Vodafone Idea Ltd (VIL) net addition of wireless users in January, the first time in 14 months, could be a one-time gain and might not be sustained, analysts said.
The change in January was due to a new reporting method adopted by the debt-laden operator, they said.
VIL, the third-largest telecommunications company by market share, added 1.7 million users in January, after losing a total of 55.4 million users since October 2019.
“VIL reported a strong increase in its customer base in Uttar Pradesh West (3.8 million net additions in January), while its customer base decreased in the rest of India. VIL’s active client ratio at UP West decreased from 89% in December to 75% in January, resulting in a flat active client base of 18 million. This implies that the reported high growth could be due to the adjustment of the reports, “said Kunal Vora, senior analyst for telecommunications at BNP Paribas.
VIL, which has been in talks with potential investors since September to raise ₹25,000 crore, is focused on retaining high paying 4G customers. It has been actively migrating its users from 2G to 4G while reorganizing its existing spectrum to improve service quality.
VIL had a total of 269.8mn users as of December 31, up from 271.8mn in the previous quarter, according to company data. The figure comprised 109.7 million 4G users, up from 106.1 million in the September quarter, indicating that it lost 2G users.
“VIL shows signs of stability … The decline in active VIL subscribers has slowed significantly. It fell just 0.3 million in December from an average of 3.4 million in the last 12 months, “ICICI Securities said in a report.” The total subscriber base has started to grow with a net addition of 1.7 million, “he added.
VIL’s active subscribers accounted for 89.63% of its total base at the end of January, compared with 97.44% for rival Bharti Airtel. Despite leading the wireless market, Reliance Jio with 79.01% had the lowest active users among the top three telecommunications companies. Active Subscribers or Visitor Location Record (VLR) is a temporary database of users who have wandered in an area served by an operator.
Vora said Jio’s customer base in Punjab and Haryana stabilized in January after falling in December amid protests by farmers. Jio, a subsidiary of Reliance Industries Ltd, faced the heat of agitation from farmers, who wanted the three controversial farm laws repealed.
Jio added nearly 2 million customers in January, a big improvement from 478,917 users in December. However, it continues to struggle with the slow addition of subscribers to its network.
Bharti Airtel has been a leader in adding net wireless subscribers. It enrolled 5.9 million users in January alone, the most since July 2019.
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