Airtel active subscriber dip, muted 4G additions temporary, say analysts

Airtel active subscriber dip, muted 4G additions temporary, say analysts

Bharti Airtel, which reported a 1.2 million dip in active subscribers in October, is not expected to continue the same trend going forward as analysts say this is a one-time phenomena and does not lead to concerns over the company’s fundamentals.

The telecom operator’s active subscriber decline in October was the highest in the last 17 months, data from Telecom Regulatory Authority of India (Trai) showed on Wednesday. The reasons for the same can be attributed to the transition of lower-end subscribers to Jio Bharat 4G phone, cleaning of inactive subscriber base by the company, as well as some impact of the tariff hikes taken by Airtel at entry-level in 2023, according to some analysts.

As of October end, Airtel’s active subscriber base was at 375 million. Owing to Airtel and Vodafone Idea, which lost 1.4 million active subscribers, the overall active subscriber base fell by 1.43 million in October to 1.045 billion.

“Sector’s active subscriber decline in October seems temporary, given that the two previous instances of subscriber decline YTD (year-to-date) were followed by healthy additions next month,” said brokerage house Jefferies, in a note.

Besides October, in 2023 so far, the active subscriber base for the industry fell in June and August by 574,199 and 3 million, respectively, Trai data showed. After the dip in these months, the active subscriber additions were over 3.5 million each in July and September, according to the data.

According to the data, the mobile number portability (MNP) requests at 12.7 million also remained high in October, thereby indicating stiff competition.

“Mobile Number Portability (MNP) requests remained elevated at 12.7 million, indicating intense competition to attract subscribers, with tariff hikes unlikely until after the 2024 general elections, in our view,” said brokerage house Kotak Institutional Equities.

Interestingly, Jio has been continuously adding active subscribers for nearly a year now. In the last 11 months till October, the telecom operator added over 34 million active subscribers.

“Jio continued to lead on active subscriber additions, which bodes well for sector’s pricing outlook,” Jefferies said. The company had 422 million active users as of October end, with a market share of 40.4%, according to ICICI Securities.

Active subscriber market share of Airtel and Vodafone Idea was at 35.9% and 19%, respectively.

Apart from the active subscribers, Airtel’s 4G subscriber additions at 520,000 in October were the lowest in 18 months. The company’s 4G subscribers at the end of October were at 251.09 million. “Bharti’s muted performance was even more stark in the wireless broadband segment; it added only 0.5 million wireless broadband subscribers (lowest in the past 18 months),” said UBS Securities, in a note.

According to Jefferies, while Jio added 3.2 million 4G subscribers partly driven by Jio Bharat adoption, Bharti’s 4G subscriber additions slowed down to an 18-month low. “This could be a timing issue in our view, as Bharti’s 3G/4G subscriber additions touched a 2-year peak in the previous month,” said Jefferies.

Overall, the 4G subscriber additions at 2.8 million were an eight-month low in October, according to Trai data.

Analysts believe that the 4G subscriber additions should recover in subsequent months, drawing parallels from the healthy subscriber additions, post weak additions of 400,000 in February 2023.

As of October end, a total of 849.97 million 4G subscribers were there in the country. The overall mobile subscriber base of the country rose marginally by 831,467 users to 1.15 billion as of October-end. Jio continues to lead subscriber additions, and added 3.16 million subscribers. On the other hand, Airtel added only 352,640 users, its lowest additions in six months.

Vodafone Idea continues to lose subscribers for 31 months. In October, the company lost over 2 million subscribers, taking its total base to 225.49 million. Subscriber base of Jio and Airtel at the end of October was at 452.37 million and 378.13 million, respectively.

According to Kotak Institutional Equities, Airtel gained market share in 12 out of 22 circles with big gains in Punjab, Himachal Pradesh, and Haryana, while it lost significant share in Mumbai, Odisha, and Karnataka.

On the other hand, Jio gained market share in all 22 circles with big gains in Kolkata, Himachal Pradesh, Odisha, Kerala, Maharashtra, Madhya Pradesh, and Gujarat. Vodafone Idea lost market share in all circles except for Karnataka, Mumbai and Rajasthan.