3G slows as 4G grows

Are the 3G subscriptions reaching a saturation point? Well, new 3G users certainly seem a little harder to get these days.

The four 3G network operators were seen adding more than a million new subscriptions a month, on average, in FY15 as well as in FY16. But the charm and growth of mobile broadband’s early years is apparently waning. Based on calculations from PTA statistics, 3G subscriber additions had dropped to 0.37 million a month on average in the period Jan-May 2017.

The 3G slowdown this year is happening amid Ufone slowly shedding subscribers, with Jazz and Telenor adding fewer subscribers than they used to. Only Zong defied the pack by adding 1.54 million new 3G users onto its network, accounting for roughly 84 percent of the overall 1.83 million 3G additions in the Jan-May 2017 period. That’s why Zong’s share in the 3G pie has gone up to 24 percent in May 2017, at the expense of Jazz (34%) and Ufone (13%), whereas Telenor holds steady at 29 percent.

However, substantial growth has come from an unexpected quarter. In May last year, 4G services, which qualify as a niche market, had not hit a million subscriptions. A year later, the tally is 5.24 million. One interesting bit is that during the Jan-May period this year, the 4G additions were 2.33 million, higher than the 3G subscriptions added in this period!

Save for Ufone, all operators are competing in the 4G market. Zong leads, as of May 2017, with a 73 percent market share, followed by Jazz (17%), and Telenor (10%). Thanks to growing competition in this space, 4G subscriptions in May 2017 were 5 times those in June 2016. 3G only grew 1.3 times in this period. Encouragingly, 4G subscriptions have gone up to nearly 15 percent of 3G subscriptions, compared to 3-4 percent roughly a year ago.

Be that as it may, the 3G slowdown is not a positive sign. Of the roughly 141 million total cellular subscribers, only about 30 percent were on mobile broadband networks (3G and 4G) services as of May 2017. That’s an improvement from 20 percent a year ago. But the remaining gap is still huge: some 99 million 2G subscriptions (unique users around 50 mn) need to be transitioned to mobile broadband.

That will require a rural push, which the operators, who have a better commercial case for urban broadband, may be unwilling to do. But an urban-centric strategy means a saturation point will soon hit in terms of subscriptions, if not in revenues. Perhaps that explains why 3G subscriptions are losing their growth momentum even as more urbanites presumably switch to the speedier alternative of 4G.