Tariff hike dents Bharti Airtel's user base, more subscribers disconnect

There seems to be a massive churn in the mobile landscape, with Bharti Airtel at the losing end of it. Results reveal nearly 28 million users left Airtel in one quarter alone. Increasing competition and recent price hikes have meant that as much as 8.7% of the total user base has logged out in the lastest quarter alone.

The drop in subscriber number shows the price sensitivity of Airtel's user base. The company has embarked on much talked-about price hike during the quarter, and has hinted at more. MD Gopal Vittal told investors after the results, “Tariffs remain abysmally low in India, and another round of price hikes will likely happen in 2022, although it won’t in the next 3-to-4 months as the current SIM consolidation caused by the last round of hikes needs to come down.” The consolidation in the number of mobile SIM cards usually happens when consumers review their service provider after a round of price hikes. This has raised a question with in the analyst community, if the monetization of the user base is a challenge for Airtel?

Also Read: What should investors do with Bharti Airtel after Q3 results; buy, sell or hold?

What has caught the analysts' eye is the fall in data usage per consumer. That too has taken a hit despite the decline in user base. Whether is was due to the poor quality of user base or patchy network, that is not yet clear. But this churn seems to spilling beyond telephony, as even the Direct-To-Home user base continues to be eroded, by over 6%, for yet another quarter.

Bharti Airtel on February 8 reported a surprise 27 percent sequential decline in its consolidated net profit, at Rs 829.60 crore for Q3FY22. It reported a 5.4 percent quarter-on-quarter rise in consolidated revenues at Rs 29,866 crore.

Once a dominant player, Airtel's mobile subscriber base has declined in two out of last three quarters. Vittal admits the SIM consolidation could continue in the January-March quarter as well, after they doubled their base prepaid rates.