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?