Jio leads active subscriber base growth; Vodafone’s slide continues

• While both Jio and Airtel added subscribers in May, Vodafone India continued to experience subscriber losses.
• However, there was an improvement in the quality of the subscriber base, as there were 5 million VLR (Visitor Location Register) net additions.
• 5G rollouts by Bharti and Jio are exerting pressure on VIL's 4G subscriber base.

Telecom majors are not adding as many mobile subscribers as they used to a couple of years ago. While improved penetration is one reason, the other key reason is tariff increase that most players undertook in 2021. In the month of May, the sector saw active subscriber base rise by 5 mn. Billionaire Mukesh Ambani controlled Reliance Jio continues to gain market share in India’s telecom market. Data released by the Telecom Authority of India (TRAI) shows that Reliance Jio added 4.9 million new subscribers in May, which is more than double of Bharti Airtel’s 2.4 mn net additions. VIL continued to experience subscriber losses, with a decline of 2.8 million subscribers.

According to Jefferies, reported subscriber additions were fairly muted at 0.1m, keeping the overall subscriber base stagnant. While Jio's subscriber additions were steady month-on-month at 3 million, Bharti's subscriber additions picked up to 1.3m, VIL (-2.8m) continued to witness subscriber losses.

The traction in monthly numbers is coming not from urban areas but from much rural areas. Subscriber additions in C-Circles (0.6m) and Metros (+0.1m) were offset by losses in A-circles (-0.5m) and B-Circles (-0.1m). Rural subscriber additions of 0.6m were offset by a 0.5m subscriber decline in May 2023, says the Jefferies report.

Improvement of quality of subscriber base

Nonetheless, there was an improvement in the quality of the subscriber base, as there were 5 million VLR (Visitor Location Register) net additions, according to Kotak Institutional Equities, Active subscribers are calculated based on reported Visitor Location Register (VLR).

The increase in active subscribers was driven by Jio (+4.9 million) and Bharti (+2.4 million). However, Vodafone Idea Limited (VIL) continued to experience subscriber losses, with a decline of 1.8 million active subscribers during the same period. Except for Metros, all circles witnessed subscriber additions, with B-Circles (+4.8 million) and C-Circles (+2.5 million) leading the way. Notably, VIL's subscriber loss was the highest in six months, as it lost subscribers in 17 out of 22 circles. The recent launch of Jio Bharat by Jio could lead to a potential acceleration in subscriber losses for Vodafone Idea Limited (VIL). This move is expected to expedite the transformation of the market into an effective duopoly sooner than previously anticipated, according to analysts at Jefferies.

Additionally, mobile broadband (MBB) subscribers increased by another 5.3 million compared to the previous month, indicating a data penetration rate of approximately 72%.

5G rollouts by Bharti and Jio affects VIL's 4G subscriber base

May 2023 witnessed a pick-up in 3G/4G subscriber additions, reaching 5.3 million, compared to 4 million in the previous month. The increase in 3G/4G subscribers was primarily driven by Jio and Bharti Airtel. Interestingly, unlike in March 2023, Vodafone India’s 3G/4G subscriber base remained flat month-on-month and did not recover, as per Jefferies Equity Research.

This indicates that the 5G rollouts by Bharti and Jio are exerting pressure on VIL's 4G subscriber base, potentially leading to continued market share gains for Bharti and Jio in the telecom sector. The introduction of Jio Bharat by Jio could lead to an acceleration in subscriber losses for Vodafone Idea Limited (VIL).

Fixed Broadband (FBB) subscriber base continues to clock growth

India's Fixed Broadband (FBB) subscriber base showed continued growth, increasing by 0.58 million to reach 34.5 million, representing a year-on-year growth of 23%. JioFiber added 0.27 million FBB subscribers, reaching 8.9 million subscribers, showing a remarkable 51% year-on-year increase. Bharti also experienced growth, adding 0.15 million FBB subscribers, taking their total to 6.4 million, indicating a 35% year-on-year rise.