The size of the Indian mobile market is revealed to be much smaller than previously thought, according to new Wireless Intelligence analysis, which claims that almost 30 percent of Indian subscribers should be classified as inactive. Based on recent figures by the Telecoms Regulatory Authority of India (TRAI), Wireless Intelligence estimates that almost 250 million Indian connections were inactive in Q2 2011. This means that as much as 30 percent of the country's 850 million connections base is redundant, leading to a revised market size of around 600 million active connections. The inactive subs base in India is therefore equivalent to the total market size of major mobile markets such as Brazil or Russia, the firm says.

“The fact that the country's connection base is inflated by some 250 million inactive connections has dampened the growth achievements of many Indian operators, and clearly shows that further investments are still required to expand and improve network coverage,” said Joss Gillet (pictured), senior analyst at Wireless Intelligence.

India's mobile penetration rate can also be recalculated in light of the inactive subs, says Wireless Intelligence, coming down from around 68 percent to 48 percent.

The market revaluation has been triggered by rule changes in the activity period allowed for prepaid users and the effect of mandatory SIM registration. Previously, users would see their services terminated if they had not recharged their prepaid cards or placed/received a call within a period of 180 days. In 2010, that period was reduced to 90 days and, recently, the TRAI has reportedly reduced the period to just 20 days. The regulator measures the number of active subscribers via its visitor location register (VLR), a temporary database of subscribers who have roamed into a particular area.

According to Wireless Intelligence, Etisalat DB's Cheers Mobile and state-owned MTNL were the two operators found to have the highest proportion of inactive subscribers at 65 percent of their respective total connections. India's largest mobile operators, by contrast, have proportionately fewer inactive subscribers. Only 11 percent of market-leader Bharti Airtel's 169.2 million connections are classified as inactive. Fourth-placed Idea Cellular had the lowest inactive base of all 15 Indian operators at 8 percent.

"The revaluation of the market comes at a time when local operators are preparing for slowing growth and a renewed focus on customer retention and value-added services," added Gillet.