Ronnie05's Blog

Net Subscriber Growth Slowing down! Telcos need to re-think

Posted in Industry updates by Manas Ganguly on July 9, 2011

Mobile subscribers growth is slowing down. If it was a lingering doubt that i had expressed in my last post, May 2011 subscribers data adds a solid brick of evidence that subscriber growth is decelerating.

Highlights of the May month numbers have been:
1. 13.35 Million new mobile subscribers were added taking total tally to 840 Mln.
2. Wireline subscribers reduced by 0.15 mln – the tally stands at 34.40 mln.
3. As of May 2011, there are 554.75 Million Urban subscribers as compared to 294 million rural ones.
4. Urban Teledensity (154%) is nearly 5 times higher than rural (34%).
5. There are 2 urban subscribers for every one rural mobile subscriber in India
6. Mobile Number Portability requests increase from 85.41 lakh subscribers at the end of April 2011 to 105.70 lakh subscribers at the end of May 2011.
7. Active wireless subscribers in May 2011 stand at 588.13 Million, which is about 70 percent of all mobile subscribers!
8. Broadband subscription reaches 12.12 Million in May-2011 from 12.01 Million in April-2011.

While ARPU has been southbound for a while now, the trend that is building up is a slow down in subscriber acquisition as well as MNP numbers starting to look up. For 2 quarters, Telcos have tried their muscle in trying to stop subscribers from jumping ship. However, with absence of improvement in quality of voice and data served, users are now making the shift. AN example here is that of Videocon which was languishing at an ARPU of Rs.8.5 and now to add to its miseries are customers as they jump ship. A reported 1.86 lakh subscribers exercised MNP in Videocon this month.

The growth now on is to come from the rural segment and there are choices that the TRAI and DoT are considering to encourage operators to travel deeper into rural India. Two options are currently being considered, one of them being subsidies to Telecom operators as an incentive for furthering the rural reach. The other option is about utilizing the Universal Services Obligation Fund (USOF) fund chest which is around Rs.20,000 crore currently to fund rural expansion. I guess we would see something on this front before the end of the year.

Whichever way it is Innovation at reaching out and monetizing telecom services has been a bottleneck and with the wellspring of net subscriber adds slowing down, it will be interesting to see how operators fare on a lot of operational and profit counts!

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