180M deactivations would help ARPUs to inch up but tele-density would be faced with decline

According to a release from BusinessandMarket.net, the mobile subscriptions base in India will steadily shrink over the coming months and is expected to be around 880 million by December 2012 and 800 million by December 2014. (See: http://www.businessandmarket.net/p/press-release.html)

There is no reason to expect that the worst would be over after the India mobile services industry reported net negative additions in the months of July and August 2012. On the contrary, it would be developing into a trend that would last for the coming 18-24 months.

There already is a 10 percent to 12 percent redundancy in the form of inactive subscribers, which would be further increased by another six to eight percent when the free-roaming regime sets in, expectedly around January 2013. Consequently, between 160 and 180 million subscription could become eligible for de-activation.

BusinessandMarket believes that these many subscriptions would be hard to scrub for operators in very short periods and operators would run the risk of sending negative or disruptive signals to investors, partners and other stakeholders. Therefore the deactivations are expected to be spread out over longer time frames. Operators are likely to prefer scrubbing 6-7 million inactive subscriptions per month, and would not like to delete more than 9-10 million subscriptions a month.

However, given that there also would be new subscriber additions, the net negative additions would get somewhat moderated. Exceptions apart, the average net negative additions are likely to be in the range of four to five million subscriptions a month for the forecast period of 2012 to 2014.

This is expected to have positive fallout for the industry in terms of increased average revenue per subscription (ARPU), among other benefits but would negatively impact the tele-density of the country for the mobile subscriber forecast period under consideration. 
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