Some 71% of India’s total mobile subscription base is active.
IHS Global Insight Perspective | |
Significance | Rural markets continue to drive mobile subscription growth. |
Implications | VLR data indicate that ongoing subscriber disconnections will mean a significant uplift in reported ARPU. |
Outlook | Operators are already seeing some success in stabilising voice pricing across their footprint and this will be aided by the likely consolidation of the sector over the next two years. |
TRAI, the regulator, reports that India had 884.37 million mobile subscriptions in November 2011, up by 2.97 million in the month. Rural areas accounted for 71.7% of these net additions to reach rural penetration of 36.05%, while urban penetration reached 159.92%. Of the 884.37 million mobile subscriptions, around 71.8% or 635.39 million were active (not accounting for the CDMA subscriber base of BSNL) on the basis of the peak Visitor Location Register (VLR) in November 2011.
A number of operators have said that they will start disconnecting customers who have not used their mobile phones for more than 60 days (see India: 20 November 2011: Vodafone to Disconnect Inactive Subscribers). This is the timeline the Indian authorities use to calculate operators’ numbering requirements. As a result, operators’ mobile customer bases will appear to shrink, although both ARPU and MoU levels will be boosted as a result of these calculations. The table below provides an estimate of how monthly ARPU could be lifted by a revision of Vodafone India’s customer base.
Estimated Impact of Subscription Recalculation on ARPU—Vodafone India | |||||
Note | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | |
Reported Mobile Service Revenue (GBP Mil.) | 1 | 961.0 | 986.0 | 1,036.0 | 1,053.0 |
Total Mobile Subscribers ('000) | 2 | 124,255.0 | 134,570.0 | 141,519.0 | 144,992.0 |
Average Total Mobile Subscribers ('000) | 128,606.0 | 139,727.5 | 144,993.5 | 146,728.5 | |
Calculated Mobile Monthly ARPU (GBP) | 3 | 2.5 | 2.4 | 2.4 | 2.4 |
Reported Mobile Monthly ARPU (INR) | 2 | 176.0 | 171.0 | 169.0 | 168.0 |
Average Exchange Rate over Period (GBP:INR) | 4 | 71.7 | 73.5 | 73.9 | 74.4 |
Reported Mobile Monthly ARPU (GBP) | 5 | 2.5 | 2.3 | 2.3 | 2.3 |
% Peak VLR Rate (March/June/September/December) | 6 | 75.9 | 79.5 | 80.8 | 81.2 |
VLR Mobile Subscribers ('000) | 7 | 94,309.5 | 106,942.8 | 114,375.7 | 117,762.5 |
Average VLR Mobile Subscribers ('000) | 98,137.7 | 113,259.4 | 118,092.1 | 119,455.9 | |
Calculated Mobile Monthly ARPU based on VRL Mobile Subscribers (GBP) | 8 | 3.3 | 2.9 | 2.9 | 2.9 |
Notes: | |||||
Outlook and Implications
The above table indicates that in the case of Vodafone, ARPU levels would have been around one-fifth higher than for the past few quarters if the VLR subscriber base has been used to calculate ARPU. The impact of reclassifying active subscribers will vary across different operators, but the migration to a 60-day rule will refocus attention on how successful new entrants have been in capturing market share.
The lowest VLR rates in November 2011 were 25.37% (Etisalat) and 31.37% (S Tel), while the Telenor-controlled Uninor had a higher VLR rate (59.55%) than several more established players such as Aircel (54.42%) and BSNL (52.96%). While none of the new entrants have yet to turn a profit, Uninor and the Russian-controlled MTS India have had more success in developing an active growing customer base. While all operators will have a predominantly pre-paid customer base for some time, overall subscription growth in the market will be driven by rural additions, which will largely dilute ARPU, as well as mobile broadband growth in urban areas, which will drive up ARPU. Operators are already seeing some success in stabilising voice pricing across their footprints and this will be boosted by the likely consolidation of the sector in the next two years.