Mobile operators may be collectively adding around 7 million subscribers each month, one of the highest growths globally, but along with the expanding user base, their bad debts?basically, defaults by post-paid users?are also on the rise.
According to industry sources, the total bad debts of domestic mobile operators are roughly estimated at around 3-4% of the total post-paid revenues. During the last fiscal, total revenues of the industry stood at Rs 45,000 crore, 85% of which came from pre-paid customers. Post-paid revenues, therefore, were roughly Rs 7,000 crore, of which about Rs 250 crore are estimated to be bad debts. Industry sources said bad debts in India were twice the global average.
Industry officials said that given the low average revenue per user (Arpu) of the Indian market, at about Rs 230 (GSM plus CDMA), bad debts of 3-4% is quite high and unless checked, they could lead to serious cash-flow problems.
The Cellular Operators? Association of India (COAI) last year proposed the sharing of fraud management data among telecom operators, as is done by banks and credit card companies. According to the proposal, a consumer that has defaulted with one cellular operator would be denied a connection by another.
However, stiff competition in the mobile segment, where subscriber addition by churn is the norm, resulted in few takers for the association?s proposal.
COAI is now trying to revive the proposal so that defaults can be checked.