Indian wireless sector may experience negative net subscriber growth for many quarters

In continuous series of information sharing on Indian wireless sector, the picture still looks very negative on detailed analysis of Dec2012 data released by TRAI. The released consolidated wireless industry level data shows that wireless subscriber level stands at 864.7 Mn and experienced huge drop of 15.9 Mn in net subscriber addition QoQ. The biggest contributor is non-active subscribers deactivation process initiated by incumbent mobile operators which led to reduction of Non-VLR subscriber but still at a very high level of 163.11 Mn as shown in subscriber distribution figure for Dec. 2012.

Subscriber Distribution (In Mn)

The constant high level of non-active subscribers in the wireless segment indicates that sector would witness more negative net subscriber growth for many quarters to come. We may witness few positive net subscriber addition growths but it all depends upon the challenger or Tier 2 and Regional Tier 3 mobile operator’s decision to clean up their non-active subscriber base. As shown in Figure “Active vs. Non Active Subscribers Dec2012”;

Active Vs Non-Active Subscriber Dec 2012 (In Mn)

The incumbent mobile operator’s level of non-active subscriber base are reducing fast and reached around 5% of the total subscriber base whereas Figure clearly demonstrates very high level of non-active userbase with Tier 2 and Tier 3 Mobile operators such as Tata, BSNL, Unitech, Aircel and MTS.

It prompted me to analyse the current market share of mobile operator’s w.r.t Active and Non active subscriber base instead of TRAI reported market share on consolidated basis. The Figure “Market share Active vs. Non-Active” clearly shows that BSNL, Aircel, Unitech, MTS are the leaders of Non-active subscriber base in Dec 2012 and have not initiated any clean-up process.

Marketshare Active vs Non-Active

Based on TRAI released document and subsequent extraction of User loss MoM on wireless subscriber data Dec 2012, net subscriber addition for BSNL, Unitech was positive to neutral whereas detailed analysis as shown in above figure shows that they have not initiated any non-active subscriber clean-up process.

User Loss (Dec-Nov)

The above analysis clearly indicates that incumbent mobile operators are focussing more on cleaner information management to reduce overall service management whereas challengers (Tier2) and regional (Tier 3) players still need to undergo the refinement to be more efficient and effective in subscriber management.

The higher non-active subscriber base in many operators inflated their consolidated wireless subscriber market share for Dec 2012. In Figure “Reported vs. Actual (VLR) Market share”, it is clear that VLR active subscriber market share for incumbents are growing whereas challenger/regional players are losing.

Reported vs Actual (VLR) Market Share

The incumbent players like Bharti Airtel (3.3%), Vodafone (2.8%), Idea (2.8%) and Reliance (0.9%) gained market share on active subscriber basis whereas the biggest looser are BSNL, Aircel, Unitech, MTS.

Market share Gain/Loss based on Active Subscribers

According to COAI press release, In Jan 2013, GSM operator’s net subscriber stands at 403k. It is interesting to note that incumbent mobile operators added around 5Mn subscriber and the gain got neutralized by loss of around 4.5 Mn by Challenger/Regional player. The another highlight of press release was non initiation of non-active subscriber clean-up process by PSU mobile operators such as BSNL and MTNL, which contributes around 50 Mn non active subscriber base in the current consolidated subscriber base. I am expecting another 5 -6 Mn net subscriber loss in Jan 2013 once consolidated data gets released by TRAI as CDMA operators are in the process of clean-up.

In conclusion, the wireless sector is bound to see continuous negative net subscriber growth for many quarters to come. The recent closure of services due to Supreme court ruling and uncertainty around few mobile operator’s pending legal issue will have direct impact on the overall growth of wireless subscriber addition or churn. In current scenario; industry is bracing for challenges when it comes to Challengers/Regional Players whereas it offer great opportunities for incumbent mobile operators.

Source: TRAI performance indicator Report, Dec2012 Subscriber Data, COAI press release

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