Kotak International Equities in a report on Thursday highlighted that Reliance Jio, the country’s largest telecom operator has 87 million users who recharge their mobiles without connecting to Jio network. The report is based on the Telecom Subscription Data for June as released by the Telecom Regulatory Authority of India (Trai) in late September. Kotak International Equities in its note highlights the gap between active users as reported by Trai and the paying subscriber base as reported by the telecom operators. The active subscriber base on Reliance Jio and Airtel network are both said to be 310 million each as per the Trai subscription report.
Jio Has More Paying Subscribers as Compared to its Active User Base
The data for active subscribers is said to be calculated based on the proportion between visitor location register (VLR) and home location register (HLR). The HLR data provides the total subscriber base of an operator while the VLR data represents the subscriber roaming into one particular network at any given time. It has to be noted that the subscriber can be present at a single network at any point of time, thus, signifying the importance of VLR data.
“VLR is a purely technical measure but is a fairly decent proxy of consumer activity on a network," Kotak International Equities said in its note. "We are unable to comprehend why R-Jio’s subscriber base would exhibit much different behaviour than Bharti’s subscriber base.”
The firm said that the investor disclosures provided by Airtel highlighted that its revenue-earning subscriber base (RES) is 10% lower than VLR and 12% lower than HLR. Similarly, the disclosures provided by Reliance Jio is said to highlight its RES base is same as its HLR base, translating to 28% higher than VLR base.
“How does Bharti end up with a VLR base that is 10% higher than its paying consumer base while Jio has a VLR base that is 28% lower than its paying consumer base?” Kotak International Equities said in its note.
Jio RES Base is “Startling”
The firm highlighted that the gap between Jio’s HLR base and its VLR base stood at 87 million in June, said to be up 34 million since June 2019.
“The sheer magnitude of this absolute gap is startling,” Kotak International Equities said in its note. “Who are these 87 mn subs who are recharging their SIMs regularly, are not connected to Jio’s network at the time of peak-VLR but are connected at some other times when an even larger number of peak-VLR-SIMs aren’t connected [sic].”