The Economic Times daily newspaper is available online now.

    Covid-19: Telecom operators brace for a sharp drop in subscriber additions

    Synopsis

    Operators said net subscriber additions may fall by at least 2 million in March alone, and may dip further if the social isolation advisories are kept in place for a long duration. There is not vaccine yet to treat Covid-19, which has infected over 200,000 people worldwide and killed more than 8,000.

    4
    Telecom operators said the number of footfalls will go down further in the next few days as many more retail shops down their shutters.
    MUMBAI: Telecom operators are bracing for a sharp drop in subscriber additions as the new coronavirus outbreak forces potential customers to spend more time indoors.

    Operators said net subscriber additions may fall by at least 2 million in March alone, and may dip further if the social isolation advisories are kept in place for a long duration. There is not vaccine yet to treat Covid-19, which has infected over 200,000 people worldwide and killed more than 8,000.

    "We expect to see dips in customer net addition. On a regular month, the average net add is 3 million subscribers, but this March, because of the virus impact, it may come down to well below 1 million," said Rajan Mathews, director general of Cellular Operators Association of India (COAI).

    The industry body that represents private telcos Vodafone Idea, Bharti Airtel and Reliance Jio, said it takes 30-45 days for a new subscriber's bills to impact the revenue and, therefore, the impact of lesser new subscribers will show up only in the first quarter of the new fiscal year, starting April

    According to senior industry executives, the stores are going empty and very few are coming in for a new SIM card.

    "This will impact our 4G additions, since the call for isolation is percolating from metros to smaller towns and cities, where the main customer pool resides," said one executive, requesting not to be named.

    Telecom companies are expanding their 4G network and also trying to get customers to move from 2G phones to smartphones, which needs new SIM cards. But these plans will face a hurdle as people cut down on venturing out to avoid contracting Covid-19.

    With 200 patients testing positive for COVID-19 in India, there has been calls for isolation from all authorities, including Prime Minister Narendra Modi. Telecom operators said the number of footfalls will go down further in the next few days as many more retail shops down their shutters.

    "We still do not know the exact impact, and as the number of cases increases, so will the reduction in new customers," said another senior executive at a telecom company.

    At the end of December, Vodafone Idea had 304 million customers, Jio 370 million, and Bharti Airtel 283 million.

    However, the fall in subscriber numbers is unlikely to have an immediate impact on the average revenue per user (ARPU), a key industry metric.

    COAI's Mathews said the 2 million dip will be offset by increased data usage by people who are now working from home or staying indoors. "Along with the impact of tariff increase in December and data volume growth during this period, ARPU will go up by 5-10% for March," said Mathews.

    Latest data put out by the telecom regulator pegs the average monthly wireless data usage per subscriber at 10.37 GB, which analysts said could rise by about 15% in the next two quarters if people continue to work from home over a prolonged period. Out of India’s 687.62 million internet users, 22.26 million are wired broadband users, while the remaining 665.37 million are mobile or `wireless’ internet users.

    The three telcos raised their tariffs in December by up to 50% in some cases, and had expected that impact to benefit their ARPU in the final quarter in FY19-20. As of the December-end quarter, Vodafone Idea's ARPU was Rs 109, while rivals Bharti Airtel and Reliance Jio clocked Rs 135 and Rs 128.4, respectively.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in