Vi Records Biggest Customer Exodus In Nearly 2 Yrs In Feb

“VIL’s 4G subscriber decline in Feb-23 was its highest 4G subscriber decline in over 20 months suggesting that 5G rollouts by Bharti and Jio are putting pressure on its 4G subscriber base," said analysts at Jefferies, highlighting the threat to the carrier’s market share in all telecom circles, but primarily in Metro and A-level or high-revenue yielding circles, where the company’s share has been impacted the most.

The absence of 5G services is a key factor behind the faster erosion of marketshare of the No. 3 carrier with customers opting for Airtel and Reliance Jio, said industry experts. This was evident in higher MNP or mobile number portability requests that likely stemmed from Vodafone Idea users porting out to experience 5G on Bharti or Jio.

“Subscriber market share for VIL declined by 16bps to 20.8%, while improving marginally for Bharti Airtel and RJio at 32.4% (+12bps MoM) and 37.4% (+12bps MoM), respectively. Over the last 12 months, Bharti Airtel has gained ~33% of the subscribers lost by Vodafone Idea and BSNL," said analysts at Morgan Stanley Research.

VIL’s subscribers on active basis declined by 800,000 in February, they said, while noting that Jio gained 20 basis points in active user market share to 38.7%, while Airtel maintained its market share at 35.7%. VIL lost 13 basis points. As of February-end, Jio, Airtel and Vodafone Idea had active sub base of 398 million, 367 million and 208 million.

Analysts at JM Financial attributed Vodafone Idea’s troubles to churn in the lower average revenue per user (Arpu) segments given the entry level prepaid tariff hikes undertaken in July and November of 2021. “Notwithstanding the moratoriums, VIL needs to close the fundraise exercise quickly for a meaningful increase in capex to boost upgrade of customers to mobile broadband," they said in a note seen by Mint.

The trends indicate Jio’s lead in active subscriber additions and Bharti’s market share gains among 4G users, giving them advantage in terms of tariff outlook as well. The Jefferies’ analysts said market share gains among 3G/4G users should keep Airtel and Jio amenable to higher tariffs.

“We expect Bharti and R-Jio’s market share gains to accelerate at Vi’s expense, especially among premium subscribers, driven by pan-India 5G rollouts and Vi’s cash constraints, long-delayed fund-raise and uncertainty on 5G launch," said analysts at Kotak Institutional Equities. They further noted that a delay in tariff hikes could lead the sector to an effective duopoly.

Mint had reported earlier this week that the government, which is now a shareholder in the VIL after converting interest on dues into equity, is expecting the carrier to come back with a revival plan within a month. The Aditya Birla Group promoted company has been trying to raise ₹20,000 crore through debt and equity since 2020, but has been unable to bring the funds into the company.