When mobile phone companies, used to reporting several million new

Question

Which of the following best completes the passage below?

When mobile phone companies, used to reporting several million new customers in a month, do the opposite and report a sharp fall in that number, you know that the country’s most dynamic industry has entered a new, more troubled phase. However, this statistic may not necessarily be as much of a cause for concern as it looks because ________________________.

(A) mobile phone companies have huge cash reserves so they will not face the problem of cash flow for a few months at least

(B) inflated claims about new customer acquisition have been very much a part of the industry story so far

(C) the sales of mobile phone handsets hasn’t fallen down appreciably

(D) other competitors have not entered the market in huge numbers

(E) mobile phone companies are making huge investments in widening their network coverage

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Dereno · Answer

The question stem begins the statement about mobile companies which show the rise in customer numbers , but do they really show the drop in customer number also. It mentions the company, which has been more dynamic in the past years, have shown troubled phase in the recent years.

The next line begins with the word,  however  - which clearly denotes the shift from earlier perception. This statistics, May not be cause of concern as it looks because ______________________.

The blank space has to be filled with some information which clearly mentions the statistical data to be either false or misleading.

(A) mobile phone companies have huge cash reserves so they will not face the problem of cash flow for a few months at least

The question speaks about customer increase or decrease only. It neither speaks about profit or revenue or cash reserves that are needed for the effective functioning of the company. Since this option speaks about cash reserve, which is just not relevant to the question in hand. Hence wrong.

(B) inflated claims about new customer acquisition have been very much a part of the industry story so far

This option clearly mentions the customer numbers are inflated. So any decrease in the inflated value is not going to give us the accurate figures or impact on the dynamic company. Hence, the option clearly justifies as the suitable option for conclusion. This option goes contradictory to the initial few statements of the question. Hence, correct.

(C) the sales of mobile phone handsets hasn’t fallen down appreciably.

This question is not discussing about mobile handsets with each customer implicitly or the change in number of handsets with each customer. Hence, irrelevant option. Wrong.

(D) other competitors have not entered the market in huge numbers.

The competition between telephone companies or their market share is not the core crux of the question. Rather, the increase or decrease in numbers is not to be worried. Hence, wrong.

(E) mobile phone companies are making huge investments in widening their network coverage.

This option mentions the investments made by mobile companies to expand their network coverage - this might include installing new telephone towers at remote locations, where the population density can be very low. This option doesn’t explain either the increase or decrease which has been mentioned in the question. Hence wrong.

Option B

Bunuel · Answer

Official Explanation:

Answer: B

We have to somehow show that the statistics are not a sign for worry. B does this best by stating that the original statistics were most likely inflated so the fall in numbers may not actually be as steep as it looks.

(A) But what about after a few months? This would still be a worrying sign for the companies.

(B) The correct answer.

(C) There is no real connection between the sale of mobile phone handsets and how many subscribers join mobile phone companies every month.

(D) If despite this fact the numbers are going down, then there must be some problem.

(E) Irrelevant to the argument.

mkeshri185 · Answer

I did not get why B is the answer?. It says the Customer Acquisition was inflated means 'INCOMING' customers were LESS than actually shown. But it doesn't talk about the falling numbers. Means the falling is the same level (as nothing is given about falling , so we assume it to be same' but the incoming of customers are actually less.Then it should be of more concern not less concern.

If Reported added customers = 10 M and people going away = 5M so earlier it was problematic. But answer is looking for something which says this is LESS WORSE than the shown. B option says Reported data was inflated means in reality Reported customer is less than 10 M so lets say Actual data = 8M then out of 8M users , 5M got away which is far more problematic.

We can't just say the data is flawed so it's not of that much concern.
Still if you choose B then explain my example also.

suburbMBA · Answer

Hey, I struggled with this answer for a while too. I finally made peace with the following logic. Not sure how sound it is, but it made sense to me.
The concern that we're looking to address is that this reported fall in numbers may not necessarily be as terrible as it seems.

B gives us some indication that the fall may not be as drastic as it looks because the base we're looking at is itself inflated. Assume the reported   number for the previous month is 10 Mn and the current decline is 2 Mn. Now a drop from +10 to -2 Mn looks bad. But if we are told that the accurate figure for the prior month is 5 Mn, the drop seems less scary.

Note that this situation is still not ideal but it is not as terrible as it first looked and this is exactly what the question asks us to find.

Apologies in case of any mistakes and hope this helps.

Aman1993 · Answer

Hi Bunuel can you explain how B is the correct answer? This is a paradox question and we know that previously companies used to report millions new customers but now numbers are falling. If B is correct answer then this will not solve the paradox, as this will mean in reality the fall in new customers is even more (a greater sign of worry). I think correct answer should be C.

guddo · Answer

Which of the following best completes the passage below?
 
 When mobile phone companies, used to reporting several million new customers in a month, do the opposite and report a sharp fall in that number, you know that the country’s most dynamic industry has entered a new, more troubled phase. However, this statistic may not necessarily be as much of a cause for concern as it looks because ________________________.

The passage says the reported number of new customers has sharply fallen. But then it says this may look worse than it really is.  So the blank must explain why the reported fall may be misleading , not why the companies can survive despite the fall.

(A) mobile phone companies have huge cash reserves so they will not face the problem of cash flow for a few months at least

This does not explain why the statistic itself may be less concerning. It only says companies can manage financially for a short time.

(B) inflated claims about new customer acquisition have been very much a part of the industry story so far

This is correct. If earlier reports of new customers were inflated, then the sharp fall in reported new customers may partly reflect more realistic reporting, not a real collapse in demand. That makes the statistic  less alarming .

(C) the sales of mobile phone handsets hasn’t fallen down appreciably

Incorrect. This does not show that the fall in  new customers  is misleading. Existing customers may still be buying replacement or upgraded handsets, so handset sales can remain high even while new customer acquisition falls sharply. It also does not establish that industry revenue is unchanged.

(D) other competitors have not entered the market in huge numbers

This does not explain why the fall is less concerning. Fewer competitors may reduce pressure, but it does not explain the sharp drop in new customers.

(E) mobile phone companies are making huge investments in widening their network coverage

This may be good for the future, but it does not explain why the current statistic is less worrying.

Answer: (B)

ArmaanBajaj · Answer

Doesn't C prove that the stats are misleading, coz despite no new customers, sales are rising, so the industry is moving without any changes in the revenue

guddo · Answer

I think the key issue is that (C)  does not say sales are rising , only that handset sales have not fallen much.

More importantly, handset sales do not necessarily mean new customers. Existing customers may simply be replacing or upgrading their phones. So (C) does not show that the decline in  new customer acquisition  is misleading.

(B) does exactly that. If earlier new-customer figures were inflated, then the current sharp fall may partly reflect more accurate reporting rather than a genuine collapse in demand.

egmat · Answer

Hi ArmaanBajaj,

Two slips are hiding in that reading.

Slip 1: handset sales are not the new-customer statistic.  The passage is worried about one number, the sharp fall in  new customers per month , and the blank has to explain why  that  number is less alarming than it looks. Handset sales are a different metric, and existing customers buy handsets too, for upgrades and replacements. So handset sales can hold steady while new sign-ups collapse. C says nothing about whether the falling new-customer figure is misleading.

Slip 2: "hasn't fallen appreciably" is not "rising."  You read C as sales rising, then concluded revenue is stable. Even taken at face value, it is a true but irrelevant fact.

Now B. It says the earlier new-customer figures were  inflated , which hits the statistic itself: if the old highs were exaggerated, the reported "sharp fall" is partly numbers returning to reality rather than a real collapse. That is exactly why the drop "may not be as much of a cause for concern as it looks."

A simpler version.  A gym reports far fewer new members this month. Which fact makes that less worrying?

-  "Its water bottle sales haven't fallen."  Different metric. Regulars buy bottles regardless of sign-ups, so this tells you nothing about whether the drop is real. (This is C.)
-  "It had been double-counting sign-ups all along."  Now the alarming drop is partly just cleaner counting. (This is B.)

Only the second explains the  statistic itself  away, and that is the move the blank needs.

Answer: B

When mobile phone companies, used to reporting several million new

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When mobile phone companies, used to reporting several million new

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