There has been a sharp decline in the number of new GSM mobile subscribers being added every month. The number has declined by 40 per cent, from 14.7 million in February to 8.6 million in June.
The steep decline, which is happening for the first time since 2004, is primarily because of decrease in the number of dual SIM connections and the absence of any new tariff cuts.
Analysts and operators say this is a clear indication that the growth in subscribers has peaked and is on its way down. “We won't see operators adding 13-14 million new subscribers a month anymore. As cities and towns are getting saturated, operators will find it difficult to get new subscribers from rural areas, especially with the stringent subscriber verification norms,” says Mr Rajan Mathews, Director-General, Cellular Operators' Association of India.
Across all operators
The decline in net addition is happening across all the operators. Idea Cellular, which was adding over 2.5 million net subscribers every month during November 2010-April 2011, reported a drop in net subscriber additions to 1.4 million, down 24.8 per cent. Net subscriber addition numbers of Bharti, Vodafone and Aircel also fell by 13.5 per cent, 14.5 per cent and 17.3 per cent, respectively.
But operators are not worried too much as they look towards 3G and other value-added services to compensate for the fall in volumes. “No industry can keep growing exponentially. The decline in subscriber addition was expected and there is no cause for alarm as long as the revenues are holding up. While the voice market will continue to be significant, we will see a higher uptake in data services,” says Vodafone Essar's Strategy Director, Mr Samaresh Parida.
Mr Rajat Mukarji of Idea Cellular said that as long as the operators balance out the fall in subscriber volumes by an increase in minutes of usage, or average revenue per user, there's nothing to worry.
Quality focus
Analysts reckon that the fall in subscriber growth is, in fact, good news for the industry as it will get the operators to focus on quality than quantity. “With the reduction in the number of dual SIM connections, the numbers that are being reported now are more realistic. This is good for the industry as operators will now focus on high revenue share instead of subscriber share. You will also see a host of value-added services being launched over the next 12 months,” says Mr Prashant Singhal, telecom industry leader, Ernst & Young.
Tariff hike likely
Market watchers say that operators could increase the tariffs to balance out the fall in volumes.
“There are already discussions taking place for a tariff hike. Operators are also tightening the screws on the channel partners who were till now fleecing the service operators by selling dual connections to users who would not even make calls worth Rs 30 a month,” said a market watcher.