Vodafone Idea’s (Vi) subscriber loss reduced to a seven-month low in March, while the company added 1.1 million broadband users after two months of net loss. Analysts consider these key trends worth monitoring.
Though Vi has been losing customers for over two and a half years, the churn reduced to below a million in March after five consecutive months, as per data from the Telecom Regulatory Authority of India (Trai).
“Jio’s softer-than-usual subscriber growth in March and Vi’s slowing subscriber market share loss are key trends to keep an eye on going forward,” global investment banking and financial services major UBS noted in an analyst report.
Reliance Jio continues to strengthen its position in the Indian telecom market, though its subscriber additions have declined recently. The telco gained 2.14 million new users in March, which is lower than the 3.59 million and 4.17 million users gained in February and January, respectively.
“While Jio continued to lead with 2.1 million net additions, this was relatively softer growth compared to the trend of the past 12 months. On the other hand, Vi had the lowest subscriber loss since September 2023,” UBS pointed out.
Meanwhile, Jefferies said Vi’s recent fundraising could impact future subscriber additions. While Vi’s 1.1 million subscriber additions in the wireless broadband segment are positive, this “needs to be monitored before arriving at any definitive conclusion of stabilisation on this front.”
“Vi lost 0.6 million active subscribers in March 2024, losing subscribers for the fourth straight month. Moreover, Vi lost active subscribers in 15 out of 22 circles, indicating continued pressure on subscriber retention,” it added.
Possible slow recovery
Analysts remain cautious regarding Vi’s potential turnaround after its successful Rs 18,000 crore follow-on public offer (FPO), with some changing their recommendation for Vi stocks to hold from sell.
Last week, analysts said the FPO reinvigorated the sector and might reduce the significant loss of subscribers and market share that the financially troubled telco has experienced.
On Monday, ICICI Securities forecast Vi’s cash earnings before interest, taxes, depreciation, and amortisation (Ebitda) to grow at a compounded annual growth rate (CAGR) of 3 per cent over FY24-28E on a low base. “This assumes Vi is able to grow its subscriber base and secure a higher incremental Adjusted Gross Revenue (AGR) market share,” it said in an analyst note.
However, it also noted that the valuation was generous and based on FY27, which accounts for two tariff increases.
First Published: May 06 2024 | 8:08 PM IST
