A popular term modified by the health and life insurance industry to encompass the act of convincing of a consumer to buy more life insurance, with the promise that it would be paid for with built-up values on old policies
The churn rate, measuring the number of customers who defect to a rival operator, fell to 25 per cent in the first quarter - some six percentage points lower than last year - as O2 introduced a number of loyalty programmes to lock in long-term customers.
Fitch expects Tahoe's net leverage to stay at around 85%-90% as we think Tahoe is not likely to deleverage because a faster churn rate will require the company to expand its current land bank, which is sufficient for only around 2.5 to 3 years of development.
Tahoe's attributable contracted sales rose 14% to CNY34.3 billion in 2016, and the company will increase its churn rate from 2017 with contracted sales estimated at above CNY60 billion in 2017 despite unfavourable government policies.
The company's churn rate, as measured by contracted sales/gross debt, is likely to fall below 0.6x and may stay below this level, which will breach Fitch's threshold and may result in a rating downgrade if recurring EBITDA does not increase sufficiently to provide an offset.