Subscriber growth falls to a four-year low for telcos

A collusion of factors, including reduction in retailer commission, hike in call tariffs and stringent identity verification requirements, has accelerated the fall in monthly mobile subscriber addition, which hit a four-year low in August.

Going by data released by the Cellular Operators Association of India (COAI), the GSM industry body, member operators added 5.4 million new subscribers in August.

That’s down nearly 30% from the 7.64 million added the previous month.

The fiscal year average, too, stands much higher at 13.6 million a month.

GSM — short for Global Standard for Mobile communications — technology accounts for over 600 million subscribers across India. Code Division Multiple Access, or CDMA, accounts for another 219 million, or about a quarter of the total mobile phone subscribers in the country.

According to COAI, Bharti Airtel and Vodafone added around 1.1 million subscribers in August, a 52-month low for both, while Idea Cellular topped the chart with 2.3 million new additions.

Idea Cellular, promoted by the Aditya Birla group, recorded a 132% jump in net additions from the previous month.

Among the operators, Idea has the largest presence in rural India.
While larger operators saw declines in subscriber addition, smaller and newer operators such as STel and Videocon, in fact, saw negative subscriber addition in August, implying loss of subscribers during the month.

With Indian cities getting saturated with mobile subscribers and telecom firms going slow with their rural operations, the fall in subscriber additions were expected.

But the fall has come at a sharper pace than analysts expected.
Urban teledensity is over 150%, according to the Telecom Regulatory Authority of India, while rural teledensity is still stagnating around mid-30 levels, leaving much room for growth.

Unlike in cities, increasing rural coverage comes with higher capital expenditure as the firms will have to set up new telecom towers to improve coverage in areas where they don’t currently have adequate presence, said an analyst with a local brokerage, requesting not to be named as he is not authorised to speak to the media.

As the focus on urban subscriber addition reduced, service providers have also cut back on expenses by reducing commission for retail agents who sell new mobile connections.

Further, in an effort to raise the average revenue per user, some of the larger firms such as Bharti, Vodaone, Idea and Reliance Communications had recently raised call tariffs by about 20%, mostly for calls within their respective networks.