RCom cleans up its subscriber base again

RCom claims deactivated subscribers are 'unprofitable' subscribers who have not used their phones for more than two months

Reliance Communications today said that it deactivated the accounts of 10 million low-revenue earning subscribers. This makes it the fourth largest telecom operator as opposed to the third largest it was in August. It now ranks after Bharti Airtel, Vodafone India and Idea Cellular.

RCom claims that the deactivated subscribers are 'unprofitable' subscribers who have not used their phones for more than two months. The operator, which now has 116 million subscribers, says that these de-activated subscribers are the lowest end of the range of average revenue per user (ARPU).

“This will have no impact on revenues, and will instead contribute to the improvement of service quality on the network. Our focus is entirely on enhancing profitable minutes on our network, and not on the number of subscribers,” said a Reliance Communications spokesperson.

As much as 93.7% of RCOm's subscriber base is active, as per data provided by the telecom regulator. That puts them in the fourth position in terms of the numbers of subscribers who are active on their networks, after Vodafone, Idea and Bharti Airtel.

This is the third time that RCom cleaned up its subscriber base. In September last year, it cleaned up its subscriber base off around 20 million subscribers. Earlier this year too, it took up the same exercise, slashing its subscriber base by yet another 16 million.

In the last one year, the company has also been cutting on free minutes that it offers on its network. As the number of subscribers come down, the ARPU of the company could go up, say analysts. “There are such subscribers who have taken lifetime free connections and have not been using it. There is no revenue flowing from them. Even low-revenue customers are also accounted for while calculating ARPUs. But there will be no great impact on margins,” said Mahantesh Marilinga, senior research analyst at Finquest.

Analysts say that it is a good practice to have a healthier subscriber base. “Each company needs to focus on subscriber revenue. Earlier, operators would think that maintaining inactive and fake subscribers have no cost. But they have come to realise that there is a real cost associated with it,” said Kunal Bajaj, independent telecom analyst.

After new TRAI regulations came into effect two quarters back, it has become more expensive for operators to acquire new subscribers as well. “One has to pay commissions to acquire low-revenue earning customers as well. If you clean out inactive subscribers and add new ones, they will neck each other out,” said Bajaj.

 
On a monthly basis, the number of wireless subscribers in the country is also declining. For the month of September, the total wireless subscriber base declined by 0.7% to 899.8 million.