SIM consolidation in telecom keeps gross subscriber trends muted in Jan

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Gross subscriber base of the telecom industry declined 9.4 million in January to 1,145 million as consolidation of SIMs continued. In December 2021, the subscriber base fell 12.9 million.

Tariff hikes announced in November 2021 have prompted users to reconsider their preference for telecom service providers, which has led to SIM consolidation, and as a result there has been a decline in the number of mobile SIM cards in the market.

The fall was largely driven by Reliance Jio which saw its gross subscriber base fall 9.3 million to 406 million in January. It should be noted that January is the second consecutive month of declining gross subscribers for this telecom services provider. Analysts say the fall indicates a clean-up of Jio’s inactive users.

Close competitor Bharti Airtel Ltd. saw additions to its gross subscriber numbers, up 0.7 million to 356 million in January.

As far as active subscriber additions are concerned, it was robust for both these companies. In January, Jio saw additions of 4.2 million while Airtel reported additions of 1.3 million. For the industry, the visit location register (VLR) or active subscribers base rose 6 million in January. VLR is a metric which reflects the number of active subscribers on a mobile network.

Vodafone Idea Ltd remained a laggard with gross, active, and 4G subscriber base seeing a decline in January. Depsite the recent fund raising, Vodafone Idea continues to struggle. Analysts say the company would need to infuse more capital in network expansions to compete with the other two firms, failing which it’s prospects would remain muted at least in the near-term.

Meanwhile, according to analysts at Nomura Financial Advisory and Securities (India) Pvt. Ltd, the impact of SIM consolidation among lower-end subscribers, following the sharp tariff hikes, is likely to keep industry’s net additions subdued in the near term. However, with the launch of 5G launch in FY23, market share gains are expected to accelerate for Airtel and Jio, Nomura said in a report on 30 March.

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