Published on 19/08/2022 12:34:28 PM | Source: JM Financial

Telecom MBB Subs Addition Healthy, But Active Subs Addition Muted By JM Financial Institutional Securities Ltd

Posted in Broking Firm Views - Sector Report| #Telecom Sector #Sector Report

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* Jio’s net subs rose for 4th consecutive month; however, active subs addition declined marginally in Jun’22: Jio’s net subs rose by 4.2mn in Jun’22 following an increase of 3.1mn/1.7mn/1.3mn in May’22/Apr’22/Mar'22; this is after having reported net subs loss of 3.7mn/9.3mn/12.9mn/19mn in Feb’22/Jan’22/Dec’21/Sep’21 due to sim consolidation post the Nov’21 tariff hike and repurposing of customer retention efforts for low-ARPU subscribers. However, Jio’s active subs declined by a marginal 0.1mn after having reported strong addition of 4.5mn in May’22 (though it had seen muted additions in Mar-Apr’22) and ~4mn additions per month during Mar’21 to Jan’22. Jio’s VLR ratio is healthy at 92.8% in Jun’22 (sharply higher than sub-80% before Aug’21 but down from peak of 94.0% in Feb’22) vs. 98.4% for Bharti and 85.2% for VIL.

* Bharti’s MBB subs addition robust at 2.2mn; further, active subs also rose by 2.3mn in Jun’22: Bharti’s MBB (Mobile broadband – 3G+4G) subs rose by 2.2mn in Jun’22 after having reported robust addition of ~2mn each in Feb-May’22 (except for decline of 0.3mn in Apr’22). However, some moderation in MBB subs addition is driven by limited availability of smartphones due to chip shortage, resulting in a rise in the average price of smartphones, as highlighted by the Bharti management during its 1QFY23 results concall. Further, Bharti’s active subs base rose by 2.3mn in Jun’22, after having added 2.2mn active subs in May’22, probably indicating abatement of sim consolidation post the Nov’21 tariff hike.

* VIL’s MBB subs declined by 0.4mn in Jun’22; further, decline in active subs continues: VIL’s MBB subs declined by 0.4mn in Jun’22 (with Aug’21-Jun’22 cumulatively witnessing 0.1mn decline in MBB subs). Further, its active subs base dipped by 1.4mn in Jun’22, continuing the declining trend over the past many months due to the outsized churn in the lower ARPU segments given the entry level prepaid tariff hikes undertaken in Jul’21 and Nov’21. We believe that despite the moratoriums and recent tariff hikes, VIL may have to close the ~INR 100bn equity fund-raise exercise from non-promoters (with the promoter having agreed to infuse INR 49.4bn) for a meaningful increase in capex to boost upgrade of customers to MBB.

* Jio and Bharti robust FTTH addition continues: Jio’s FTTH subs additions continued to be strong at 0.27mn in Jun’22 (vs. peak addition of 0.35mn in Apr’22). Further, Bharti’s FTTH subs were also robust at 0.11mn in Jun’22 (vs. peak addition of 0.17mn in Jul’21).


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