Telecom Industry's Subscriber Base Highest In 10 Months, Potential Upside In Stock Price?

The Indian telecom industry has bounced back this month, after a sharp fall in April. The industry's total subscriber base has expanded by 2.8mn, which has been the highest in the last 10 months. According to a report, Jio added 3.1mn subscribers holding the top position. Their VLR subscriber bases are also growing by 4.5mn and 2.2mn, respectively. Significantly, the total industry VLR subscriber base has increased by 3.9mn, after falling by 7.5mn in April, this year.

Commenting on the present market situation, brokerage firm Emkay Global stated, "Jio led the pack in wireless broadband subscriber additions as well, with 3.1mn adds, and was closely followed by Bharti (1.9mn). VIL also added 1.2mn broadband subscribers. Further, Jio continued its winning streak in wireline subscribers by adding 0.26mn subscribers, while Bharti added 0.11mn (our interaction with Bharti management suggests that wireline subscriber base for April, 2022 was at 4.63mn vs 4.85mn reported by Trai earlier). Jio has further extended its lead and now has 5.9mn wireline broadband subscribers in total, while Bharti has 4.7mn."

Additionally, the rural-urban mix has been significantly stable for the 3 operators. Reliance Jio has experienced healthy subscriber growth in both rural and urban areas, but Bharti Airtel has seen a flat growth in urban subscribers. However, Vodafone has lost both rural and urban subscribers. The rural proportion now stands at 44%, 49% and 50% for Jio, Bharti and VIL, respectively, according to a recent report.

Renowned brokerage firm Emkay Global has mentioned company-wise potential and performances. The firm added, "Taking cues from data for the first two months of Q1FY23, we believe both Jio and Bharti might surpass our quarterly subs addition estimates (Jio: 6mn; Bharti: 2mn). Recovery in data subscriber addition from Q2FY23 will be key to watch out for."

Bharti Airtel's VLR base had declined by 3.1mn in April. Its VLR proportion grew to 98% in May'22 from 97.7% in April, 22. Bharti has added 1.8mn subscribers in April and May against the firm's estimate of 2mn additions for Q1FY23. Jio's VLR proportion rose to 93.8% in May from 93.4% April, 22. VLR subscriber market share improved further to 38% from 37% in April, 22. The firm is estimating 6mn subscriber adds for Q1FY23 vs its delivery of 4.8mn adds in April and May. Vodafone-Idea's subscriber base contracted by 0.8mn in May, 22. Emkay Global mentioned, "Its VLR base also fell by 2.3mn as the VLR proportion declined to 85.1% from 85.8% in April, 22. Delhi, Maharashtra and Mumbai circles saw the sharpest declines in VLR base, while UP (E and W) saw the highest increases in their VLR base."

Vodafone Idea Ltd.'s share price is Rs. 8.80, Reliance's share price is Rs. 2,499.00, and Bharti Airtel's share price is Rs. 671.00 now, as of July 20. Investors can watch these stocks.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.