Ongoing negative subscription growth to help telcos improve operational efficiencies?

Earlier in the month, Telecom Regulatory Authority of India (TRAI) data for July 2012 showed six out of 13 operators registered a combined negative subscriber growth of 24.71 million over the previous month.

This was followed by a Cellular Operators Association of India (COAI) report showing that six out of the nine GSM operators it represented experienced negative subscriber growth in the month of August 2012. Only two operators Aircel and Loop Mobile were able to show positive subscriber growth for the month, while BSNL data was not available. The net subscriber decline by COAI member operators was over 7 million in August.

Data for non-COAI members like Reliance Communications and Tata Teleservices would likely become available only when TRAI releases its next monthly report, which it typically does 30-35 days after the end of a month.

As of now, nine out of the 13 operators that TRAI reports, already have negative subscriber growth in at least one month during the July-September quarterly reporting period. And more significantly, the top operators, Airtel, Vodafone and Reliance, have all earned the dubious distinction now.

This indeed is a quarter en route to becoming the worst performing ever, with two consecutive months of net subscriber decline almost certainly determined.

It also almost looks certain that the quarter will report a higher net subscriber decline than the total mobile number portability (MNP) requests received. If one were to go by the MNP trends from the past months, the total MNP request for the July-September quarter would hover below 15 million. And that has already been exceeded by the net subscriber decline in July alone.

One explanation to this decline is that subscribers are surrendering their second or third SIMs en mass. That would have sounded logical had India been a post-paid dominated market. Given that it’s a prepaid market, the chances that subscribers would bother to surrender their connections are very slim.

The other possibility, that operators themselves would be proactively be disconnecting the inactive subscriptions is more likely.

The question remains: why? Why would operators suddenly be doing that?

One reason would be that operators no longer see value in maintaining subscriber records for those cases where the inactive periods are exceedingly long and the visits to their networks are too occasional. This would lead to a bloated assessment of their resource needs (including spectrum) and the hence the budgets.

With the rise in spectrum costs impending, it is logical for such measures to suddenly gain significance.

More such disconnections are likely in the coming months before it all gets stabilized. A related reason also lies in the to-be-implemented free-roaming regime, the announcement for which was already made more than three months ago.

As is common knowledge, there are large migrant populations in the metros and tier 1 cities that visit their home states with varying frequencies. Often, they use different SIM when visiting their home towns, to save on roaming charges.  

Now, with the roaming regime expected to end in the near future, subscribers would no more be using the second SIM cards to save on roaming costs (they may still use second SIM for personal requirements, but the incidence would come down).

That too would lead to more inactive connections, which in turn would likely be switched off by operators.