Telecom user base dips as operators hike tariffs

Ayushi Kar | Updated on: Feb 20, 2022
Overall mobile subscriber base was down by nearly 13 million users in Decmber

Overall mobile subscriber base was down by nearly 13 million users in Decmber | Photo Credit: SIVAKUMAR PV

Millions of mobile users in the lower strata of the consumer base are giving up their connections after telecom operators increased tariffs by 20-30 per cent over the past few months

Subodh Mondal, a 24-year-old daily wage worker in Mumbai, recently gave up his phone connection after his mobile operator increased tariffs in November. Mondal, who used the phone to keep in touch with his family in Bihar, now relies on kirana stores with public phone booths to make calls back home.

“ I was able to keep in touch with my son and wife on a daily basis when I had a connection but now I call maybe once a week. The recent increase in mobile tariffs has made it difficult for me to keep a connection,” he told BusinessLine.

Like Mondal, millions of mobile users in the lower strata of the consumer base are giving up their connections after telecom operators increased tariffs by 20-30 per cent over the past few months. According to the latest subscriber numbers released by the Telecom Regulatory Authority of India, except Bihar, Jammu & Kashmir, Delhi and Kerala service areas, all other service areas have showed decline in their wireless subscribers during the month of December, 2021. 

In Madhya Pradesh, for example, the mobile user base declined by 2 million. Similarly, in Andhra Pradesh, Maharashtra and Mumbai, over 1 million phone users gave up their connections. Overall mobile subscriber base was down by nearly 13 million users in Decmber, according to the TRAI data.

Last year, Airtel and Vodafone Idea had increased minimum tariff from ₹79 to ₹99, and the maximum to ₹2,899 from ₹2,399. Rjio, which started the tariff war since its launch in September 2016, also announced the hike in tariff to minimum of ₹91 (for 28 days) from ₹75 earlier and maximum to ₹2,879 from ₹2,399 (for 365 days). 

According to industry experts, lower-end subscribers, who use 2G feature phones, are getting impacted as the entry-level price point has further been increased to ₹99. This is the second hike for the segment in over six months, effectively doubling the price. 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.

Faisal Kawoosa, Founder and Chief Analyst, techARC, told  BusinessLine, there were many reasons for the December decline in wireless subscriptions, but tariff hike was likely the most prominent one. “The November hike in tariffs is likely to have compelled people to get rid of their secondary SIM. Telecom operators are also getting rid of inactive numbers, something that they were not doing much during Covid.”

 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.

Rising tariffs may squeeze more citizens to give up subscriptions this year which could also impact the delivery of Government services. Many government programmes are linked to Aadhar which, in turn, is linked to the phone. “As households start to get rid of additional mobile plans as tariff rise, it is likely that the head of the household will connect government services, programmes and scheme to one number, rather than each household member having their individual mobile number connected to government services and schemes in their respective names,” said Kawooza.

Published on February 20, 2022
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