Last 5 years, subscriber base falls by 40mn, 30mn being in rural

India’s telephone subscriber base has come down by nearly 40 million users over the past five years, as operators chase higher revenues. The total user base has declined from 1,205 million in February 2019 to 1,169 million in February 2023.

The decline has been largely in rural areas, where 30 million mobile phone connections were given up during this period.

According to industry experts, there are a number of reasons for the dip in numbers.

“Telecom operators have been weeding out phone connections that are either largely unused or sparingly used, in a bid to clean out their networks of idle connections. The operators do not have any incentive to keep these connections online now with spectrum being auctioned. Earlier, they would continue to keep even idle connections because they got spectrum based on the number of subscribers,” said an industry executive.

Rise in tariff
The second reason for the decline could be the increase in tariffs by the operators over the last 24 months. According to industry experts, lower-end subscribers, who use 2G feature phones, have been impacted as the entry-level price point has increased by almost 100 per cent.

Roughly, 30-35 per cent of the wireless subscribers are on 2G networks. In addition to this, 4G subscribers, who recently upgraded from 2G and 3G services, are also likely to be affected. “Earlier, there used to be a large number of users who were having multiple SIMs. Now, this has become an expensive proposition,” said a market expert.

Market experts expect further tariff hikes this year. The telecom industry has been under severe financial crisis over the last two years with mounting losses and increasing debt.

But at the same time operators have had to invest in rolling out 4G network, purchase expensive spectrum, and payout hefty regulatory dues. With tariffs being low, the operators were not recovering enough revenues from the services to meet these expenses.

Hence, an increase in tariffs is the only way for the operators to generate more cash to be able to not only address current capital requirements but also to be ready to invest in 5G technology that is slated to be rolled out in next year.

Vodafone Idea’s financial stress is another reason for the decline in its user base. The struggling operator has been losing subscribers consistently and hasn’t been able to roll out new network due to cash crunch. The Hindu BusinessLine