Impact of July's tariff hike by telcos almost over, analysts believe

While overall subscriptions are down, active subscribers have risen since July

The impact of subscriber churn and sim consolidation following the broad based tariff hike by private telecom players in July may be over, and the market has largely absorbed the price hike, analysts said on Tuesday.

 

Meanwhile, market leader Reliance Jio’s loss of customers for the fourth straight month in October, albeit at a slower pace, has been chalked to weeding out of inactive 4G users.

 

India’s three largest private sector telecom operators, Reliance Jio, Bharti Airtel and Vodafone Idea, had raised tariffs in the first week of July this year. Since then, all three have seen major hits to their subscription numbers. In October, Jio lost 3.76 million users, while Bharti Airtel reversed 3 months of decline, and added 1.92 million users.

   

But active subscriber numbers rose for all telcos barring Vodafone Idea in October, financial services group JM Financial pointed out.

 

“We believe the SIM consolidation trend seen post the July 2024 tariff hike is largely behind us and was limited largely to lower-end subscribers; hence, it is not a reason for concern for Jio or Airtel,” it said in a note.

 

The telecom sector’s wireless broadband subscriber (4G/5G) count also shrank by 4 million in October, down from the 5.6 million decline in the preceding month.

 

“Subscriber decline was led by Jio (-3.8 million), BSNL/MTNL (-1.4 million) and Vodafone Idea (-0.9 million), which was partially offset by subscriber additions in Bharti (2.1 million). The sharp decline of 3.8 million subscribers in Jio suggest weeding out inactive 4G customers,” investment banking company Jefferies said in an analyst note.

 

Meanwhile, Airtel’s loss of broadband users accelerated month on month in October. It had been a key beneficiary in last four months post tariff hike, Morgan Stanley said in a note. “Airtel saw major net adds in rural region (+3.2 million) while it lost subs in urban region,” it said.

 

Market leader Jio’s subscriber loss had continued to accelerate till September. But the latest attrition was much lower than the 7.96 million, 4.01 million and 0.76 million user loss experienced by Jio in the preceding three months. But some analysts said Airtel’s comeback to subscriber addition after three months of churn post tariff hike shows better performance.

 

“This clearly shows that Bharti’s subscriber mix is stickier and less price elastic vs the Jio subscriber base,” UBS said in a note. Cumulatively, Jio has lost 16.48 million users in the past 4 months or 3.45 per cent of its total subscriber base of 476.52 million at June-end, data from the Telecom Regulatory Authority of India (TRAI) shows. Airtel has so far lost 5.52 million users in 2024.

 

Active subscribers up

 

Meanwhile, while the sector has lost 20 million total subscribers since July, the active subscriber count has risen by more than 5.7 million indicating the market has absorbed the higher prices, they pointed out.

 

“The impact of tariff hikes on the active subscriber addition has started to recede suggesting that the market has absorbed the price hikes. Increase in active subs were driven by B-Circles (+8.4m) and C-Circles (+2.3m) while Metros (-0.6m) and A-Circles (-3.3m) witnessed subscriber decline," Jefferies said. 

Ringing in recovery 

 

Jio 

 

> Lost 3.76 mn subscribers in October, marking fourth consecutive months of decline

> Subscriber losses have slowed compared to previous months (7.96 mn in July, 4.01 mn in August, 760,000 in September)

 

Bharti Airtel 

 

> Reversed 3 months of subscriber losses, adding 1.92 mn subscribers in October

> Strong gains in rural regions (+3.2 mn), but losses mount in urban regions 

 

Vodafone Idea 

 

> Continued to lose users, with 900,000 decline in October