India’s telecom boom appears to be running out of steam, with the overall telephone subscriber base declining for the first time in July.
According to data released by the Telecom Regulatory Authority of India, the total subscriber base fell by 20.71 million to 944.81 million in July from 965.52 million a month ago.
The biggest loss in user base was for Reliance Communications, which lost 20.48 million users, followed by Tata Teleservices, Uninor, Videocon, Loop and MTNL. “This is a cause of worry as clearly the market has lost the growth momentum,” said Rajan Mathews, Director-General, Cellular Operators Association of India. Mobile operators have been reporting decline in net additions over the past six months.
Reasons for decline
There are multiple reasons why the numbers are coming down. Most new operators have stopped services in some of the circles owing to the uncertainty over their licences.
For instance, Uninor lost over a million subscribers on its network after it closed operations in four circles.
Before February 2011, the industry’s net subscriber addition was around 20 million a month.
In June 2012, this came down to about 5 million. Deactivation of inactive subscribers is another major reason.
Also, spectrum allocation rules have been changed from subscriber-linked criteria to auction.
Earlier, operators could get more spectrum if they added more subscribers. But now, with auction being the preferred allocation method, there is no incentive for operators to bear the cost of offering services to someone who does not even pay Rs 10 a month.
The new norm governing numbering resources is another reason.
The Telecom Department now allocates numbers based on active users. RCom, for instance, has had to deactivate millions of subscribers to free up numbering resources.
Most other operators are also now ejecting subscribers who do not use their phone over a 60-day period.