Airtel regaining entry-level subscribers as tariff hike shock subsides

Analysts say continuing user loss for Vodafone Idea a key concern

Bharti Airtel, which lost 1.13 million users in November, is expected to stop the continuing loss of entry-level subscribers soon as the initial shock of the tariff hike abates, according to analysts.

 

The analysts, however, said it would be difficult for Vodafone Idea (Vi), whose overall subscriber base fell by 1.5 million in November, to put an end to its subscriber loss, describing it as a “key concern”.

 

According to the latest Telecom Authority of India (Trai) data, Airtel slipped back into subscriber loss in November after reversing a 3-month subscriber decline a month ago.

 

The telco lost 2.9 million subscribers in the second quarter (July-September) of FY25, even as it had gained 4.2 million 4G users, indicating subscriber loss at the lower end, Axis Capital noted in an analyst report.

 

"Note that Airtel and Vi have consistently raised entry-level voice tariffs (unlimited voice). The first two months of Q3 (October-December) saw Airtel gain 0.8 million subscribers. We expect December to see further gains, as the initial sticker shock of the hike abates," it said.

 

Other analysts, including at Jefferies, also believe Airtel and Jio will continue to consolidate their market positions by leveraging strong operational performance and investments in high-value segments. Jio successfully regained this category of consumers in November, reversing four straight months of subscriber loss. 

 

Difficult for Vi

 

Vi's total subscriber base shrank by 1.5 million to 209 million in November, while the number of active subscribers fell by 1.9 million to 177 million. This is in line with the declining trajectory seen for many months, except in September 2023, JM Financial said in a report.

 

"The overall subs base fell by 1.5 million in November, continuing the downward trend due to churn in lower-Arpu segments, given the sharp hike in entry-level prepaid tariffs. Vi's continued subscriber loss is a key concern," it said.

 

Analysts believe this is likely due to its relatively weak network, which continues to make it susceptible to market share loss. The visitor location register (VLR) ratio for Vi reduced to 85 per cent in November, down from 87 per cent in June, Axis Capital said. "With the ongoing spend on capex post the equity raise, we do expect some improvement in these trends from Q4 (January-March) onwards," Axis Capital said. 

The VLR for the two other private sector telcos Jio and Airtel were 97 per cent and 99 per cent, respectively. However, it was 59.6 per cent for the state-owned BSNL.

 

After witnessing a spike in net subscriber numbers for four straight months after the July tariff hike as it had not raised prices, BSNL again lost users in November. It lost 0.34 million users in the latest month, after adding close to 7 million mobile users from July to October.