COAI has recently issued some guidelines, which are expected to help cellular operators in issuing more accurate figures regarding their subscriber base. Although these guidelines are not binding, analysts point out that with the market maturing rapidly, operators will by and large abide by these norms. Besides, as a Delhi-based telecom consultant puts it, "There is nothing to beat the peer pressure which will ensure that operators follow the norms."

Reporting cellular subscriber base has been a subject of speculation for sometime now since the valuation of a cellular service provider is dependent on its subscriber base and becomes a major issue in the event of a takeover. The acquisition price is directly proportional to the size of the subscriber base with the rate ranging from $500 to $2,000 per subscriber.

Apart from acquisitions, cellular companies routinely inflate subscriber numbers in the ‘game of one upmanship’. Operators are also accused of inflating numbers just before raising funds.

According to the COAI guidelines, members have been asked not to account for various categories of users, the most significant category being that of suspended users. The major issue in accounting norms was the issue of pre-paid customers since different operators use different cut-off periods to check whether a pre-paid customer has exited their service or not.

Another category of disputed subscribers comprises customers who have churned out after the suspension period. Rothin Bhattacharya, executive director, Telecom, KPMG Consulting, says, "There is a 2-3 percent churn in the subscriber base of operators. If operators are not careful about this percentage, estimates can go widely wrong. In particular, when the given bases are huge, even a small margin can skew the figures drastically."

In addition, COAI has issued guidelines not to include test/service cards given to national and international operators to test automatic roaming; mobile numbers used by employees, mobile numbers available with operators and the distribution channels and roaming subscribers who are already in the network of the home operator.

Says TV Ramachandran, director general, COAI, "We issued these guidelines in September, and operators have followed the guidelines in the last two months. In fact, there has been no serious discrepancy in reporting the numbers since the subscriber base of cellular users in both September and October grew by nearly 2.5 lakh which was the same in August as well."

Inaccurate reporting of subscriber bases impacts the industry adversely since many acquiring companies have burnt their figures recently due to inflated subscriber bases. According to industry sources, one acquiring company found the subscriber base to be inflated by as many as 35,000 numbers. In most cases of acquisition, subscriber figures are found to be inflated by 10,000 or so. As has happened in the case of a leading operator who had acquired several circles, the sharp drop in subscriber base of the acquired circle soon after the takeover revealed that the base was actually much inflated.

However, experts opine that the market has matured a lot since the early days and with only the more serious players left in the fray, possibilities of inflated subscriber bases have become that much more remote. Experts also opine that the natural check and balance system in the market, wherein operators keep a tab on the subscriber bases of their competitors is an effective deterrent for operators citing inaccurate subscriber figures.

Balaka Baruah Aggarwal