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Huge hang-up: Tata Teleservices lost 2.7m in July

Sharp contraction in subscriber numbers, which comes close on the heels of a tariff hike, may be due to purging of inactives.

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In a country used to seeing millions of new telecom subscribers every month, Tata Teleservices has pulled a shocker by losing as many as 2.7 million, or 3.1%, of its subscriber base, in July.

The company, which owns the Tata Docomo brand, saw its wireless subscriber base fall from 91 million at the end of June to 88.3 million at the end of July, data from industry body Association of Unified Telecom Service Providers of India show.

The company has a 11% revenue share of India’s telecom market.

According to the Telecom Regulatory Authority of India, only about 48% of Tata Tele’s subscribers were active at the end of June.

The sharp contraction compares with a relatively weak subscriber addition of 2.1 lakh in June. The National Capital Region, Chennai and Madhya Pradesh saw the sharpest declines.

Tata Tele did not respond to queries from DNA Money seeking reasons for the subscriber loss.

On the other hand, rivals Bharti Airtel and Vodafone added 1.5million subscribers each in July, while Idea Cellular added a million.

In June, Tata Docomo had announced that those joining after 16th of that month will need to pay higher charges after their first year of subscription.

The higher charges represented a doubling in call tariff from 1 paisa per second to 2 paise per second.

Bharti, Reliance, Vodafone and Idea Cellular joined soon after with a 20% tariff hike in call rates, marking the reversal of a 2-year trend where call tariffs have been on a downward spiral following the entry of new subscriber-hungry operators in 2008-09.

Analysts, however, differed on possible reasons for Tata Tele losing subscribers “spectacularly”.

Of late, they say, operators have been trying to focus more on increasing revenue from subscribers rather than adding subscribers aggressively, thus resulting in a slowing down of monthly subscriber additions.

Analyst with a foreign brokerage, who did not want to named, said the fall Tata Tele’s subscribers is likely on account of the firm purging its books of inactive subscribers — typically those who sign up just to take advantage of discounted promotional schemes and stopped using the connection when the discount schemes are no longer available.

To be sure, the only other telco that has reported a fall in subscriber numbers during July is Videocon, which lost about 95,000 subscribers.

For Videocon, a struggling new entrant in the market, this is not the first time.
DNA Money had reported in February that Videocon lost of as many as 1.3 million subscribers during January, which analysts then attributed to efforts to ‘clean-up’ the subscriber base.

The clean-up referred to newer entrants in Indian telecom industry such as Videocon, Uninor, Etisalat and Sistema Shyam aggressively signing on subscribers without verifying their identities as required by law and later scrambling to ensure regulatory compliance by ‘cleaning-up’ the database.
 
 

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