Intensifying Battle For Vodafone Idea Users: Airtel and Jio Compete Amidst Rising MNP Requests In April

Increased mobile number portability (MNP) requests in India’s telecom sector indicate heightened competition, driven by Reliance Jio and Bharti Airtel’s 5G efforts. This could lead to higher sales and marketing costs. Vodafone Idea (Vi) continues to struggle in retaining subscribers, particularly 3G/4G users, emphasizing the need for significant funding. Vi’s lack of 5G rollout has impacted its subscriber base, while Jio and Airtel are gaining subscribers.

MNP

The telecom sector in India is witnessing intensified competition as indicated by the increased mobile number portability (MNP) requests. The race between Reliance Jio and Bharti Airtel to establish a stronghold in the 5G market has fueled this competition, potentially leading to higher sales and marketing costs.

Vodafone Idea (Vi) continues to struggle in retaining subscribers, particularly 3G/4G users, emphasizing the urgent need for significant funding. While analyzing the April 2023 telecom subscriber data released by the Telecom Regulatory Authority of India (TRAI), analysts have shed light on these trends.

In April 10.95 million subscribers submitted requests for MNP taking the cumulative MNP requests to 830.65 million from 819.70 million at the end of March.

“Higher levels of MNP could also be due to VIL users porting out to experience 5G on Bharti or Jio. This is likely to keep churn levels elevated and drive-up S&M costs for telcos,” analysts from Jefferies said.

Heightened Competition and Potential Costs
Analysts have observed that the sustained rise in MNP requests over the past year signifies escalating competition, primarily driven by Reliance Jio and Bharti Airtel’s aggressive pursuit of the 5G market. This intensified competition may result in higher sales and marketing expenses for telecom companies. Notably, users of Vodafone Idea (Vi) may be porting out to experience 5G services offered by Bharti Airtel or Jio, contributing to elevated churn levels and increased costs for the telcos, as suggested by Jefferies analysts.

Vi’s Struggle and the Need for Funding

Vodafone Idea’s challenges in retaining subscribers, particularly in the 3G/4G segment, continue to present a dire situation for the telco. Analysts emphasize the urgent requirement for significant funding to enable Vi to remain competitive in the market.

Vi’s lack of a 5G rollout has started to impact its overall subscriber base, especially the 3G/4G user base. Meanwhile, Jio and Airtel have been successful in gaining subscribers, further highlighting the competitive landscape.

Subscriber Trends and Impact on Vi

The subscriber data for April 2023 reveals that Jio added 3 million 3G/4G subscribers, while Airtel added 2.3 million. In contrast, Vi experienced a loss of 1.3 million 3G/4G subscribers. This indicates that the 5G rollouts by Bharti and Jio are exerting pressure on Vi’s 4G subscriber base.

Vi witnessed a decline of 3 million in its overall subscriber base in April, whereas Jio added 3 million subscribers, and Airtel recorded the addition of 76,328 new users. Analysts suggest that Bharti’s discontinuation of the Rs 99 plan in certain circles might have impacted its subscriber additions.

Vi’s Ongoing Challenges and the Way Forward
Vi’s struggle to retain customers has persisted for 25 consecutive months, underscoring the urgency of substantial fundraising.

“For VIL, the situation continues to be dire, and a sizable fund-raising is required at the earliest,” analysts from Emkay said, adding that while the focus on 5G rollout by Airtel and Jio sustains, the key trigger for growth in the industry will be headline tariff hikes.

Analysts from Emkay state that Vi’s focus should be on securing significant funding and that the key trigger for growth in the industry will be headline tariff hikes.

“This suggests that 5G rollouts by Bharti and Jio are putting pressure on VIL’s 4G subscriber base,” analysts from brokerage firm Jefferies said in a report.

They believe that a minimum 20% hike in tariffs is necessary for Vi to benefit meaningfully and invest in 5G. While Jio continues to lead in active subscriber additions and Bharti gains market share among 4G users, Jefferies analysts are optimistic about the sector’s tariff outlook.

The Last Bit, The telecom sector in India is witnessing heightened competition as Reliance Jio and Bharti Airtel aggressively pursue the 5G market. This competition is reflected in the increased mobile number portability (MNP) requests, potentially leading to higher sales and marketing costs for telcos. Vodafone Idea (Vi) continues to struggle in retaining subscribers, particularly in the 3G/4G segment, highlighting the urgent need for significant funding.

While Vi’s subscriber base is being impacted by the lack of a 5G rollout, Jio and Airtel are gaining subscribers. The industry awaits headline tariff hikes, and analysts believe that Vi’s growth prospects and ability to invest in 5G depend on securing substantial funding.