Mobile subscriptions fall after clean up drive



Mobile subscriptions fall after clean up driveSiddharth Tak/ Zee Research Group

The prospect of long-term stagnation gripping Indian telecom market is getting real with each passing day. In July, for the first time ever the net mobile subscriber additions of mobile operators fell by 20.61 million to 913.49 million on account of massive cleanup drive against inactive users. The biggest hit was taken by Reliance Communications with subscriber base ebbing by 20.49 million.

Similarly, in August 2012, the decline of 5.13 million owed to deactivation of connections by Bharti Airtel, Vodafone and Idea (the combined base of these three declined by 5.11 million). Taken together, July-August saw India’s total mobile user base declining by 25.74 million. By no means, however, it should be considered as negative. In fact, the cleanup will help industry to focus on revenue generation rather than amassing customers.

With the implementation of new subscriber verification norms from next month, the pressure on subscriber net additions are likely to subsist for a couple of months to come. Separately subscriber net additions have been negative for top three operators consistently over the past three months suggesting coordinated efforts are being made to control the multi–SIM phenomenon.


In January-August 2012, India added only about 14.52 million mobile subscribers as against 141.65 million in 2011, clearly representing a steep decline in net addition of mobile subscriber in the country. The net mobile subscriber additions in 2010 and 2009 were about 227.04 million and 178.26 million respectively.

Explaining the rationale behind the declining trend of subscriber net additions in the country, Ajay Srinivasan, director, CRISIL, opined, “Mobile operators across the board are deactivating inactive subscribers (a subscriber who has not made a revenue-earning call in 60 days) from their networks since July 2012.”

Srinivasan’s thought got an endorsement from Mahesh Uppal, promoter and director, Com First (India), who averred, “The main reason behind the negative trend seen in net addition is that companies are deactivating their inactive customers in order to reduce the burden of the inactive customer cost.”


Another school of thought came from Sandeep Gupta, Managing Director, Protiviti Consulting, who asserted, “The mobile operators are churning out their inactive customers. Moreover, mobile operators in the country are not offering exciting offer packs which led to less or negative growth in net additions of mobile subscribers.”

Providing an insight behind the mobile operators move to deactivate their inactive customers, Srinivasan at CRISIL, said, “Earlier, allocation of spectrum was linked to the number of subscribers on the operator network. In future, however, all allocation of spectrum would be done only at a market-determined auction price. Hence, in order to efficiently use available spectrum, operators would have to focus on increased usage by subscribers on their network, as against merely adding subscriber numbers, and network planning.”

An interesting fact came out of TRAI report which stated that percent of active user has increased from 70 percent in December 2010 (since TRAI started tracking of active users in the country) to 77.27 percent in August 2012. While in the month of June, this figure was at 74.49 percent, it increased by 3.23 percent in the period of those two months (July and August) when the net additions faced negativity.

Reliance Communications’ active mobile users have increased significantly from 66.63 percent in June 2012 to 76.10 percent in August 2012. Similarly, Idea’s active users have increased from 92.51 percent to 94.05 percent. However, Bharti’s active users have increased marginally from 90.78 percent to 91.53 percent along with Vodafone’s gain of mere 0.7 percent to 90 percent during the same period under review.

Looking at the circle-wise performance related to the growth seen in active users, Haryana has emerged as the biggest gainer with active mobile subscriber base growing by 5.74 per cent to 75.14 percent in August 2012. Haryana was followed by Mumbai at 70.18 percent (gain of 5.26 percent) and Delhi at 76.52 percent (gain of 4.58 percent).