Last month I had written about how the Subscriber addition numbers have progressed for the Top-3 Telecom operators between May'16 to October'16, i.e. a period including 3 months leading to launch of Reliance Jio's services and 2 months after the event. Bharti Airtel and Idea Cellular had reported a sharp increase in VLR numbers for the 2 months of September & October'16, with even Vodafone reporting modest increase in pace of additions. November'16 was the 3rd month since Reliance Jio's commercial launch in first week of September'16. The new entrant with a brand new 4G-LTE network, did face several issues relating to Call Connectivity with other operators during the first couple of months. With more & more Points of Interconnect being commissioned and the network being streamlined, the Call Connectivity experience from & to Reliance Jio's network experienced a sharp improvement with most calls getting connected within the first one or two tries.
By the end of October'16, Reliance Jio's Total Subscriber base stood at 35.6 million, out of which 33.4 million were active on VLR. During the month of November'16, Reliance Jio added another 16.2 million subscribers to it's Total tally, but it's VLR number increased by just 10.4 million. This meant that a portion of people who had taken up a Reliance Jio Sim during the initial euphoria period had stopped using it, possibly due to frustration from poor quality of service experience during the initial couple of months. With the quality of service improving, especially on the Call Connectivity front, many of them could again start using the network. Reliance Jio's VLR %, which has dropped to under 85% during November'16, could again improve during the months of December'16 & January'17.
Coming back to the progress made by the Top-3 operators on the VLR base front, it was always going to be interesting to see if they are able to maintain any kind of positive momentum, at a time when Reliance Jio is aggressively adding subscribers on it's 4G-only network with the attraction of FREE services. The VLR base numbers of Bharti Airtel & Vodafone India for the month of November'16, clearly tell us that the momentum is unsustainable. Each of the Top-2 operators had added nearly 1 million subscribers to it's Total tally during the month, but both of them have seen their VLR base increase number dip in the negative territory. Though the dip in VLR base is very small for November'16, there is the fear of the situation being worse in December'16, as most Reliance Jio users had reported a sharp improvement in the Quality of Service on the Call Connectivity front from the latter half of November'16. Even the Data Speeds on the new entrant's 4G network had improved from late
December'16 onwards. This positive change in the Quality of Service on Reliance Jio's network will certainly have repercussions on the network usage of all the other operators.
Idea Cellular is probably the only operator which has managed to post a decent positive change in it's VLR subscriber base during November'16 and continuing it's charge towards challenging Vodafone India for the No.2 spot in subscriber stakes. Over the 6 months upto November'16, Idea Cellular has managed to cut down Vodafone's lead over itself from 7.6 million VLR subscribers to just about 2.9 million. Idea Cellular could certainly be looking at dethroning Vodafone India from the No.2 spot in VLR subscribers ranking latest by March'17. In such a backdrop it becomes even more interesting to see if Vodafone's management manages to convince the Aditya Birla Group & Idea Cellular's management for an All-Stock merger between the two companies to create India's No.1 cellular operator with a sizable lead over Bharti Airtel. I had already mentioned in one of my previous reports a few months ago that Vodafone India & Idea Cellular will need to co-operate with each other to offer 3G & 4G services across all 22 circles, especially when Bharti Airtel had clearly made it's intentions clear a few months ago of not offering Intra-Circle-Roaming facility going forward as it is able to offer 3G as well as 4G services across all 22 circles on it's own network. A merger between Vodafone India & Idea Cellular will certainly make for a strong competitor, atleast on paper. But there are many issues that the two will need to take care of, especially in terms of effective shareholding of their respective Promoters/Investors and the management control / decision making. There are several potential benefits too in terms of realignment of network resources & ability of offer much wider 2G/3G/4G coverage. The Indian Telecom's market dynamics will certainly change if this merger goes through, especially in the face of the rise of Reliance Jio as a serious threat to the dominance of the Top-3 operators.
I have included Tata Teleservices' VLR base change chart above just to highlight the fact that it is losing VLR subscribers at a rapid pace since October'16. Between the two months of October & November'16, Tata Tele has lost nearly 3.4 million VLR subscribers, which is nearly 7 to 8% of the operator's Total VLR subscriber base. The rapid pace of drop in VLR subscribers base clearly suggests that Tata Tele has finally decided to pull the plug on it's CDMA operations as it must be getting increasingly unviable to continue the operations. CDMA network was more popular amongst Data hungry customers before the advent of abundant 3G/4G options at cheaper price points. Now with most leading operators offering good quality 3G/4G network with excellent Data speeds and very attractive price points, the users of the CDMA (Photon) services must be shifting their usage to a better option. We can expect some firm announcement from Tata Tele about closure of it's CDMA operations some time in the next few months. With network usage dropping continuously, there is no point for the operator to continue keeping the CDMA network alive for a long period. The company can certainly utilise those resources to enhance it's 3G services and even think of launching 4G services in a few circles where it has acquired Band-3 spectrum from recent auctions. In fact I am of the opinion that Tata Tele should even exit from many of the circles where it has very insignificant presence with 2G-only network and focus on strengthening it's network where it can offer 3G/4G services. A strong operations in about 9 or 10 circles will make more sense than Tata Tele's current 19-circles operations. Let's see by when more sense will prevail with the management of the company & they take some concrete steps towards rationalising it's operations or become a part of some M&A deal.
By the end of October'16, Reliance Jio's Total Subscriber base stood at 35.6 million, out of which 33.4 million were active on VLR. During the month of November'16, Reliance Jio added another 16.2 million subscribers to it's Total tally, but it's VLR number increased by just 10.4 million. This meant that a portion of people who had taken up a Reliance Jio Sim during the initial euphoria period had stopped using it, possibly due to frustration from poor quality of service experience during the initial couple of months. With the quality of service improving, especially on the Call Connectivity front, many of them could again start using the network. Reliance Jio's VLR %, which has dropped to under 85% during November'16, could again improve during the months of December'16 & January'17.
Idea Cellular is probably the only operator which has managed to post a decent positive change in it's VLR subscriber base during November'16 and continuing it's charge towards challenging Vodafone India for the No.2 spot in subscriber stakes. Over the 6 months upto November'16, Idea Cellular has managed to cut down Vodafone's lead over itself from 7.6 million VLR subscribers to just about 2.9 million. Idea Cellular could certainly be looking at dethroning Vodafone India from the No.2 spot in VLR subscribers ranking latest by March'17. In such a backdrop it becomes even more interesting to see if Vodafone's management manages to convince the Aditya Birla Group & Idea Cellular's management for an All-Stock merger between the two companies to create India's No.1 cellular operator with a sizable lead over Bharti Airtel. I had already mentioned in one of my previous reports a few months ago that Vodafone India & Idea Cellular will need to co-operate with each other to offer 3G & 4G services across all 22 circles, especially when Bharti Airtel had clearly made it's intentions clear a few months ago of not offering Intra-Circle-Roaming facility going forward as it is able to offer 3G as well as 4G services across all 22 circles on it's own network. A merger between Vodafone India & Idea Cellular will certainly make for a strong competitor, atleast on paper. But there are many issues that the two will need to take care of, especially in terms of effective shareholding of their respective Promoters/Investors and the management control / decision making. There are several potential benefits too in terms of realignment of network resources & ability of offer much wider 2G/3G/4G coverage. The Indian Telecom's market dynamics will certainly change if this merger goes through, especially in the face of the rise of Reliance Jio as a serious threat to the dominance of the Top-3 operators.
I have included Tata Teleservices' VLR base change chart above just to highlight the fact that it is losing VLR subscribers at a rapid pace since October'16. Between the two months of October & November'16, Tata Tele has lost nearly 3.4 million VLR subscribers, which is nearly 7 to 8% of the operator's Total VLR subscriber base. The rapid pace of drop in VLR subscribers base clearly suggests that Tata Tele has finally decided to pull the plug on it's CDMA operations as it must be getting increasingly unviable to continue the operations. CDMA network was more popular amongst Data hungry customers before the advent of abundant 3G/4G options at cheaper price points. Now with most leading operators offering good quality 3G/4G network with excellent Data speeds and very attractive price points, the users of the CDMA (Photon) services must be shifting their usage to a better option. We can expect some firm announcement from Tata Tele about closure of it's CDMA operations some time in the next few months. With network usage dropping continuously, there is no point for the operator to continue keeping the CDMA network alive for a long period. The company can certainly utilise those resources to enhance it's 3G services and even think of launching 4G services in a few circles where it has acquired Band-3 spectrum from recent auctions. In fact I am of the opinion that Tata Tele should even exit from many of the circles where it has very insignificant presence with 2G-only network and focus on strengthening it's network where it can offer 3G/4G services. A strong operations in about 9 or 10 circles will make more sense than Tata Tele's current 19-circles operations. Let's see by when more sense will prevail with the management of the company & they take some concrete steps towards rationalising it's operations or become a part of some M&A deal.
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