The research company said that India’s wireless-telecom subscriber base rebounded to 1.159 billion in January 2021 same as that to pre-pandemic levels after a falling to 1.140 billion in June 2020 following a massive churn during the lockdown, which saw reverse migration causing a labour crisis
4G mobile data subscribers to rise to 820 million by the end of March 2022 higher than in the last fiscal because of higher competitive intensity, according to a CRISIL report released Tuesday.
The rating agency said "The pandemic slowed 4G subscriber additions to 12 million in the June 2020 quarter, with smartphone shipments probing new lows. There was recovery in the quarters that followed, but growth in 4G subscriber additions remain below the pre-pandemic rate. However, the March 2021 quarter would have been better because India’s 4G subscriber base is expected to have risen to 710-720 million in fiscal 2021".
The research company said that India’s wireless-telecom subscriber base rebounded to 1.159 billion in January 2021 same as that to pre-pandemic levels after a falling to 1.140 billion in June 2020 following a massive churn during the lockdown, which saw reverse migration causing a labour crisis.
Crisil said with the onset of the second wave of the pandemic and the resultant restrictions, there is once again reverse migration of labour. That could mean another quarter of subscriber churn. Also, given the restrictions in major cities, smartphone sales are likely to be impacted as well, which would slow 4G subscriber additions in the current quarter.
"In this scenario, our bull case is 4G subscribers rising to ~820 million by the end of this fiscal, assuming restrictions last only for the current quarter. In the bear case, where lockdowns extend through the second quarter, we see that number reaching ~800-810 million" the rating agency said.
The pace of additions should pick-up gradually over the remainder of this fiscal as competitive intensity in the wireless-telecom market increases despite second wave of pandemic as there was a significant capacity addition after the spectrum auctions and removal of inter-operator charge (IUC) charges,
"The acquisition of spectrum by telcos in March 2021 auction has led to three major players — Airtel, Jio and Vodafone Idea — almost achieving spectrum parity as they are now comparable in terms of MHz/million subscriber metric. Additionally, over the last two years, incumbent operators like Bharti Airtel and Vodafone Idea have re-farmed 3G spectrum for 4G use across a majority of circles, leading to significant 4G capacity addition," Crisil said.
Crisil ruled out a price war, competition is expected to be indirect, in the form of tie-ups with smartphone manufactures for low-cost phones, increased bundling of over the top (OTT) content and lower entry points for upgrade customers.
“The build-up in competitive intensity also indicates that the industry is unlikely to see unanimous tariff hikes at least in the near term, limiting a large upside in average revenue per user (ARPU) in fiscal 2022. However, individual players will most likely increase tariffs on selected plans given their immediate need to improve ARPU. While all players agree that tariff hikes are paramount, they have differing levels of urgency to implement the hikes," it said.
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