Reliance Jio user addition slowing; Airtel could be long-term winner: UBS

Jio's share of telecom market increased to 9.3% in March from 8.8% in February

Even as Reliance Jio, the newest player in the telecom market, continues to add subscribers, the pace of additions seems to be slowing down. In March, the telco added only 5.8 million subscribers, compared with 12.2 million the previous month, according to a UBS report on the Indian telecom sector, based on the monthly data released by the Telecom Regulatory Authority of India (Trai).

However, despite this slowdown, the Mukesh Ambani firm continues to top in the absolute number of subscriber added. It is followed by Bharti Airtel, Idea Cellular, BSNL and Vodafone -- in the same order.

Jio's share of the telecom market increased to 9.3 per cent in March from 8.8 per cent in February. 
 

"March momentum favours incumbents. Jio "Prime" is not driving a demand pick-up. We are surprised to see lack of acceleration in March, since Jio "Prime" offer was announced in the month. April was the first month of Jio's paid services and would offer further insight into customer conversion and migration from incumbents to Jio," UBS said in the report.

Airtel, Idea and Vodafone reported net additions of three million, 2.1 million and 1.8 million, as against 1.2 million, 1.2 million and 0.8 million, respectively, in February -- even as all incumbents countered Jio's prices -- the report added.

Other operators, including Reliance Communications, Tata Teleservices and Telenor continued to lose market share, with their cumulative loss of subscribers expanding to 6.8 million, against 1.7 million in February, UBS said.

Vodafone recovered broadband subs in March and Airtel continued to expand broadband penetration, which increased to 22.1 per cent from 20.9 per cent in February. Vodafone gained market share with net additions of 5.7 million broadband subscribers.

Airtel's pace of broadband net additions also increased to 2.4 million in comparison to 1.1 million in February. Idea reported increase in broadband subscribers to 24.7 million (+0.4m net adds) reversing the trend of decline in January and February. UBS said while data for April and May will be more significant given Jio has started charging since April, overall trends suggest Airtel continues to hold a firm footing in Indian mobile market with key operating metrics outperforming peers. Vodafone and Idea have also shown recovery in March after underperforming Airtel in January and February, with smaller operators continuing to lose share at a rapid pace.

"Airtel's scale and ability to invest makes it a long term winner in our view," the report added.