wordpress blog stats
Connect with us

Hi, what are you looking for?

Editorial: The Benefits Of Over-reporting Indian Mobile Subscribers Numbers

For anyone deeply involved in telecom in India, the only surprising thing about this Times of India report, suggesting that an internal Department of Telecom check indicates that telecom operators in India were over-reporting number of subscribers by around 80 million in May, is that it has been reported as late as this. I remember discussing the issue of over-reporting of subscribers with some telco execs on the sidelines of a TRAI open house discussion two years ago, but it was a conversation not backed by concrete facts. Ironically enough, the discussion at that open house was focused on whether more telecom operators should be allowed in India.

But why would telecom operators over-report their subscriber base, and why would the government not audit or cross-check these figures on a regular basis? Assuming that the over-reporting is true, lets look at the benefits of over-reporting:

— Allocation of Spectrum and Mobile Numbers is linked to subscriber base; Benefits: Telecom operators

The higher the subscriber base, the greater the allocation of spectrum. A year or so ago, we had reached a situation were the incumbent telecom operators were starved of spectrum in the metro cities, leading to a decline in quality of service. Over the past six-eight months, the incumbent operators have out-performed in case of subscriber addition. Numbers too are a somewhat scarce commodity, though not as scarce as spectrum. It’s another thing that the number reported as ‘subscribers’ is better termed as ‘connections’, due to the prevalence of multiple SIM cards.

— Low ARPU, Spectacular EBITDA Margins; Benefits: Telecom Operators, Government

Advertisement. Scroll to continue reading.

India is famous for having among the lowest ARPUs, or the Average Revenue Per User, in the world, and yet some telecom companies out-perform with EBITDA margins of upwards of 40% (though declining slowly).

A couple of quarters ago, India’s largest mobile operator Bharti Airtel, fielding questions of declining ARPU in the Indian market, and the potential launch of new telecom operators, and the competition posed by Reliance GSM, suggested that analysts focus on “Revenue Market-Share”, and not market-share, due to the ownership of multiple SIM cards among subscribers.

The higher the reported subscriber base, the lower the ARPU. Maybe, just maybe, the ARPU isn’t as low as has been reported. The higher EBITDA margins, the potential for telecom subscribers to evolve and for ARPU to eventually increase on a large subscriber base once growth starts stabilizing, is an attractive investment opportunity. A success story around telecom also helps that Indian government get more FDI: the greater the success, the higher the price the auctions are likely to generate. In a similar vein, the telecom growth story also can fetch the new telcos higher valuations.

3. Large, Fast Growing Subscriber Base; Benefits: Government, Telecom Operators

The massive telecom rollout, the government much touted interest in supporting the rollout with the obligatory rural focus (never mind the under-utilized USO Fund): it’s a good story with telecom as a means to bridging the urban-rural divide; undoubtedly, it does play a part, but inflated numbers mean that the job is not being done as well as has been showcased.


Advertisement. Scroll to continue reading.

All in all, a massive growth in telecom subscriber base is a story that benefits both the telecom operators and the Indian government. The entity which doesn’t benefit? The foreign investor who buys into the massive growth story. Then again, a lower subscriber baser means more potential for growth, no?

Update: Do read a related editorial in the Financial Express: Sukh Ram to A Raja

You May Also Like


Bharti Airtel announced on April 14 that it would have a new corporate structure. “This is expected to sharpen the focus of the company...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ