Data Tariff Hike By Airtel and Vodafone Idea to Reduce Total Mobile User Base

One of the biggest moves in the telecom industry last year, towards the end of the year has been the data tariff hike by the telecom companies. All the private telecom operators came together to increase the prices of their plans, in some cases by as much as 40% after being hit brutally by the AGR dues and poor financials. However, the data tariff hike was not liked by the telecom subscribers and was only a good move for the telecom companies. But, there is another unprecedented result of the data tariff hike in India, and that happens to be the loss in mobile subscribers. As per an ET Telecom report which cites Trai

data, the total active mobile subscriber base in India might have shrunk by 4% in the previous calendar year, as compared to the year before. As per the data published by the Telecom Regulatory Authority of India (Trai), at the end of October 2019, the total number of subscribers stood at 981 million, as compared to 1.02 billion at the same time in 2018. It is also expected that the data tariff hike is likely to have a ripple effect, and this trend will continue well into this year as well.

Customers Giving Up Dormant SIM Cards

As per the analysts, the fall in the active subscriber base of telecom customers is likely due to the giving up of the dormant SIM cards. The increase the pricing of the prepaid plans, higher minimum recharge plans and increased appetite for data has also increased the spending of the Indian population on both their SIM cards. This means that owning two SIM cards is costlier than ever. Hence, people are likely giving up on their dormant SIM cards. The analysts also claim that one of the first effects of this can be a 25%-30% fall in the growth of dual SIM users. The consumers might lean more towards single SIM cards.

Rohan Dhamija, head of India and the Middle East at Analysys Mason remarked about this,“Calendar 2020 will definitely see a reduction in India’s mobile user base after several years due to the likelihood of multi-SIM (scenarios) consolidating down to single, primary SIMs.”

Active User Base Still Growing Strongly

There are two major parameters here to look at, first is the total user base in the country, and the second is the active user base. As per the analysts, the active user base in India for mobile data has not gone down since 2009, but the last time the total user base went down was back in 2012. After eight years, now in 2020, the total user base of mobile subscribers is expected to go down. The analysts have also said that the most vulnerable telecom operator in the industry right now happens to be Vodafone Idea, which is the most prone to customers giving up on its SIMs. The telecom operator has impending network integration in some of the major circles of India, and that happens to be the reason why a lot of subscribers of Vodafone Idea are leaving the network.

Increase in Data Tariffs

The increase in tariff prices is mostly because Bharti Airtel and Vodafone Idea increased their minimum recharge plans back in 2018. This combined with the data tariff hike at the end of 2018, has urged the consumers towards SIM consolidation. The Cellular Operators Association of India (COAI), has also hinted towards a marginal decrease in the total user base. The COAI represents private telecom operators like Bharti Airtel and Vodafone Idea.