Analyst corner: Jio stable, remain cautious on Airtel, Vodafone Idea

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Published: October 23, 2019 12:49:26 AM

We expect competitive intensity to remain high for the postpaid/enterprise/home segment. We remain cautious on both Bharti and Voda-Idea.

Jio added 8.5 million users in August though dips in September — Jio added 8.5 million users in August, though the addition dipped in September slightly to 7 million.

Telecom industry added 11 million broadband (BB) subscribers in August, recovering from the July lows of 9 million. Jio added 8.5 million users, flat month-on-month though September at 7 million was lower. Bharti saw an uptick and added 3.2 million users vs 0.4 million (July). Vodafone-Idea added just 0.4 million BB users in August. With Jio still below its RMS and subscriber target and VodaIdea BS stretched, we expect focus for Jio to remain on user addition and pricing increases to take another 9-12 months.

BB subscriber addition improves

m-o-m: The mobile industry added 11 million BB users in August, up from 9.4 million in July. The improvement was led largely by Bharti. Jio added 8.5 million users in August though dips in September — Jio added 8.5 million users in August, though the addition dipped in September slightly to 7 million. The quarterly additions though were largely in line. Bharti BB addition improve, Voda-Idea still weak — Voda-Idea added just 0.2 million BB users in August down from 0.4 million in July. In CY19, it added just 3.2 million BB users. Bharti BB user addition improved to 2.8 million vs the low of 1 million in July.

VLR users decline increase for Bharti, moderate for Voda-Idea: Bharti overall subscribers declined 0.5 million m-o-m and Voda-Idea declined 5 million. Bharti and Voda-Idea reported subscribers though are still much higher than those reported in quarterly earnings. The gap is led largely due to the minimum ARPU users which still have to churn out. VLR users for Voda-Idea declined 3 million in August vs the 10 million+ over past 2 million. Bharti VRL users decline increased to 6 million vs 4 million in July.

Near-term price hikes unlikely: In the recent IUC top-up, Jio could instead have taken a clean price hike given it has become the market leader. The move to charge for IUC, with a sunset clause, indicates its sustained focus on users and that tariff increase is not a near-term focus. This move encourages voice-only users to move to Jio. Incumbents are not yet charging any IUC and infact have come out against the move. We expect Jio’s focus to remain on users and sustainable price hikes until it crosses 40% market share (in FY21).

We expect competitive intensity to remain high for the postpaid/enterprise/home segment. We remain cautious on both Bharti and Voda-Idea.

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