Ind-Ra: Consolidation on Spectrum, Subscribers, Assets Continues

India Ratings and Research (Ind-Ra) has published the January edition of its credit news digest on India's telecom sector. It highlights the trends in the telecom sector with a focus on subscriber additions, subscriber market share, circle wise additions, broadband subscribers, data usage and pricing.

Key highlights of the report include growth in the wireless broadband (3G/4G) subscriber base at an average 66% y-o-y over the 12 months ended November 2017; 132 million new broadband subscribers were added during the period. Narrowband subscribers have been continuously declining on a q-o-q basis and successively converting into broadband subscribers. Growth in broadband subscribers has been accelerated after Reliance Jio Infocomm Limited's ('IND AAA'/Stable) entry, suggesting phasing out of 2G progressively in the medium term.

Negative Subscriber Growth: Subscriber growth declined 1.3% m-o-m in November 2017, reflecting a loss in Reliance Communications Limited's subscriber base, post announcement of the shutdown of its voice operations. Overall, the industry lost 15.7 million wireless subscribers in November 2017, continuing the decline in subscriber base trend visible since July 2017.

Average Revenue Per User (ARPU) Outlook: GSM ARPU (including LTE) increased by 5% q-o-q to INR84 in the quarter ending September 2017, but was 30.6% lower y-o-y. The recent price cuts by Reliance Jio Infocomm Limited indicates that the pricing discipline may still be uncertain and highly dependent on consumer behaviour despite industry consolidation. Ind-Ra expects short-term ARPU outlook to remain weak.

Focus on Subscriber Retention: According to Ind-Ra, top telcos would focus more on increasing their subscriber market share than revenue market share during 2018 and the dual-SIM phenomenon would continue for longer-than-expected, given low customer loyalty and high price sensitivity.

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