Reliance Jio and Bharti Airtel’s rising active subscribers bode well for tariff outlook: Analysts

The subscriber additions for Reliance Jio and Bharti Airtel were more than offset by the decline in Vodafone Idea’s subscribers in October, analysts said after the Telecom Regulatory Authority of India (TRAI) released November data on Monday. The monthly active subscriber base growth of 2.9 million during the month bodes well for the sector's tariff and growth outlook, the analysts said.

During the month, the sector's active subscriber base growth was led by Jio, which witnessed an eight-month-high addition of 4.9 million such users. Bharti and Vodafone Idea lost one million and half a million active subscribers each.

Active subscriber base for the sector has been at the same level over the past nine months, Jefferies noted in its latest report on telecom services. Also, the sector's 4G subscriber additions picked up 5 million led by Bharti Airtel’s 14-month-high addition of 3 million, according to TRAI data.

“Even though MNP (mobile number portability) requests remain at near-peak levels, implying rising competition, Jio's active subscriber gains and Bharti's 4G subscriber gains bode well for the sector's tariff and growth outlook,” Jefferies said.

Monthly MNP requests for the sector remained elevated at near-peak levels of 12 million in October. According to the brokerage, the rise in MNP requests over the past five months implies increasing competition for subscribers in the market. This is also evident from the higher churn levels seen during 2QFY23 across telcos, it said.

Morgan Stanely, meanwhile, pointed out that industry mobile subscribers declined for the second consecutive month whereas mobile broadband subscribers addition has rebounded to the trend in May-Aug 22.

It also noted that while Voda Idea’s market share loss of 20-30 basis points each month continued, the telco’s subscribers in the metro region have declined for the first time in five months.

Reflecting on tariff, Jefferies said Bharti's move to potentially raise voice tariffs could aid active subscriber market share gains for Jio, which also bodes well for the sector's tariff outlook. “We factor this in our numbers by baking in three tariff hikes of 10% each during 4QFY23, 4QFY24, and 4QFY25 for both Bharti Airtel and Reliance Jio,” it said in its report.

The brokerage has a "hold" call on Bharti Airtel with a target of Rs 855 per share, implying an almost 2 percent upside from Monday’s closing price. It has given Reliance Industries a "buy" rating with a target price of Rs 3,100 per share, meaning it expects a 19 percent jump in the stock price.