The ongoing rate war in the mobile industry has led to an increase in multiple Subscriber Identification Modules (SIMs), which means a subscriber owns multiple connections to make full use of the various schemes and promotional offers.
"The wireless subscriber numbers are overstated by 25-30 per cent. The low-end mobile users own multiple SIMs, as they are very conscious of prices and are constantly looking for bargains. However, this trend is not restricted to rural areas; it is also picking up in urban areas," said Mahesh Uppal, a telecom expert.
There are 500 million mobile subscribers in the country. Of these, 95 per cent are prepaid, who would not mind changing every now and then to avail the latest offerings.
The telecom industry has been witnessing intense rate wars and high competition after the entry of new players. The per-second billing plan started by Tata DOCOMO, a new entrant, became a hit with mobile users, forcing others to follow suit.
According to Macquarie Equities Research, the rise in GSM subscribers is due to increased incidence of dual SIMs. Indian telecom operators sharply cut rates in October, which has aided the phenomenon. It said an estimated 20 per cent of the total industry subscriber base is due to dual SIMs.
"We see a sharp increase in incidence of dual SIMs, and the uptick in GSM subscribers (excluding GSM subscribers of two CDMA carriers) would not necessarily result in a corresponding increase in wireless revenues, as usage shifts to other players," the report added.
"Overcapacity in urban centres has accelerated the dual SIM phenomenon, as new schemes have allowed for arbitrage opportunities," Rajiv Sharma, an analyst with HSBC Securities and Capital Markets (India), said in a report.
