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The Indian telecom sector experienced significant shifts in October 2024, as evidenced by the latest data released by the Telecom Regulatory Authority of India (TRAI). This data revealed a substantial month-on-month increase in active subscribers, a surprising development given a concurrent decrease in 4G/5G subscriptions. This apparent contradiction highlights strategic shifts within the industry's major players. Reliance Jio, despite the loss of inactive 4G subscribers, maintained its leading position with a 39.9% market share. This suggests a proactive approach to customer retention, focusing on active, engaged users rather than maintaining a large base of inactive accounts. Bharti Airtel, on the other hand, demonstrated strong growth in data subscribers, indicating a successful strategy of attracting and retaining premium customers. This contrasts with Vodafone Idea's continued loss of subscribers, raising concerns about its long-term viability in a fiercely competitive market.
Jefferies' brokerage note provides valuable insight into these market dynamics. Their prediction of continued market share gains for both Bharti Airtel and Reliance Jio underscores the competitive landscape and suggests that these two companies are well-positioned to capitalize on industry trends. The report highlights the intensifying competition between these two giants, as their combined market share in the fixed-broadband (FBB) segment reached approximately 53%, a significant increase year-over-year. This trend signals a potential movement towards a duopoly in the Indian FBB market, with Bharti Airtel and Reliance Jio dominating the sector. The report further emphasizes the impact of tariff hikes and SIM consolidation, suggesting that the industry is recovering from a period of decline. Net additions are recovering for Bharti Airtel and gains for BSNL are moderating, indicating a stabilizing market. Excluding IoT devices, the wireless subscriber base saw a smaller decline in October 2024 than in the previous quarter, showing signs of a market rebound.
The TRAI's recommendations add another layer of complexity to the evolving telecom landscape. The suggestion to reintroduce special recharges for voice and SMS services alone is noteworthy. This move, aimed at providing consumers with more affordable options, directly addresses concerns about the cost of bundled data plans. This regulatory nudge toward affordability could significantly impact the pricing strategies of telecom providers, potentially leading to increased competition and a more diverse range of plans. The recommendation to extend the validity period of plans from 90 to 365 days further emphasizes the TRAI's commitment to consumer welfare and potentially improves customer loyalty by offering greater flexibility and value. The interplay between the market dynamics revealed by TRAI's data and the regulatory recommendations suggests a future shaped by a delicate balance between competition, consumer needs, and government intervention. The long-term consequences of these trends remain to be seen, but the current landscape points towards a future where the market share battle between Bharti Airtel and Reliance Jio intensifies, while the regulatory environment shifts towards increased consumer choice and affordability.
Motilal Oswal's report offers a complementary perspective, highlighting a further decline in the industry's wireless subscribers. However, this decline is presented within the context of a recovery, suggesting that the negative trends of the previous quarter are reversing. The brokerage's exclusion of IoT devices from its analysis provides a clearer picture of the core wireless subscriber base, revealing a smaller decline than initially reported. The comparison with the significant decline in the second quarter of FY25 emphasizes the recovery underway. By separating IoT subscriptions from traditional wireless subscriptions, Motilal Oswal offers a more nuanced analysis of the market's health, suggesting that the industry is transitioning towards a more sustainable and balanced growth trajectory. The convergence of TRAI's data, Jefferies' analysis, and Motilal Oswal's report offers a comprehensive view of the current state of the Indian telecom market – one marked by intense competition, strategic shifts by major players, and ongoing regulatory adjustments aimed at benefiting consumers.
Source: Telecom stocks in focus: Jefferies expects Bharti and Jio to continue gaining market share