In other words, the rapid pace of subscriber addition continues and if one was to include all other operators (including those on the CDMA, or code vision multiple access, platform), total additions are likely to be close to the 14 million number achieved in July. But even as total subscriber additions are getting more and more impressive, thy are becoming less and less relevant.

Telecom analysts Srinivas Rao and Amyn Pirani of Deutsche Bank AG point out in a recent report titled Subscriber numbers: more noise, less substance that while the wireless subscriber base has grown by 11% quarter-on-quarter in each of the past two quarters, industry revenue has grown by just about 1.3%. Thanks to the fast pace of subscriber additions, Deutsche Bank’s estimate of the wireless subscriber base at the end of the current fiscal will be beaten by a wide margin. However, the wireless industry’s revenue of Rs25,500 crore as reported by the Telecom Regulatory Authority of India for the quarter ended June amounted to only 20% of the brokerage’s full year estimate.

Graphics: Sandeep Bhatnagar / Mint

Secondly, a large chunk of new subscribers are coming from ‘B’ and ‘C’ circles. In July and August, for instance, 40% of the net GSM subscriber additions came from metros and ‘A’ circles, while two-thirds came from ‘B’ and ‘C’ circles. Customers in these circles have much lower consumption patterns and hence the average revenue on a company-wide basis has been drifting lower for the past few quarters.

To add to this, Tata Docomo’s aggressive pricing strategy is leading to pricing cuts by incumbents as well. This is unlike the time when Reliance Communications launched its nationwide GSM services, where incumbents by and large held on to their tariffs. It’s no wonder the markets haven’t reacted to the sharp rise in subscribers and telecom shares continue to underperform the broad market.

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