Of bleeding cellular subscriptions

Latest statistics from the Pakistan Telecommun-ication Authority show that the mobile network operators (MNOs) lost subscribers for second month in a row in January, closing the month at 120.8 million subscribers. The MNOs shed over 1.1 million subscribers in January, and over 2.7 million since November when the cellular pie had expanded to an all time high of 123.6 million subscribers.
The drawdown is not operator-specific - its related to the whole sector, as all the five MNOs dropped subscriptions in December and January, thereby yielding no change in the rankings based on market share. As discussed earlier in this space, this continuing decline in cellular subscriptions is due to the PTA directives issued in November and December last year.
As per the fresh rules, MNOs had been barred from selling new Sims through their franchise networks and third-party retail outlets, until the installation of Biometrics Verification System at these sales channels. Sources say that progress is yet to be made on that front, meaning that the MNOs retail arm has remained in spasm, badly affecting new Sim sales.
On top of that, the existing subscription pie was set to reduce after the PTA directives to the operators to purge unverified and illegal Sims out of their networks, and to put a ceiling on the holding maximum number of Sims to five per user. There is no data available on how many subscriptions were actually lost due to the clean-up drive of illegal Sims, or from blocking of Sims in excess of the limit.
The urgency from the operators, to deploy the biometric system across their retail networks, has been missing. Its been a month since the original PTA deadline of February 28 (to install those systems) has gone by. It appears that losing three million subscriptions (which could increase in the future) didn really upset the operators much, which could mean that the topline has remained unaffected.
As per the PTAs Annual Report (2012), the MNOs earned nearly Rs300 billion in revenues between Jul-Jun 2011-12, which signifies a healthy, 14 percent YoY growth. Thanks to growth in voice and data segments, the average revenue per user also showed 2.6 percent YoY growth to reach Rs214.8 per month.
Continuation of Sim clean-up process and putting a limit on Sim sales per person may not affect the revenues, for cellular connectivity has become a basic need, and there is no reason why new Sim rules, per se, would curb voice or data usage of an average user. Unique number of cellular users is estimated by various telecom sources to be in the range of 70-80 percent of total subscriptions in Pakistan, which could mean that the subscription dip may not have pushed actual users out of the networks.
However, revenue growth is going to depend on resumption of Sim sales across the retail network. That is important, because there is still room for new subscriber acquisition in currently-unserved, remote areas and territories. Moreover, the addressable market for the operators has grown to include teenagers in recent years, because, as mentioned above, connectivity is no more viewed as a luxurious pursuit.