Even as the telecom operator market veers towards a duopoloy, the competition to acquire telecom subscribers has heightened. Contrary to the expected trends, mobile number portability (MNP) churn rate has been increasing since April 2022. According to the latest subscriber report, released by the Telecom Regulatory Authority of India, the MNP churn rate for November 2022 has doubled at a year-on-year level.
In November 2022, 1.1 per cent of the total wireless subscribers ported their number to another operator. This is almost double the rate reported in November 2021, where only 0.6 per cent of the total subscribers ported their numbers.
The reasons for the heightened rates for mobile subscribers switching operators are many. According to Peeyush Vaish, Partner and Telecom Sector Leader at Deloitte India: “Subscribers leaving Vodafone Idea’s network for Bharti Airtel and Reliance Jio is one of the reasons behind the higher MNP rates. The rollout of 5G services by Jio and Airtel is also contributing to the rising MNP churn rates. Right now, operators have not taken any tariff hikes on their 5G network, so customers are switching to operators who are providing 5G network in their respective areas.”
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However, another analyst added that the more likely reason is the fact that operators have hit the upper limit on the number of additional subscribers they can add to 4G networks. Due to a variety of economic and geopolitical factors, the total 4G subscriber base has stopped growing. Operators cannot further penetrate into the rural market as users cannot afford smartphones and 4G data plans. Therefore, according to the analyst, telcos are trying to swipe subscribers away from their competitors and increasing investment on on-ground sales and marketing strategies.
Quarterly updates by the top operators Jio and Airtel do indicate that sales and acquisition expenditures have increased massively for operators. According to Reliance Jio’s quarterly report for Q3FY23, selling and distribution expenses for the December 31 quarter has doubled on a year-on-year level to ₹498 crore in Q3FY23, versus ₹269 crore for the same quarter last year. Bharti’s sales and marketing expenses also increased by 40 per cent between Q2FY23 and Q2FY22.