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Home / Markets / Mark To Market /  Jio and Airtel show resilience amid covid, but VIL struggles

After a robust March, Indian telecom providers saw lockdowns weigh on their subscriber base in April. The latest data from the Telecom Regulatory Authority of India (Trai) showed that the sector’s net subscriber addition in April was muted at 2.2 million. Analysts point out that this compares with an average of 5.4 million additions seen in the past six months.

Of the three main companies, Reliance Jio saw the highest net subscriber addition of 4.8 million in April, although it was lower than the 7.9 million it added in March. “We believe that the relatively strong subscriber additions for Jio indicates aggressive channel push aided by the new JioPhone plans, apart from the fact that lockdowns were staggered during the second wave (in contrast to the simultaneous nationwide lockdown during the first wave)," analysts at JM Financial Institutional Equities Ltd said in a report.

In good stead
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In good stead

At second spot was Bharti Airtel Ltd with a relatively moderate net subscriber addition of 0.5 million in April. This was considerably lower than the average of 4.3 million net additions in the past six months, analysts said. However, it scored better than close competitor Jio on the visit location register (VLR) parameter in April. VLR reflects the number of active subscribers on a mobile network.

Airtel’s VLR proportion was the highest since 19 June and it managed to hold the leadership position in terms of VLR market share for the fifth consecutive month, analysts at Emkay Global Financial Services Ltd said. Airtel’s VLR subscriber base expansion of 2.6 million was largely driven by sharp increases in circles such as Uttar Pradesh and Bihar, analysts said.

Vodafone Idea Ltd (VIL) bled with a 1.8 million decline in net subscribers as it lost customers in 19 of the 22 circles. Its active subscribers also declined by 2.1 million on a month-on-month basis— the highest since October 2020. Further, its gross subscriber additions turned negative after remaining positive for two months.

Analysts at JM Financial point out that even though the full impact of the second wave had not come into force, VIL lost subscribers and is relatively more susceptible to lockdowns and SIM consolidations compared to its peers. This is due to the presence of a larger number of lower average revenue per user 2G subscribers, they said. Put simply, the relative resilience of Jio and Airtel will keep the much-awaited tariff hike at bay in the near term. This does not bode well for VIL, which is already grappling with financial stress.

“The acquisition of significant spectrum by Bharti and Jio in the recent auction will allow them to enhance their user experience further. It will compound the woes for VIL, which continues to lag on investments in network infrastructure given persisting delays in its capital-raising plan," analysts at Kotak Institutional Equities said in a report on 12 July.

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