Telecom - Subscriber watch - Mobile broadband subs dip was a negative surprise - ICICI Securities

The Telecom Regulatory Authority of India (TRAI) has released its monthly data on subscribers (subs) and MNP (mobile number portability) for Apr'20. Industry active subs dipped 31.3mn on lockdown and non-availability of offline recharges. VLR (active) subs are based on best day in past 30days, and worst could have a much higher impact. Accordingly, we have forecasted a decline in revenue for Bharti Airtel (Bharti) / Vodafone Idea (VIL) in Q1FY21. The negative surprise was a dip in mobile broadband subs by 11.2mn, with highest decline for VIL at 6.1mn, and Bharti's dip by 3.8mn. Bharti's MBB subs market share improved 20bps to 24.8% and RJio's to 53.4% (up 58bps). RJio's wired broadband subs net add is still uninspiring at 0.03mn MoM to 0.9mn, probably on logistics issue in lockdown (its market share was only at 4.7%).

Industry active subs dipped 31.3mn (down 3.2% MoM)

- Industry-active subs base dipped 31.3mn (down 4.2% YoY and 3.2% MoM) to 958mn. Active subs decline was on account of lockdown and non-availability of offline recharges. Further, we see impact from labour migration and SIM consolidation for multi-SIM owners. VLR (active) subs is based on best day in past 30days, and worst could be much lower. We have forecasted revenue decline for Bharti / VIL in Q1FY21.

- RJio's active subs shrink 7.2mn to 306mn in Apr'20, and had least subs dip. However, RJio saw total subs net add at 1.6mn despite tough situation; however, active subs as a percentage of total subs dropped to 78.8% (vs 80.9% in Mar'20).

- Bharti's active subs declined 8mn to 307mn and total subs dipped 5.3mn.

- VIL's active subs were most impacted with a decline of 14.1mn resulting in an active subs base of 280mn during Apr'20. This was despite total subs base decline of just 4.5mn MoM to 315mn, probably also had some cleaning up of inactive subs.

- RJio's active subs market share improved to 32% (up 28bps MoM); Bharti's was at 32.1% (up 20bps MoM) and VIL's dipped 50bps MoM to 29.2%.

Industry also lost MBB sub, down 11.2mn, which is a negative surprise

- Industry MBB subs dipped 11.2mn to 657mn in Apr'20, despite a significant rise in the importance of requirement of data connectivity, which was a negative surprise.

- Bharti's MBB subs fell 3.8mn to 142mn. VIL's MBB subs dipped 6.1mn to 111mn, this was disappointing. VIL lost most MBB subs on lower base. We have factored highest revenue decline for VIL in Q1FY21 and it vindicates our assumption.

- RJio's MBB subs base grew 1.6mn to 389mn. Adjusted for inactive subs, RJio's MBB market share stood at 53.4% (up 58bps MoM) while Bharti's was 24.8% (up 20bps MoM) and VIL's 19.4% (down 37bps MoM).

RJio's wired broadband subs rose 0.03mn to 0.9mn

- Wired broadband has not shown resilience in Apr'20 as well and subs grew 0.03mn MoM to 0.9mn, probably due to logistical issue on lockdown, we would wait to see performance in May'20. RJio's wired broadband subs market share is only 4.7%.

Industry MNP churn rate shrunk to 0.1% (vs average of 0.5%)

- Industry porting dipped to 0.9mn in Apr'20 vs average 5.8mn in the previous three months. Therefore, MNP churn rate dipped to 0.1%, which is unsustainable and should rise with the opening up of cities and towns. However, it will help in reducing cost in Q1FY21.

Active subs: Industry lost 31.3mn subs

Active subscribers, or visitor location register (VLR), is a temporary database of subs who have roamed into the particular area that an operator serves. Each BTS is served by exactly one VLR, hence, the unique registration. The VLR data is calculated on the basis of active subs in VLR on the date of peak VLR of the particular month for which the data is being collected. This data is collected from switches having a purge time of not more than 72 hours.

Source : Equity Bulls

Keywords