The share of active mobile subscribers has jumped to 78 per cent as mobile companies eject users who have taken a connection but do not make calls for over 60 days. The share of active users was 68 per cent of the total subscriber base a year ago.
As a result of the weeding out exercise, the telephone user base dipped by another 5 million in August. The subscriber base had dipped by 20 million in July after massive disconnections by Reliance Communications.
This was the first time the telephone subscriber base had fallen since mobile services started in 1994. Bharti, Vodafone and Idea Cellular lost subscribers in August. The total telephone user base now stands at 939 million, of which 701 million are considered active users or those who make a call or send an SMS at least once in 60 days.
This is a far cry from just a few years ago, when telecom service providers used to provide Life time Pre-paid SIMs to subscribers. As a result, even if a customer did not recharge for six months, he would still be counted as a subscriber.
There are several reasons why mobile companies have changed their tactics. For one, spectrum allocation rules have changed from subscriber-linked criteria to auction. Earlier, operators could get more spectrum if they amassed 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.
As a result of the clean-up exercise the Average Revenue Per User for telecom companies is beginning to increase for the first time in many years. This is good news for telecom companies that have been dealing with declining revenues for the past two years.