Ahead of 5G launches, India’s mobile market stutters

  • India is a massive mobile market with more than 1 billion active cellular connections
  • The main mobile operators are gearing up to launch their initial 5G services
  • But the number of active connections declined slightly during July

India’s massive mobile services sector suffered a minor, but notable, setback in July ahead of the upcoming launch of 5G services by the country’s main telcos. 

According to the latest statistics from the country’s watchdog, the Telecom Regulatory Authority of India (TRAI), the number of active mobile connections – defined as those that made a network connection recorded by an operator’s home location register (HLR) database – recorded during July this year was 1.0132 billion, down by 4.4 million from the number reported for June. (The total number of mobile connections reported for July by the operators, whether active that month or not, was 1.148 billion, meaning 88.25% of cellular connections were active during July.)

In fact, the number of active connections has been wavering since March, when it topped out at 1.0213 billion. Since then it has been on a rollercoaster ride and currently seems to be on the downturn. 

And the dip isn’t down to underperformance from one operator – all the main service providers are seeing slight erosion to their active customer numbers. 

In July, market leader Reliance Jio had 382.2 million active connections, Bharti Airtel had 356.2 million, Vodafone Idea had 216.9 million, and state-owned BSNL had 57.3 million, with each recording a decline compared with June (Vodafone Idea suffered the biggest reverse at 1.8 million).

This might seem a trivial decline in the grand scheme of things, but keep in mind that India’s population is growing – the country is set to overtake China as the world’s most populous country next year when both are expected to have about 1.4 billion residents – and the mobile device is the communications lifeline for the vast majority of the population (there are only 25.6 million landlines across all of India). With those factors considered, anything other than a gradual increase in the number of active connections should be a concern. That mobile tariffs in India have been rising across the board during the past year will not be helping to reverse any declines.

And this is not be the most encouraging trend for the mobile sector following the recent auction of 5G spectrum licences and ahead of the anticipated 5G service launches over the next few months. For example, Vodafone Idea is yet to confirm its launch plans, but Jio is set to launch its initial 5G services next month, as is Bharti Airtel.

It’ll be interesting to see how the operators market their 5G services. Local reports suggest Bharti Airtel won’t create a new higher tariff for 5G services, but customers who want to use its 5G services will default to its highest pricing levels, which should help drive up revenues and average revenue per user (ARPU) numbers, provided the operator can avoid churn and its customers want to, and can afford to, buy a 5G smartphone. Jio has stated it will offer “affordable 5G and 5G-enabled services”, and is likely to press Bharti Airtel hard on pricing.   

Current ARPU levels are below 200 rupees (US$2.50) per month, but consider also that most mobile users in India are on pre-paid plans, which means they will be very careful about using services that carry the highest charges. Bharti Airtel’s customer base is 95% pre-paid, for example, and its ARPU level in the three months to the end of June (its fiscal first quarter) was 183 rupees ($2.30), representing a steady quarter-on-quarter increase that Airtel ambitiously puts down to improving levels of customer service rather than its higher pre-paid prices.

To get a return on their 5G investments, which are enormous after the operators shelled out $19bn on their spectrum licences alone, India’s service providers will need those ARPU levels to go up further – the Bharti Airtel management has a target of 300 rupees ($3.76).

If the country’s main operators can reach that kind of ARPU level it would certainly help towards getting a return on their 5G investments – and it would help even more if the number of active users was going up rather than down.

- Ray Le Maistre, Editorial Director, TelecomTV

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