Mobile services are now as essential as fuel: analysts
The phenomenon was underscored by the negligible impact of price increases from last November to December on the active mobile user bases of major Indian telecom operators Reliance Jio, Bharti Airtel and Vodafone Idea.
“Mobile services are now seen as essential, like fuel, which must be refilled regardless of the cost…we got this answer even in the villages during recent field checks,” Kunal Vora, Head of India equity research, BNP Paribas, says ET.
The reason for this is that consumers in both urban and rural markets have become accustomed to data services, especially video, as well as the ubiquity of UPI-based mobile payment transactions.
“Consumers are comparing telecom top-ups to fuel, calling it an essential service that they should enjoy regardless of price increases,” Vora added.
BNP estimates that total UPI-based mobile payment transaction volume jumped 95% year-on-year to a whopping Rs 8.3 lakh-crore (about $110 billion) in February 2022. In fact, UPI’s market share as a preferred payment method increased from 14% in February 2021 to 22% in February 2022.
The Unified Payment Interface (UPI) is a payment system that allows users to instantly transfer money from their accounts to another account linked to a mobile phone. With the growing penetration of mobile phones in rural India, the ubiquitous mobile phone is seen as a powerful tool to foster digital financial inclusion.
Analysts said the limited impact of the November-December 2021 price hikes on the active user base of telecom operators also underlines that mobile services are considered essential and that the telecom sector has regained pricing power. raised.
Jefferies said the acceleration in active subscriber additions to 5.9 million for the entire telecommunications industry in January 2022 – from 4.2 million in December 2021 – was despite a full month of price increases. This, he added, “is encouraging as it indicates acceptance of the new tariffs”.
Market leader Jio added the highest number of active mobile users – 4.2 million – in January 2022, followed by Airtel, which added 1.3 million such subscribers. Even the struggling Vi lost fewer active users in January (0.7 million), compared to 2.1 million in December, suggesting that its active user base was largely stable.
Active, or Visitor Location Register (VLR), data published monthly by the telecommunications regulator shows the number of customers actively using a mobile network.
BNP’s Vora said the telecoms industry was largely retaining its active month-to-month mobile user base despite carriers raising prices sharply, a slowdown in consumption and rising handset costs. is a positive indicator.