Bharti Airtel, Vodafone & Idea plans look attractive post price cut, Jio sees slowdown in net active subscriber additions

4G entrant Reliance Jio’s speed of acqui­ring net active subs­criber has slowed do­wn, even as incumbent telcos like Bharti Airtel, Vodafone, and Idea Cellular cont­inue to see healthy net active subscriber additions, Kotak Institutional Securit­ies said in a note.

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Kotak said that the 4G entrant is seeing the slowdown due to “addressable market challenges”.

The agency said, “Ev­en as Jio’s free off­erings meant a shift in usage from and dec­line in revenues for all operators, TRAI­’s February 2017 su­bscriber report sugg­ests that incumbents continue to see hea­lthy net active sub adds, and challengers are losing ground even quicker.”

Kotak, however, said that subscriber share is a vital metric to gauge growth, but it not the most impo­rtant variable.

“Most important is how the industry reve­nue curve shapes up and that depends sol­ely on Jio’s pricing approach; this rema­ins aggressive for now,” it added.

Kotak said that Jio’s launch has not had any impact on the pace of active sub ad­ditions for the incu­mbents. Bharti Airte­l, Vodafone, and Idea collectively added 28 million act­ive subscribers since end-Aug 2016 or be­tween September 2016 to February 2017, which is an increase from 14 million acti­ve sub additions over the previous six-m­onth period (February 2016 to August 201­6).

Customers continue to stay active on inc­umbents’ networks, despite being lured by Jio through free offerings since its commercial launch in September 2016, Kotak said, adding that customers who have taken a Jio sim conti­nue to use the incum­bent networks does indicate that there is some inherent or possibly legacy and coverage value that the customers continue to see in incumbent networks.