Vodafone and Idea saw their active subscriber base decline by 0.1 million and 0.4 million, respectively, in the first two months of the fiscal while the dip for smaller operators stood at five million in the first two months of the new financial year, the CLSA report said. This compares with smaller telcos’ average monthly decline of 4.5 million in the quarter ended March.
“The decline in smaller operators’ subscriber share from 19% is likely to continue, as the unlimited voice plans offered by larger players are taking away the incentive of having a second connection only for voice,” the report said.
Jio and the country’s largest player AirtelBSE 1.26 % were the only telcos to have added active subscribers in April-May at 8.7 million and 1.5 million, respectively. Overall, Jio added 4.78 million customers in May, while Airtel gained 2.09 million, as per sector regulator Trai’s data.
While Jio’s active subscriber base has revived with more penetrations in metros, it has hit the 4G device hurdle, it said. Jio’s move to launch 4G-enabled feature phones at highly affordable rates — some analysts such as those in HSBC expect the start price to be as low as Rs 500 — is expected to help the firm overcome this bump.
“Amidst intense competition and next big disruption of an aggressive 4G feature-phone launch by Jio, gaining share will be the key for operators’ success,” said CLSA.
Jio launched commercial operations in September last year, and hardly charged its customers for the first six months, rolling out promotional offers with plenty of benefits at low prices, wooing customers in big numbers. However, with the company turning into paid services in April, the number of people moving out of major service providers has reduced.
In May, mobile number portability (MNP) requests stood at 5-6 million, which showed that porting out primary connection to Jio is yet to gain traction, CLSA said.
“Going forward, for Jio, success of 4G feature phone launch will be the key to future subscriber growth and reductions in promotions will drive industry average revenue per user (ARPU),” said CLSA analysts.
Kotak expects Airtel’s monthly ARPU to decline 4.3% on-quarter to Rs 151 in the June quarter and predicts Idea’s will dip 3% sequentially to Rs 138.
The CLSA report also highlighted how Sunil Mittal-owned Airtel’s lead in 4G rollouts has helped the operator to outpace Vodafone and Idea on subscriber additions since FY16. But, the largest operator has seen a marginal decline of active subscribers in metros.