Churn Declines Quality of Subscriber Base Improving

The churn level in the Indian Wireless Industry has started to decline sharply, in line with our expectations, driven by – Stricter subscriber verification norms set by the regulator in November 2012.

Hike in the prices of SIM cards by distributors (as indicated by our checks) to cover up for the declining volumes, thus discouraging rotational churn. Clean-up of the subscriber base by operators in the past few months. A lower churn should help operators reduce their SG&A spends, thereby improving margins.