India’s mobile subscriber base, which has grown consistently for the last two decades, has fallen by 30 million in just four months, primarily due to pressure on the operators to ensure full documentation of their subscribers and deactivate zombie accounts.
Starting from June, India’s mobile operators, including Tata DoCoMo, Reliance Communications, Bharti Airtel, Idea Cellular, Vodafone and Shyam Sistema (MTS), have been vigorously clearing their databases of zombie subscribers.
The most important reason for the purge of numbers is speculated to be inadequate documentation. The government has been, in recent months, pressing the telecom operators to get their subscriber-related paperwork in order, worried about terrorism. It also implemented new guidelines for validating new subscribers last month, prolonging the mobile number activation process from a few minutes to between 1 to 2 weeks.
Another reason for the purge has been the rise of the zombies and the resulting ‘number crunch’.
Indeed, in recent years, mobile companies have been extremely aggressive in adding new subscribers, leading to the addition of zombie subscribers who are not really using the services after buying the nearly-free connection. In fact, the pace of ‘gross’ subscriber additions was faster than the real growth in in-use numbers, or VLR numbers.
According to the Telecom Regulatory Authority of India, only about three-quarters of India’s total 900 million (90 crore) subscribers are actually switched-on, as indicated by VLR (visitor location register) of mobile companies.
In fact, the problem became so acute that mobile companies were soon running out of numbers to allot to new customers.
Now, in response, mobile operators have been rapidly purging their networks of the zombie connections, most visibly from June.
The biggest purge, by far, has been done by Reliance Communications, which launched its GSM services about four years ago. The company offered several freebies and extremely low call rates to induce customers to join its network.
Not surprisingly, by May this year, only two-thirds of its subscribers were actually switched on, though that figure was much better than those of other new operators like Aircel and Tata DoCoMo, both of which had 57.8% of their subscribers active on VLRs (see first chart below).
To rectify, Reliance Communications launched a mega-purge of 21 million subscribers, or about 14% of its total subscriber base, in July this year. Not surprisingly, Reliance’s share of India’s mobile subscriber base fell from 16.55% in June to 14.68% in July. It again purged about 1 million more subscribers from its records in October (See chart 4 below).
RCom, however, was not alone in the purge, nor was it the first. Tata DoCoMo set off the trend in June, getting rid of nearly 1.35 mln subscribers in June, followed by about 1.7 mln in October.
Another big purger was Bharti Airtel, India’s biggest operator, which removed about 2.4 to 2.5 million subscribers in August and another 1 million in October.
Similarly, Vodafone removed about 1.7 million in August and about 0.7 million in September, and Idea Cellular removed about 2.3 million during the two months.
Uninor, which shut its operations in several states over the past three months, too has got rid of more than 3.5 million subscribers.
Sistema, which operates the MTS branded service, has been among the least affected, with under a million purges.
Interestingly, state-owned BSNL is yet to start any significant cleaning process, and has been a net gainer in all these. Its market share has gone up from 10.5% in May to 11% in October.
The net result of all this has been that India’s mobile subscriber base has been shrinking fast from June onwards, with no signs that growth is going to return. It has fallen by about 30 million from about 934 in June to 904 at the end of October (see chart below).
On the positive side, the dip has not really affected India’s real growth in mobile penetration. The real number of mobile subscribers, as reflected in VLR-based subscriber data, has continued to grow during the period. It went from 687 million at the end of May to 704 million by the end of October.
Moreover, the percentage of ‘switched on’ subscribers too has grown consistently. It was about 74.2% of the total subscribers in May, and jumped abruptly to 76.4% in July due to Reliance’s purge. Since then, it has grown to touch 77.9% in October (See chart 3 below).
While many have lauded the move to bring more transparency into subscriber numbers, some customers have, however, complained about being given the short shrift, as their numbers have been among the deactivated ones.