On the 31st March 2007 the so-called "re-verification" programme of Indian mobile customers instituted by the Department of Telecommunications came to a close. The re-verification process involved India's mobile companies checking the records of each and every one of their customers to confirm identity and to ensure personal details were correct. Unverified customer accounts would have to be de-activated by the deadline if the operators were to avoid being penalised. Early indications from India's second largest cellular service operator Reliance were that almost 15% of its customer base had not been verified by the time the deadline passed - about 4.2m customers in absolute terms. Reliance was reported to be unconcerned about the impact on its financials as it claimed that the de-activated customers were, for the most part, not revenue-generating - in other words, inactive. Nevertheless, there was some concern that if the story at Reliance was to be repeated across the board then the Indian market as a whole would suffer a very material cull of customers.
However, this was not to be. Customer numbers from the COAI, the industry body which represents India's GSM companies, showed no obvious signs of having been impacted by the re-verification programme. Customer numbers from the counterpart organisation representing the CDMA operators, the AUSPI, took three weeks or so longer to emerge, but last week emerge they did - only to show that all other operators, other than Reliance, were similarly unaffected. The result for the overall CDMA base was a cull of approximately 3.3m customers on a net basis during March 2007, or between about 4.5m and 5.0m customers on a gross basis, assuming average organic growth in the month. The chart below shows India's CDMA mobile customer base broken down by operator over the last year.
At the national level the customer base increased in size by 2.8m in March, from 155.2m to 158.0m, as the GSM customer base expanded by a record 6.1m customers - beating the previous high recorded in November by a full 22%. As the chart of GSM net additions below shows, the key player in this record-breaking performance was state-owned BSNL, operating as "CellOne", which doubled its net additions from 1m in February to 2m in March. However, GSM net additions at Aircel, MTNL and Spice were also up strongly in March compared to the recent trend. For its part, market leader Bharti turned in a March performance almost exactly on a par with its average over the previous five months. The strength of the GSM market combined with the cull in the CDMA base left net additions for the first quarter in India at 15.44m - almost exactly 5m less than China's 19.44m first quarter figure.
The cull of customers by Reliance had the effect of reducing its national market share from 20.9% to 18.3% between the end of February and the end of March 2007. The largest gain in March was made by the out-performing BSNL, with an increase of 1.15pp to 17.75%, followed by Hutch (soon to be Vodafone) with a 0.40pp gain to reach 16.7%, maintaining its fourth place in the market. As a result of the disconnections at Reliance, however, all other operators in the market - apart from the beleaguered Mumbai operator BPL - gained market share during March. Reliance has since reported that some of the customer accounts de-activated at the end of March have since been re-activated as a result of the verification procedure having been completed after the deadline. Whilst April results will mitigate the effect of the March cull to some degree, we do not expect any significant percentage of Reliance's de-activated accounts to be revived in this way.
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World. To download a sample issue of the Briefing in PDF format, please click here. For more information including full subscription pricing, please visit The Mobile World"
Posted to the site on 10th May 2007
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