Jio added around 4X active users vs Airtel in Feb, Vi cedes more ground: Analysts

Reliance Jio continued to lead the market in terms of active subscriber additions with nearly 3.2 million active users added in February, four times Bharti Airtel's addition of 0.8 million. Vodafone Idea continued to lose active subs (0.8 million), even as the total active subscriber base rose to 1,028 million, according to data collated by the Telecom Regulatory Authority of India (Trai).

The muted growth in Airtel’s active subscriber base can be attributed to a limited impact of the entry level tariff hikes it implemented in pre-paid, analysts said.

“Bharti Airtel added 0.8 million subs (versus 1.7 million in the past six months); it was adversely impacted by the rise in minimum recharge,” analysts from ICICI Securities said in a report.

However, the impact is limited, observed analysts from brokerage Emkay. “Bharti discontinued its Rs 99 plan in November'22 in Haryana and Odisha. However, Haryana witnessed a 0.03 million increase in VLR subscribers. Interestingly, Bharti also added 0.16 million VLR subscribers in Odisha,” they added.

The growth in active users comes despite a 1.06 million decline in overall wireless subscribers to 1.141 billion at the end of February. Jio added the highest number of subscribers at a little over a million, closely trailed by Bharti at just shy of a million subs, while Vi lost users (down 2 million) for the 23rd straight month.

Vi also lost 1.3 million mobile broadband (MBB) subs in February, the first decline in the metric in eight months, signifying the telco’s growing challenges to remain competitive in the market. Airtel added 2.2 million MBB subs, while Jio added one million.

“Notwithstanding the moratoriums, VIL needs to close the fund-raise exercise quickly for a meaningful increase in capex to boost upgrade of customers to MBB,” JM Financial analysts observed.

While the government has converted Vi’s interest dues on deferred adjusted gross revenue (AGR) payments into equity, the distressed telco has been unable to raise funds – through debt or equity sale.

Vi ceded market share to peers on all fronts with its subscriber market share dipping to 20.84% in February (versus 20.99% in January), and 20.3% (versus 20.4% in January) in case of active users. Its market share for MBB subs dipped to 15.4% (against 15.5% in January) while Airtel market share rose to 29% (28.8% in January) and Jio’s rose to 53% (52.9% in the month before).

As a result, Jio and Airtel are expected to continue gaining market share at Vi’s expense, especially among premium customers, “driven by pan-India 5G rollouts and Vi’s cash constraints, long-delayed fund-raise and uncertainty on 5G launch,” analysts from Kotak Institutional Securities said.

Despite Airtel and Jio’s market share and subs gains and focus on 5G rollout, analysts Emkay said that the timing and quantum of tariff hikes remains an important trigger for growth.

“Reliance Jio's leadership in active subscriber additions and Bharti's market share gains amongst 3G/4G subscribers should keep both telcos amenable to higher tariffs, which in turn bodes well for the growth outlook for both Bharti Airtel and Reliance Jio,” Jefferies analysts added.

While a round of pre-paid tariff hikes were expected around mid-2023, Jio’s aggressive push for the postpaid segment and the approaching general elections could mean that the next round of price hikes will be delayed by 12 months, analysts have maintained.