Why a declining user base is good news for Airtel, Jio

Ayushi Kar | | Updated on: Apr 20, 2022
The numbers indicate an increased acceptance of the tariff hikes announced by operators in November, say experts

The numbers indicate an increased acceptance of the tariff hikes announced by operators in November, say experts | Photo Credit: ViewApart

While the overall user base has declined over 3 months, the number of active subscribers has gone up

The mobile subscriber data for February 2022 shows that operators’ overall subscriber base has dipped further in February, but the number of active subscribers has increased by 9.5 million. Experts suggest that this indicates the increased acceptance of the tariff hikes announced by operators in November.

While the overall mobile user base declined for the third month in a row after operators hiked tariffs in November, the rate of decline has come down. The overall subscriber base saw a monthly decline rate of 0.32 per cent in February.

The loss in users has declined in comparison to the previous month, when the subscriber base declined 0.76 per cent in January. The bigger positive is that the active user base has grown by 9.5 million users. That’s because the overall mobile user base also includes inactive connections, whereas the active subscriber base gives the real picture of how operators are performing. Experts suggest that the telecom sector’s active subscriber base has almost reverted to pre-Covid levels, nearing the levels seen in early 2019.

The sector’s active subscriber ratio continues to improve as Reliance Jio added 10.1 million subscribers, the highest addition since October 2021. Jio’s active subscriber base has improved to 94 per cent of its total user base. Bharti Airtel continues to lead the market with a stable 98 per cent active subscriber ratio. “As Jio consolidates its market position, it is moving to make its subscriber base of a higher quality. Subscriber clean-up improves its average revenue per user, and also serves as an indicator that the largest telco has a robust network,” said an expert.

Bharti Airtel added 1.6 million total and 1.2 million in net active wireless subscribers. The company has seen an expansion of its base for the fourth consecutive month.

Reliance Jio continued its subscriber cleanup, “Overall subscriber base (for Jio) declined by another 3.7 million, with the number of overall subscribers falling by 41 million in the last six months. The VLR base rose by 10.1 million, with the VLR proportion now standing at 94 per cent. It maintained a leadership position in an active subscriber market share of 37 per cent.” 

However, Vodafone Idea lost a further 1.5 million in February, and experts predict that the operator will report a loss of at least 2 million subscribers in the fourth quarter of FY22.

Analysts at brokerage firm Jefferies said the sector’s addition of active subscribers indicates acceptance of tariff hikes. “The steady increase in active subscriber additions in January and February indicates acceptance of tariff hikes by the market. Jio led the active subscriber additions with 10.1 million, followed by Bharti at 1.2 million. VIL lost 2.9 million active subscribers in February. The sector’s active subscriber base is nearing the all-time peak levels seen in early 2019.”

“With Bharti focusing on raising ARPUs and Jio leading active subscribers, the outlook for future tariff hikes looks strong,” it added.

Published on April 20, 2022
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