By R. Jai Krishna
NEW DELHI--The number of cellphone users in India shrank by 9.38
million in November, with operators culling unprofitable
subscribers who haven't used their phones for more than 60 days at
a stretch.
The slide also includes numbers which have been deactivated
because of tighter security regulations requiring telecom companies
to verify the identity and address of all subscribers.
Bharti Airtel Ltd. (532454.BY) alone reported 2.8 million fewer
mobile phone users for November while Vodafone India Ltd. -- a unit
of Vodafone PLC (VOD.LN) -- followed close behind with a 2.38
million fall, according to data released Tuesday by the Cellular
Operators Association of India.
The COAI represents operators employing the global system for
mobile communications, or GSM, telecom technology, which is used by
about 90% of India's cellphone customers.
November's losses bring the total number of users subscribing to
GSM cellular services in India to 663.78 million, down 1.34% from
October.
Industry analysts say, however, that the culling is a positive
for India's telecom companies because most of these subscribers do
not use the connections regularly anyway. For example, some take up
new numbers just to use the free minutes offered with a
connection.
Deactivating these numbers will free up the networks to take on
more paying customers.
In the long-term, this will result in increased average revenue
per user, said Deepak Kumar, founder analyst at
BusinessandMarket.net.
Average revenue per user, or ARPU, is a key measure of
profitability for wireless companies.
Mr. Kumar expects the losses to develop into a trend that could
result in companies reporting an average loss of 4-5 million users
for the next 18-24 months.
Bharti's chief executive for South Asia, Sanjay Kapoor, said the
new rules will help operators cut costs on sales, which the
industry needs "desperately."
Vodafone India and Idea Cellular declined to comment.
Since Nov. 9, India's telecom operators have been barred from
allowing users to make phone calls until their details are
verified. This is in sharp contrast to the earlier practise, when
consumers could buy pre-activated phone connections from a retail
outlet.
Also, the telecom companies continued to reduce marketing
spending and sales commissions -- which they give to retailers to
gain new users -- in an effort to cut costs.
Apart from Bharti Airtel and Vodafone -- India's largest and
second-largest telecommunications operators by users -- all but one
operator lost subscribers in November.
Idea Cellular Ltd. (532822.BY) lost 1.56 million users while
Unitech Wireless Ltd., the local unit of Norway's Telenor ASA
(TEL.OS), lost 437,915 users.
In October, Idea had gained 239,348 new subscribers while
Unitech Wireless had added 1.11 million subscribers. Telenor
India's receding user base can be attributed also to its decision
to limit its operations to six of the country's 22 telecom service
areas.
In November, state-run Mahanagar Telephone Nigam Ltd.
(500108.BY) gained 754 users, compared with a net 13,652 new users
in October.
Bharti's total mobile phone user base fell to 186.41 million
subscribers at the end of November, while Vodafone India's shrank
to about 150.76 million users, said COAI.
In October, Bharti had added 491,570 new users and Vodafone
India 480,336.
Operators such as Reliance Communications Ltd. (532712.BY), and
Tata Teleservices Ltd., which provide telephone services using the
code-division multiple access, or CDMA, technology, had earlier
removed several users from their networks.
Reliance Communications dropped 20.4 million subscribers in July
as they didn't use its services for 60 days.
India, the world's second-largest telecom market by users after
China, is a key region for international phone companies and
equipment suppliers.
Bharti shares Tuesday closed up 4.23% at 313.15 rupees ($5.71)
while Idea Cellular ended 0.48% higher at 95.15 rupees.
In comparison, the Bombay Stock Exchange's Sensitive Index
closed up 0.63% at 19,364.75 points.
Write to R. Jai Krishna at krishna.jai@dowjones.com
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