Telecom firms may have to spend more on marketing costs as a result of the increasing competition as indicated by a rise in demand for mobile number portability (MNP), according to a report published in The Economic Times (ET). The competition in the telecom sector has accelerated due to Reliance Jio and Bharti Airtel’s 5G push
A total of 10.95 million mobile number portability (MNP) requests were submitted in April, bringing the cumulative number of MNP requests to 830.65 million from 819.70 million at the end of March.
After a few quarters of consistent increases in sales, general, and administrative costs (SGA), telecom operators were able to reduce these costs to some extent in the fourth quarter of the financial year 2022-23 (FY23). Vodafone Idea (VI)'s SGA costs decreased by 2.5 per cent sequentially in the fourth quarter, while Airtel's decreased by 7.5 per cent. Jio continued to see growth in this metric, but the pace slowed down sequentially to six per cent in the fourth quarter from 12 per cent in the third quarter.
Based on an analysis of the telecom subscriber data for April put out on Wednesday by the Telecom Regulatory Authority of India (Trai), analysts said Vodafone Idea's inability to keep its subscribers, particularly those using 3G/4G services, indicates that the telecom company's position remains dire and a significant infusion of funds is essential for the company to remain competitive.
Brokerage firm Jefferies said in a report that the rise in MNP activity could be due to VI's users porting their numbers to experience 5G on Jio or Airtel. “This is likely to keep churn levels elevated and drive-up S&M costs for telcos,” it said.
According to analysts, Vi’s lack of 5G rollout has started to show a negative impact on its overall subscriber base. Three million 3G/4G users were added by Jio to its subscriber base while Airtel added 2.3 million users. At the same time, Vi lost 1.3 million 3G/4G subscribers. The firm’s subscriber loss in April is the second-highest 4G churn the company has seen in two years, and this is the second month in the last three when it has lost mobile broadband (MBB) users.