Analysts wary of Vi’s falling subscribers, broadband users

‘Recent fundraise could have a bearing on subscriber additions ’

Vodafone Idea’s (Vi’s) subscriber loss reduced to a seven-month low in March, and alongside the company added 1.1 million broadband users after two months of net loss — two things analysts have noted as key trends that need to be monitored.

While Vi has been losing customers for more than two and a half years now, the churn reduced to below a million after five straight months in March, the Telecom Regulatory Authority of India (Trai) data has shown. “Jio’s softer than usual subscriber growth in March, and Vi’s slowing subscriber market share loss are key trends to keep an eye on going forward,” global investment banking and financial services major UBS said in an analyst note.

While Reliance Jio has continued to strengthen its position, its subscriber addition fell in recent months.

The telco gained 2.14 million users in March. However, this was lower than the 3.59 million and 4.17 million users the company had acquired in February, and January, respectively. “While Jio continued to lead with 2.1 mn net adds, this was a relatively (soft) growth vs the trend of the past 12 months. On the other hand, Vi had the lowest subs loss since September ’23,” it pointed out.

Meanwhile, Jefferies said Vi’s recent fund raise could have a bearing on its subscriber addition. It stressed Vi’s 1.1 million subscriber additions in the wireless broadband segment is positive, but “needs to be monitored before arriving at any definitive conclusion of stabilisation on this front”.

“Vi lost 0.6 million active subscribers in March 2024, losing subscribers for the fourth straight month. Moreover, Vi lost active subs in 15 out of 22 circles, indicating continued pressure on subscriber retention.”

Possible slow recovery

While analysts continue to adopt a wait-and-watch stance with regard to Vi’s potential turnaround after its successful ~18,000 crore follow-on public offer (FPO), some have changed their recommendation for Vi stocks to “hold” from “sell”.

Last week, analysts said the FPO reinvigorated the sector and might reduce the massive loss of subscribers and market share experienced by the financially beleaguered telco.

On Monday, ICICI Securities forecast Vi’s cash earnings before interest, taxes, depreciation, and amortisation to grow at a compound annual growth rate of 3 per cent over FY24–28E on a low base.