The Naked Truth About High Indian Mobile Subscriber Numbers!


Oh how the mighty fall! Indian Mobile sector seems to falling flat on its face with every passing day. From operational issues resulting in hiring freeze to deceleration in mobile subscriber base, the past few months have signaled a not-so bright future for the Indian Mobile Sector. To add to the misery, there is the 2G scam which has given a glimpse into the dirty mechanics at play in the sector.

Come to think of it, one of the primary reasons for the Indian mobile sector hogging limelight for the last 1-2 years has been the unstoppable increase in the mobile subscriber base making India one of the biggest mobile markets in the world.

Turns out, this only highlight of the Indian mobile sector wasn’t one either. Yes, you heard it right! Indian mobile operators were reporting inflated numbers when it came to the mobile subscriber base.
Turns out, 1/3th of all mobile phone numbers in India are not in use and are inactive. To put things into perspective, out of the ~900 Million mobile subscribers in India (August 2011), as many as 300 Million of those numbers could be inactive

Frankly, the whole inflated number news does not come as a big surprise (the magnitude of inflation sure does). We have often discussed that there could be certain manipulation happening when it comes to reporting the mobile subscriber number.

Logically, Indian mobile operators are not wrong on their part since they don’t free up the deactivated numbers so every phone number allotted (active or inactive) adds to the overall mobile subscriber base.

Like how webmasters could resort to inflating their website traffic stats to seek more advertisers, the mobile operators continued to report high subscriber base (including inactive numbers) to maintain their high valuations and apparently their competitive advantage when it came to securing spectrum allocations. Apparently, operators were allocated spectrum based on the mobile subscriber base.

The proportion of inactive numbers (1/3rd of total) is staggering. What I am curious about is to figure out the proportion of inactive to active subscribers by individual mobile operators.

Wonder if the true numbers will change the pecking order of mobile operators in India. On the Indian mobile operators part, they claim that a lot of these inactive numbers are under the lifetime validity plan which makes it impossible to free them for fresh use.

In hindsight, this also suggests that the Indian mobile market may not have saturated post the slowing growth rates of mobile subscribers. Adjusting for the inactive numbers will bring down the teledensity from 65% (Indian Mobile Stats) to a much lower number signifying an opportunity for deeper penetration

What are your thoughts on the practice of reporting highly inflated mobile subscriber base numbers by mobile operators? With as many as 1/3rd inactive subscribers, do you think the incumbents will take a further beating in the stock markets among other places?

  1. Kaushik Biswas says

    Can the webmasters really gain by inflating web traffic volume when Alexa ranks reveal a lot of the stats? But yes, mobile operators can show inflated volume of customer database, social networks like Facebook also don’t tell us the volume of inactive or duplicate accounts etc. Every advertiser claims they’re the best, they’re no. 1 etc. These do happen.

  2. Ankit Agarwal says

    I wasn't aware of VLR reporting, most of the reports i come across have only the overall subscriber base (Active+Inactive). I do agree that operators need to work at optimizing their biz and delivery models. Wrote on a similar subject a while back here

  3. Mobile Locator says

    Its more of a TRAI’s concern I guess. There is no point in reiterating the same old tune of calling for the need of the urgent reforms. After the 2G fiasco, such facts would be considered seriously I have some serious doubts about it.

  4. Varma says

    Ankit, where exactly are the operators reporting “inflated” numbers? They are not reporting Ghost on non-existent subs. We can debate active/inactive numbers, but the numbers are what they are. I don’t see naything inflated about them.

    1. Ankit Agarwal says

      Varna, i did mention that mobile operators have some inactive numbers as part of the lifetime validity plan. But there is no explanation for reporting the numbers that arent part of such plans and yet are reported as part of the total number. Case in point, i completely cancelled my postpaid number a few months back. I rechecked for the same number and the service provider told me that the same is not available. From where i see, there is no reason why the provider cannot free that number and offer it to its own customers. Even if they don’t they shouldnt be counting that number as a subscriber. The choice of the word ‘inflation’ can be debated but then the truth is that the numbers reported are not the actuals

  5. Bhupesh Pangti says

    TRAI has already made sure that operators publish VLR (which refers to the number of active subscribers) figures. Even those numbers are encouraging enough. The real reason of slowdown would be the dirt cheap pricing and freebies for new users. It's about time operators will cut the competition game and start charging the real value of its services.

    1. Ankit Agarwal says

      I wasn't aware of VLR reporting, most of the reports i come across have only the overall subscriber base (Active+Inactive). I do agree that operators need to work at optimizing their biz and delivery models. Wrote on a similar subject a while back here

  6. Altaf Rahman says

    This is a twin edged sword.
    Suppose an operator has 300 customers. He knows that actual uses are only 200 and the other 100 numbers are idle. OK instead of 200 customers, the operator is boasting of having 300 customers.
    The operator also has to show how much revenue is generated per customer. He is earning revenue from only 200 customers while showing 300 as the number of customer base. So his average revenue per customer is 1/3 less.
    His revenue model looks inferior based on the inflated customer base compared to actual. The actual earnings are more than what the operator declares.
    This implies that our operators are not doing that bad after all. In reality they are earning almost 50% more per customer than what they claim.
    Just my two paisa :)

    1. Ankit says

      As always interesting insight Altaf! The ARPUs should effectively be higher for most operators as against what they report

  7. Pradeep says

    300M inactive mobile subscribers and we were happy there are 900M subscribers!!! It Agree with you. It require deeper penetration

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