India’s Mobile Ghosts

The story continues….and India once again takes pride in adding another 100 mn mobile subscribers to its kitty and crossing yet another milestone of 800 mn subscribers in a total population of 1.2 bn. According to the data released by Trai, the total wireless subscriber base of India at the end of March 2011 was 811.59 mn.

It certainly calls for celebration. Or does it? Are we sure that there are 812 mn mobile subscribers in India now?

The ground reality, which comes out starkly from TRAI’s own data and some market data, (see table) tells a different story: of 500 mn, not 800 mn, mobile subscribers.

The VLR Does Not Lie

Trai’s disclosure of the number of active wireless subscribers based on a visitor location register (VLR) number of 574 mn, out of a total of 812 mn subscribers in March 2011, provides a clearer view of the subscriber number and other key operating indicators such as tele-density.

What the above VLR figure says is that India had 574 mn active mobile numbers by March end (2011), and not 812 mn. The rest-the difference of 238 mn between the two numbers-are the inactive numbers, those who have lapsed because they are past their validity and are “in the grace period”, or may be postpaid subscriptions that have been blocked for non-payment.

The VLR is an accurate, “current snapshot”. It is a temporary database of subscribers who have roamed into the particular area which it serves. Each base station in the network is served by exactly one VLR, hence a subscriber cannot be present in more than one VLR at a time. The VLR system keeps track of active users in any particular service area, and thus is the right method to calculate the number of active users.

Even so, these are all subscriptions-that is, mobile numbers. That is not the same thing as distinct users. If someone has two SIMs, he is being counted twice in all these numbers.

“Obviously, 800 mn subscriptions does not mean 800 mn users,” says Kuldeep Goyal, ex-CMD, BSNL. He believes the actual number of active mobile phone users would be in the 450-500 mn range, and emphasizes that the 800 mn figure is not a correct picture.

“You get the current VLR figure from Trai, which gives the number of actual active users, for instance 560 mn for February 2011. From that VLR figure, you can reduce another 15% or more as multiple SIM cards,” he adds.

VLR data shows the total active subscribers in the VLR on the last working day of a particular month.

“To compute India’s tele-density on the basis of 800 mn numbers is misleading,” says Deepak Maheshwari, telecom market expert and director, corporate affairs, Microsoft. “We should go with the VLR figure [of 574 mn]. Even the VLR figure indicates the peak number. If we take the VLR average, then the number could be even smaller.”

The Multi-SIM Phenomenon

How many Indians use more than one SIM card?

Comprehensive data on that is hard to come by, but we have some good pointers.

Data from CyberMedia Research (CMR) shows that nearly 45% of all mobile Handsets shipped in the India market during the October-December 2010 quarter were dual- or triple-SIM phones.

India is a unique telecom market in terms of subscription, more than 92% of users being in the pre-paid category. Most of them change their mobile numbers frequently, drawn by better tariff plans offered by competing telcos. That leads to multiple SIMs with many subscribers.

Moreover, ‘the churn of SIMs’ between different operators (due to unsurrendered but inactive SIM) ends up creating an apparent, illusory increase in either ‘active subscription’ or the ‘subscriber base’.

The Multi-SIM Phenomenon

A senior industry association member says, “The actual number of active mobile users would be in the range of 500 mn or so. There are so many reasons for subscribers to get inactive, or use multiple SIM cards, and operators try not to cut them out, but hold on to them for as long as possible.”

These operators come out with so many schemes and incentives for the subscribers to be active. “But you must also do a VLR versus HLR analysis, because for some operators the active subscribers to total subscribers ratio will be much higher than others,” he adds.

A senior regional manager with Vodafone gives a new twist to the already tweaked calculation of mobile users. “Every morning, the EMU train from Aligarh arrives in Delhi, carrying 5,000 plus daily commuters. All of them carry at least two SIM cards. And like that, there are millions who visit big cities for work daily.”

“Only a fool will say that they are adding to tele-density. In my estimate, there are not more than 480-500 mn people using mobile phones in India,” he adds.

Also the entry of low-cost multi-SIM handset models saw many mobile users opting for dual or triple SIM phones. This phenomenon is on the rise in India, which can be substantiated by the fact that even global handset majors like Nokia jumped into launching multi-SIM phone models in India.

And all these factors point to a single observation: that the real mobile user number would be much less than what is being reported as mobile subscribers.

“We are working very closely with some of the leading telcos in India and one of the things our software is being used for is to track multiple-SIM users. Our estimate is that it is close to 20%,” says the CEO and MD of a leading BI (business intelligence) and analytics company. This company is working closely with many telecom operators and has deployed user-tracking applications, churn management and revenue enhancement solutions.

“The fact is that today more and more people are opting for multiple SIMs. I recently went to a handset exhibition, where I saw Chinese handsets that could take four SIMs,” says Maheshwari. He adds that the Chinese handset players have realized this trend in India and coming up with more and more multi-SIM handsets. “The salesman said: one SIM for work, one for roaming, one for home…. Today, there are many people buying a second and a third SIM card, or carrying around two or three handsets. These are being incorrectly added to the teledensity figure,” adds Maheshwari.

Another major factor which unnecessarily adds up to the mobile subscriber number is the inclusion of defunct users.

“Most operators include all the defunct subscribers, whose phone connection have been put on hold for more than a year for non-payment of dues,” says a top official with BSNL. He further adds that this number is as high as 30% of the total subscriber base. “While the VLR reads them as different subscribers, it is actually 1 person who is using several SIM cards. So the number of people using those 56 crore SIM cards will be at least 15% less than 56 crore,” he says.

“An 800 mn number may make sense only if it is the total number of wireless connections ever sold in the country,” says Mrityunjay Mishra, co-founder of JuxtConsult, a leading online market research agency. This number, he says, would include both active and inactive users, and connections sold to the same person again and again. “The actual number of people using mobile phones would be between 450 and 500 mn.”

What Next?

Moreover, the sector regulator,Trai, should use a better mechanism to calculate the number of mobile subscriptions and the number of real users.Trai should tabulate with the actual number of active subscribers, number of active subscriptions, and the number of active SIMs per subscriber which would help us understand the actual mobile penetration in the country as well as give the service providers a clear picture of the untapped market in the country, and help them strategize for more such milestones.

Though there is nothing wrong in being happy about achieving the milestone of 800 mn mobile subscriptions, this ‘milestone’, should not make the industry complacent and they should not undervalue the potential. If the VLR figure is taken into consideration, then more than half of the country’s population is yet to hold a mobile phone and a market as large as 700 mn is yet to be tapped. “We have some big potential here,” says BSNL’s ex-CMD Kuldeep Goyal.

And that, really, is the silver lining: that by over-estimating 500 mn users as 812 mn, we have under-estimated the potential, untapped or addressable market by over 300 mn! But that is another story.

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