The industry wide addition of 6.8 million active users in October 2024 suggests that the industry has more or less absorbed the tariff hikes taken in July this year, experts said analysing the latest telecom subscriber data released by the Telecom Regulatory Authority of India (TRAI).
“The sector’s active subscribers jumped sharply in October after three months of volatility due to price hikes. Since the tariff hikes undertaken in July 2024, active subscriber base has increased by ~5.7mn, suggesting that market has absorbed the price hikes,” analysts from Jefferies said. The increase in active subscriber base was driven by Jio (+3.8 mn), Bharti Airtel (+2.7 mn) & BSNL/MTNL (+0.8 mn), and was partially offset by subscriber fall in VIL (-0.7 mn).
All three private telcos raised their tariffs by 15%-17% in the first week of July, as a result of which, the industry saw a wave of sim consolidation, resulting in subscriber loss for all three. Government owned Bharat Sanchar Nigam Limited (BSNL) consequently saw net subscriber additions since July, which too seemed to moderate in October. Vodafone Idea in its September quarter earnings call had indicated that port-outs to BSNL had started declining in the month of October as well.
Another indicator that the impact of the rate hikes taken by private telcos earlier this year is behind the industry is the slowdown in the industry wide churn seen in October at 3.3 million (as compared to 10.1 million in September), analysts added.
While industry wide churn reduced significantly month on month, Bharti Airtel was the only private telco to add subscribers (1.9 million) while Reliance Jio (-3.8 million) and Vodafone Idea (-2 million) continued to lose users.
“Bharti led the data subscriber additions in October gaining market share, and showcasing better and premium customer mix of Bharti,” Jefferies analysts said.
“This clearly shows that Bharti’s subscriber mix is stickier and less price elastic versus the Jio subscriber base,” analysts from UBS added. In fact, Jio’s subscriber loss moderated on a month-on-month basis, but Vi’s user churn at 2 million intensified as compared to an average churn of 1.6 million subscribers per month between July and September 2024.
“VIL’s MBB (3G+4G+5G) subscriber base declined further by 0.9 million in Oct’24, the 10th time in the last 21 months, primarily driven by delay in its 5G rollout and 4G coverage gaps,” analysts from JM Financial observed.
On Jio’s continuing userbase decline, analysts said that the telco was weeding out inactive 4G users. Even with subscriber churn moderating, mobile number portability requests remained elevated at 13 million (though they were flat month on month). This was possibly due to subscribers moving to BSNL or MTNL for lower tariffs (neither implemented tariff hikes). “We note that MNP requests have remained elevated and higher churn usually drives up dealer commissions/SG&A expenses for telcos,” Jefferies analysts noted. Financial Express