing revenue loss from weak verification requires moving from those friction-heavy models to adaptive, intelligence-driven systems. Verification processes should respond to real-time signals, allowing low-risk users to move through smoothly while applying additional checks only when necessary.

Intelligent verification balances security and user experience, reduces unnecessary friction, improves conversion rates, and allows fraud teams to focus on high-risk cases. By integrating real-time analytics, behavior monitoring, and reliable digital identity sources, telcos can protect revenue, reduce operational costs, and improve eKYC conversion rates without compromising security.

Well-designed identity systems do more than prevent fraud. They protect investments in customer acquisition, enhance digital onboarding performance, strengthen trust, and support sustainable growth. When built intelligently, these systems stabilize and scale operations instead of slowing them down.

By treating identity as part of business infrastructure, telcos turn it from a cost center into a growth enabler. Verification becomes a way to ensure legitimate users can access services easily, while potential fraud is intercepted proactively, reducing revenue leakage and operational risk.

Conclusion: From Leakage to Leverage

Revenue loss can result from frustrated customers abandoning onboarding, from fraudsters exploiting weak flows, or from operational inefficiencies in manual reviews. These losses are structural rather than incidental, and addressing them requires redesigning identity verification as a strategic, adaptive system.

By transforming identity into intelligent, risk-aware infrastructure, telcos can improve digital onboarding, increase eKYC conversion rates, prevent fraud, and create secure, user-friendly digital channels. In today’s telecom environment, identity verification is no longer just about confirming who a user is. It is about enabling legitimate users to access services seamlessly, keeping fraud out, protecting revenue, and supporting business growth.