Triggered by inflationary pressures, SIM consolidation and slow down in feature phone upgrades are expected to continue for a couple more quarters, analysts added. Market leader Reliance Jio lost the most number of active subscribers, a development which analysts said could delay headline tariff hikes in the industry.
“The industry’s active subs were down by 4.5 million in Nov’22 (following a sharp addition of 2.8 million in Oct’22) due to a sharp 3mn/2mn decline for Jio/VIL,” observed JM Financial in its report analysing the latest subscription data put out by the Telecom Regulatory Authority of India (Trai).
Bharti Airtel, on the other hand, added 1 million active users in November 2022. Active, or visitor location register (VLR), data put out every month by Trai reflects the number of subscribers actively using a mobile network.
“A continued underperformance in Jio’s subscriber additions vs. Bharti as seen in Nov-22, could lead to delays in tariff hikes,” analysts from Jefferies added.
Experts have attributed SIM consolidation as the main reason for the dip in Jio’s active subscriptions. SIM consolidation refers to contraction in the number of mobile connections, including multiple ones, which can typically happen when tariffs rise or when telcos merge, get acquired, or wind-up operations.
“Bandwidths are improving, tariffs not too different between service providers and there are multiple options for making calls using OTT apps like WhatsApp, and so consumers have fewer reasons to keep multiple SIMs. And Jio was the most used ‘second SIM’ for data usage,” said Mahesh Uppal, director, ComFirst, a communications consultancy.The drop in active subscriptions reflects the slowdown in upgrading to smartphones. “From 5 million conversions a month pre-pandemic, we are currently seeing 3-3.5 million conversions a month,” said Shilpi Jain, research analyst at Counterpoint Market Research, adding that inflationary pressures are the main reason for this occurrence.
Uppal added that the trend of muted active subs growth, or even decline is likely to continue for a few months given the customer base is settling into the single SIM phenomena. “The telcos may not be too bothered about the subscription numbers as long as the revenue is not impacted, which so far it hasn’t,” he added.
Another point of concern was the 2 million subs decline in rural net additions, pointed out Pareekh Jain, chief executive, EIIRTrend.
“Since the telcos are looking at the rural as the next frontier for growth, it is a pressing concern if the trend were to continue. The urban teledensity is pretty saturated at 130%. New additions will need to come from the rural market,” he said.
In this light, it becomes more important for telcos to focus on growing ARPU (average revenue per user) among the urban subscribers to ensure momentum in growth, he added.
Airtel saw active subs additions (0.1 million additions in Haryana and 0.2 million additions in Odisha) in markets where it increased the base pack tariffs.
The telco discontinued the Rs 99 plan in Odisha and Haryana circles during the second half of November, marking an 80% increase in customer outgo for the next plan of Rs 155.
Airtel gained subscribers and market share in both these circles, implying limited impact of tariff hikes on its subscriber base. The full impact of the price hike will be seen in December, analysts from Jefferies said, as the entire subscriber base would not have gone through a recharge cycle by November end.
