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Sim consolidation hit all telcos; however, Jio’s active subs addition robust

TRAI’s Dec’21 subscriber data shows a sharp decline in subscribers (subs) for the industry (down 12.9mn), though this was expected given that the telcos had declared it in their 3QFY22 results. This was primarily due to: a) outsized churn in the lower ARPU segments given the entry level prepaid tariff hike undertaken in Jul’21 and Nov’21; and b) repurposing of customer retention efforts by Jio for low-ARPU subscribers. However, Jio and Bharti’s strong FTTH addition momentum continues.

Jio’s overall subs declined by a sharp 12.9mn in Dec'21 (had fallen by 19mn in Sep’21 as well); however, active subs addition continued to be strong at 4.7mn (has been strong since Mar’21) – hence Jio’s VLR ratio has improved to 87.6% in Dec’21 (vs. sub-80% before Aug’21) vs. Bharti’s VLR of 98.0% and VIL’s VLR of 86.4%. Bharti’s MBB subscriber addition moderated for the 4th consecutive month (declined by 0.2mn in Dec’21); further, addition to active subscriber base continued to be modest since Aug’21 – rose by only 0.8mn in Dec’21. However, VIL continues to struggle: Dec’21 was the 5th consecutive month of muted MBB addition (down 0.3mn in Dec’21) indicating inadequate capex. Further, its active subscriber base continues to decline. We believe that despite the moratoriums and recent tariff hikes, VIL may have to close the fund-raise exercise for a meaningful increase in capex and further upgrade ofcustomers to MBB.

Jio’s overall subs fell by a sharp 12.9mn in Dec'21; however, active subs addition continued to be strong at 4.7mn:

As expected based on 3QFY22 results, Jio lost a sharp 12.9mn subscribers in Dec’21 (had added 2.0mn/1.8mn in Nov’21/Oct’21 but had lost a huge 19mn subscribers in Sep’21) – the management had attributed this to sim consolidation post the Nov’21 tariff hike and repurposing of customer retention efforts for low-ARPU subscribers. But Jio’s active subscriber additions remained robust at 4.7mn in Dec'21 (has been adding ~4mn active subscriber per month since Mar’21 except for a modest 1.1mn addition in Nov’21) – thus, Jio’s VLR ratio improved to 87.6% in Dec’21 (vs. sub-80% before Aug’21) vs. Bharti’s VLR of 98.0% and VIL’s VLR of 86.4%.

Bharti’s MBB subs upgradation pace moderates for 4th consecutive month; active subs addition continues to be modest:

Bharti’s MBB (Mobile broadband – 3G+4G) subscriber addition moderated for the 4th consecutive month; it declined by 0.2mn in Dec’21 (had witnessed modest addition of ~1.3mn per month since Sep’21) vs. monthly addition of over 4.0mn seen prior to that. Further, the addition to active subscriber base continued to be modest since Aug’21 – rose by only 0.8mn in Dec’21 – due to outsized churn in the lower ARPU segments given the entry level prepaid tariff hike undertaken in Jul’21 and Nov’21. The management had attributed this to tariff hike-led sim consolidation and hopes it will normalise from Feb-Mar’22 onwards.

VIL’s MBB subs upgradation pace muted for 5th consecutive month; declining trend in active subscribers continues:

This is the 5th consecutive month of weak MBB addition for VIL (down 0.3mn in Dec’21) indicating inadequate capex. Further, its active subscriber base continues to decline – fell another 2.1mn in Dec’21 – due to outsized churn in the lower ARPU segments given the entry level prepaid tariff hike undertaken in Jul’21 and Nov’21. We believe that despite the moratoriums and recent tariff hikes, VIL might need to close the fund-raise exercise for a meaningful increase in capex and further upgrade of customers to MBB.

Jio and Bharti’s strong FTTH addition continues:

Jio’s FTTH addition continued to be robust – at 0.23mn in Dec’21 and close to its peak addition of 0.25mn in Jul21. Further, Bharti’s FTTH addition was also robust at 0.12mn in Dec’21 (vs. peak addition of 0.17mn in Jul21).

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