India’s four largest telecom operators may continue to add new subscribers at the expense of smaller players, but that need not translate into an increase in the sector’s average revenue. In fact, intense price competition is likely to put further pressure on the average revenue per user, said foreign brokerage house CLSA.

The promotional offers and free services provided by the latest entrant Reliance Jio Infocomm Ltd. in September last year, prompted the top three operators – Bharti Airtel Ltd., Idea Cellular Ltd. and Vodafone India Ltd. – to come up with “retaliatory offers”. While this helped them gain market share, it will dent their ARPUs further in the current financial year, CLSA warned in a report on Thursday.

During FY18, we expect an 11 percent year-on-year decline in ARPUs for the sector, 17 percent year-on-year decline in ARPUs for Bharti Airtel and 12 percent year-on-year decline for Idea Cellular.

CLSA Report

Recently, data released by the Telecom Regulatory Authority of India (TRAI) showed smaller operators lost 55 lakh mobile subscribers overall, and 15 lakh active users in the month of April alone. The decline in the subscriber base of smaller operators is likely to continue, CLSA said.

In contrast, Bharti Airtel added 26 lakh subscribers in April, followed by Idea and Vodafone at 6 lakh and 3 lakh, respectively, according to TRAI data.

Reliance Jio: Subscriber Addition Moderates From March

The TRAI data also showed that the rate of subscriber addition in Reliance Jio moderated to 39 lakh in April from 59 lakh in March and only 71.1 percent of its subscribers were active. According to CLSA, the moderation in subscriber addition was expected as the Mukesh Ambani-led company transitioned to paid services in March this year, and on account of retaliatory offers by incumbent players.

However, monthly mobile number portability (MNP) requests have been stable at 50-60 lakh, CLSA said, reflecting that porting out primary connection to Reliance Jio is yet to gain traction.

CLSA attributes the launch of Jio's 4G feature phone as key to its subscriber growth. The launch, the report said, will likely hit ARPUs of incumbent players further. – Bloomberg Quint


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