Published on 2/07/2020 2:53:22 PM | Source: Motilal Oswal Financial Securities Ltd

Telecom Sector Update - Active subscriber base remains flat By Motilal Oswal

Posted in Broking Firm Views - Sector Report| #Telecom Sector #Sector Report #Motilal Oswal Financial Services Ltd

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MBB adds still higher than market growth

The Telecom Regulatory Authority of India (TRAI) released subscriber data for Feb’20 after a delay of two months even as we were eagerly awaiting data on active subscriber trends amid the COVID-19 crisis. Key insights are highlighted below:

* The Telecom industry continued to add gross subscribers in Feb’20, with the base increased by 4.1m to 1,161m (v/s 5.0m increase witnessed in Jan’20). The industry was supported by the addition of 0.9m/6.3m subscribers by Bharti/RJio, partially offset by VIL’s subscriber base declining by 3.5m. The active subscriber base increased by a mere 0.4m to 986.8m (v/s 3.8m rise in Jan’20) as VIL lost 2.8m subscribers and Bharti/RJio added 1.5m/1.3m active subscribers.

* Bharti gained 0.9m gross subscribers (same as Jan’20) to reach 329m and 1.5m active subscribers (v/s. 1.7m drop posted in Jan’20) to reach 314m. Moreover, Bharti has continued to maintain its top spot in terms of active subscriber market share with share of 31.9%, and ranks second in the gross subscriber market with 28.4% share.

* RJio added the highest number of gross subscribers with 6.3m adds (6.6m in Jan’20); it lagged behind Bharti (1.5m) in terms of net subscribers with 1.3m adds (v/s 4.9m in Jan’20), possibly impacted by decline in dual SIM cards in the market. The pace of gross subscriber additions has gradually reduced from an average 8–10m earlier as incremental growth is now a function of market growth. It reached 33% gross market share, maintaining its top position.

* VIL continued to lose its subscriber base, with a 3.5m/2.8m reduction in gross/active subscribers to 326m/294m, along with an increase in the pace of active subscriber churn (1.1m in Dec’19 and 0.3m in Jan’20). Subsequently, VIL’s gross/active subscriber market share fell to 28%/29.8% (v/s 28.4%/30.1% in Jan’20). With this, VIL now leads the laggards in both gross and active subscriber market share.

* Industry MBB subscriber adds stood at 7.7m to 661m (v/s an 11.5m increase in Jan’20). Currently, MBB subscribers account for 67% (+70bp MoM) of the total active subscribers.

* Bharti’s MBB subscriber adds stood at 1.3m, lower than the earlier monthly average of 3–4m. RJio’s 6.3m adds, too, were lower than the earlier monthly average of 8–9m. VIL’s MBB addsturned positive, but lagged behind at 0.3m following a 0.5m/1.4m drop in Jan’20/Dec’19. Bharti/VIL’s MBB subscriber market share fell marginally by 10bp MoM to 21.7%/17.9%, while RJio’s market share (which also includes that of Jiophone) improved to 57.9% (+30bp MoM). Thus, excluding Jiophone, RJio and Bharti’s MBB adds may be similar.


Subscriber additions continue to be positive

The Telecom industry continued to add gross subscribers with an increase in the base of 4.1m to 1.161m. This was in line with the earlier trend of 3–4m subscriber adds monthly. Bharti/RJio’s gross subscriber base increased by 0.9m/6.3m to 329m/383m (v/s a 0.9m/6.6m increase in Jan’20), while VIL lost 3.5m gross subscribers.


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