Published on 14/07/2017 4:03:56 PM | Source: Motilal Oswal Securities Ltd

Telecom Sector Industry active subscriber addition recovers led by RJio - Motilal Oswal

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Industry active subscriber addition recovers led by RJio

remains the only other strong contender The Telecom Regulatory Authority of India (TRAI) has released the monthly subscriber data for the month of May 2017. Active (VLR) subscribers in the industry increased by 4.6m to reach 1,020m in May, after declining by 1.5m in the previous month due to the commencement of RJio’s paid services. Apart from RJio (+8.7m), Bharti (+1.5m) was the only player to have recorded active subscriber addition. Bharti’s active subs market share improved 10bp to 26.5%, while RJio gained 80bp to reach 8.7%, largely at the cost of smaller players, which lost 60bp. This is in line with our view that RJio is likely to gain from subscribers shifting from second SIM usage to RJio’s prime subscription. RJio’s VLR in May improved 450bp MoM to 75.7%, indicating some stability after a 200bp decline in April. Industry’s mobile broadband (MBB) subs net adds at 7.4m remained stable, led by RJio’s 4.8m adds. RJio continues to lead the MBB subs market share at 43%; however, adjusted for inactive subscribers, RJio’s MBB subs market share stands at 36.4%. We continue believing that Bharti has the wherewithal to perform well in the current hyper-competitive market.


Industry witnesses recovery in active net subs adds

* After declining by 1.5m in April due to RJio’s paid service launch, the telecom industry’s active net subs increased by 4.6m in May 2017. Region-wise, Bihar, UP (E) and West Bengal remained the major gainers, with growth led by RJio and Bharti.

* Operator-wise, RJio added 8.7m active subs to reach 88.9m, largely at the cost of smaller operators, which lost 5m active subs. Vodafone and Idea too cumulatively lost 0.5m active subs. This could be the outcome of subscribers shifting from second SIM usage to RJio’s prime subscription. In our view, it will be key to see RJio’s subs retention as it gradually increases ARPU beyond June 2017.

* Bharti (+1.5m to 270m) was the only operator other than RJio to gain active subs.


RJio gains active subs share; Bharti – the only strong contender

* RJio gained active subs market share by a healthy 80bp MoM to 8.7%, as its VLR improved by a strong 450bp to 75.7%.

* Bharti was the only other strong player, which not only protected but also marginally gained active subs market share (+10bp to 26.5%).

* RJio’s market share gain largely came at the cost of RCom, Tata Tele, BSNL and Uninor, which all remain vulnerable due to their weak network, limited value proposition apart from pricing, and as they possibly hold majority of the second SIM market. Vodafone and Idea too lost 10bp each to reach active subs market share of 19.5%.


MBB industry remains steady led by RJio

* MBB subscribers increased steadily by 7.4m to reach 273m. RJio continues to drive industry MBB subscription, contributing 65% (4.8m) of overall adds. On the other hand, Bharti contributed 14% (1m).

* RJio leads the MBB market share at 43% (+60bp MoM), while Bharti/Vodafone/Idea hold 18.8%/14.8%/9%. Adjusting for RJio’s low active subs at 75.7%, its MBB market share stands at 36.4% (+200bp), while Bharti/Vodafone/Idea account for 21%/16.5%/10.1%.


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