The number of mobile subscribers in India is around 881 million. But how many actually use their connections? Data from the telecom regulator TRAI shows that, as of October 2011, only 71 per cent of them were active users. This has a direct bearing on operator revenues.

Avoid price wars

The message seems to be that low tariff does not buy loyalty and regularity of use. Spread uniformly across almost all the states they operate, those with highest proportion of active users are Bharti Airtel (88.8 per cent), Idea Cellular (92 per cent) and Vodafone (82.8 per cent).

Not surprisingly, the ARPU (average revenue per user) of these three mobile services players is the highest in the industry. Among other pan-India players, Reliance Communications has just 64.5 per cent active subscriber base and finds itself grappling with heavily falling ARPUs.

For BSNL, Aircel and Tata Teleservices (including Tata DoCoMo), the proportion of regular users is just 50-55 per cent. Tata DoCoMo, which pioneered the per second tariff war, has nearly half its mobile user base floating or belonging to the non-regular category. The ARPU for these players is much lower compared to the top three.

New operators

The figure for new operators such as Etisalat, Loop, Videocon and Sistema is just 27-48 per cent. Uninor is an exception with 58 per cent of its base active. To cite an example, Mumbai, with 14 operators, has just 59.6 per cent active users. However, for Bharti, Idea and Vodafone, that proportion is 75-85 per cent.

Over the last couple of quarters, the top operators have also reduced the pace of subscriber additions to make their overall base more lucrative. From an industry perspective, the takeaway is that the segment is getting crowded with too many non-serious players.

The top six-seven operators alone, among the 15 in the country, have a subscriber market share of over 90 per cent and an even higher revenue share. Clearly, if the intention to bring in a host of new players was to make the telecom turf more competitive, the experience already shows that only long-term incumbents (some, albeit shakily) might thrive.

If anything, these VLR numbers (Visitor Location Register, referring to active users) suggest that mergers and acquisitions in this space must be hastened and several operators with unviable operations must be allowed to exit the business or sell out.

That would bring pricing power back to the top players, and possibly higher quality service, which is necessary for them to shore up profits.

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