The Indian telecom industry twister: who is the real king in the game? "-The Economic Times

 

Step into the future for a bit. It is November 19, 2023. The World Cup final — India vs. Australia is on.

You’re watching the game on OTT with your family and the last over is about to start.

Suryakumar Yadav and Ravindra Jadeja in the centre. The ask is 22 runs off the last over. Mitchell Starc has started to run in.

And right then, the screen freezes. The stream has stopped.

Neighbours are screaming, something has happened but you don’t know what happened. You call your friend and he tells you the OTT app is working fine, and of course, what happened in the game.

Ok, let’s cut the nightmare here itself.

But one question — which telecom service provider would you trust for uninterrupted service in such a situation?

Difficult to decide right? A part of your mind would say you’d at least get the best two in your area, right?

That is exactly what is happening in the subscriber market share of telecom companies. The number, as released by Telecom Regulatory Authority of India monthly, is pretty volatile in nature. It isn’t clear who’s the best if you take long term data into account.

And this keeps people guessing who is the real king among Indian telecom operators that is clearly ahead of others. Not having a clear leader is a problem for the customer in making important money decisions. Automotive market leader Maruti enjoys a monopoly as people believe that they make cars that are best suited for Indian roads and they’d have less to worry about.

In the current case, having a clear market leader may give you the confidence to choose the best telecom and broadband service provider in key situations like the World Cup final, or maybe during an important telephonic interview round with an overseas employer, or perhaps an online exam on which your fortunes depend on.

Going by the subscriber data, no meaningful new subscriber additions are happening, it’s the inter-operator subscriber movement that is shifting the market shares.

And this trend of twists and turns in the subscriber market shares doesn’t seem to settle anytime soon. But who is winning the battle on numbers?

Share shift to stay

As per TRAI data published for the month of August 2023, 12.67 million subscribers submitted the mobile number portability (MNP) requests.

This is the highest over the past 29 months. This trend clearly indicates a highly competitive environment and massive subscriber movement across telcos.

What is important to note is that while this trend is expected to continue, this is also putting pressure on operational costs of telcos due to the increase in the sales, marketing, and subscriber acquisition costs.

Higher MNP requests have also led to increased industry-wide churn, which reached 1.1% in the month of August 2023 compared to 1% in July 2023 and 0.9% in June 2023.

So, in effect, the consumer is moving around in search for value.

Lack of 5G services by Vi is one of the reasons subscribers continue to move to Airtel or Jio to experience 5G services.

Moreover, both Airtel and Jio are rapidly expanding their 5G footprint with Airtel currently present in over 5,000 towns and Jio in over 7,700 towns.

Anecdotal evidence suggests mass movement of low-value customers to Jio, and Airtel’s focus on premium postpaid or high-value subscribers.

Continuing rise of mobile broadband

The month of August 2023, saw a strong addition of mobile broadband (MBB) subscriber additions. Industry-wide 7.6 million MBB subscribers were added in August 2023 taking the total count to 839 million.

This is an encouraging trend as the average MBB subscriber additions over the past six months have been around 4.4 million subscribers.

Jio added 3.2 million overall subscribers in August 2023 compared to 1.2 million additions by Bharti Airtel. BSNL lost over 2.2 million subscribers and Vodafone Idea lost 0.049 million subscribers in August.

Jio’s newly launched JioBharat phone has helped the company in amassing majority of BSNL’s featurephone subscribers and more from other competition.

While the industry saw an overall addition of over 2.2 million subscribers in August 2023 (month-over-month), the active or VLR subscribers fell by 3.1 million subscribers.

Jio added 3.2 million mobile broadband (MBB) subscribers vs. 2.6 million by Airtel and 1.3 million by Vodafone Idea during August 2023.

The total MBB subscriber additions in the two months of Q2FY24 (July and August) is higher than the total MBB subscriber additions in each of the previous two quarters. Airtel’s focus on moving its featurephone subscribers to 4G/5G and Jio’s JioBharat push seem to be the driving force behind this. Vi is also adding to the trend with higher MBB subscriber additions.

Vi are stabilising

Though lack of 5G and delay in raising any meaningful funds is haunting the telco, the August 2023 numbers published by the sector regulator indicate some relief in the Vi camp.

In August, the company lost only 49,782 subscribers — its lowest subscriber loss since it started operating as a combined entity post-merger since September 2018. This indicates that the majority of early 5G adopters have ported out to competition.

This is good news for Vodafone Idea as the company has lost nearly half of its subscriber market share to competition ever since the merger happened.

The substantial decline in the subscriber loss as per August 2023 data and Vi’s ability to maintain the highest share of postpaid subscribers are strong trends.

Strong 4G subscriber addition of 1.8 million in Q2FY24 compared to only 0.3 million in Q1FY24 is another strong indicator and it has also helped the company contain its churn.

It would be prudent for the company to raise the long-awaited capital and push the 5G pedal to further strengthen its position. Any delay in this will not be good.

Coming back to the match, we hope that OTT streaming doesn’t freeze for anyone and it stays a bad dream only. Though this reminds of the TV antenna era when one had to literally do their own twists and turns on the roof antenna to get the clear picture.

Speaking of clear picture, we will continue to monitor the twists and turns in the subscriber market share of all the telcos and share our analysis from time to time. And perhaps, we will be able to point out a king to trust.