Fresh lockdowns to hit user adds in April-June qtr; Vodafone Idea more at riskKolkata: The latest Covid spike and select lockdowns is likely to slow down mobile user adds in the April-June quarter, FY22, and delay the much-awaited tariff hikes by at least three-to-six months, say analysts.

Such a scenario, they said, could leave struggling Vodafone Idea (Vi) even more vulnerable to bigger user losses in the fiscal first quarter.

Analysts, though, expect Bharti Airtel and Reliance Jio to offset any potential slowdown in user adds by garnering higher data revenues, and also expanding their home broadband user base. This, since overall data consumption levels are likely to surge again during lockdowns with people again largely going back to working from home.

“Rising Covid cases and selective lockdowns/restrictions on movement would impact net adds as well as consumer sentiment, and we see the risks of potential tariff hike further pushed back,” BofA Securities said in a note seen by ET.

It added that “Vi would be the most vulnerable,” in such a scenario, given its weaker balance sheet.

Nitin Soni, senior director at global ratings agency, Fitch, backed the view, saying “a potential slowdown in user adds in the June quarter amid fresh lockdowns could delay tariff hikes by around 3-to-6 months, which would further hurt Vi’s precarious financials, widen its losses and lead to more customer losses”.

Loss-making Vi needs to raise rates rapidly to boost confidence levels of potential investors amid its continuing efforts to line up a sizable funding. It also needs to push through a quick tariff hike to garner resources for meeting its significant payment obligations, including annual instalments towards its adjusted gross revenue (AGR) dues of over Rs 50,400 crore and beef up its 4G network to bridge the gap with Jio and Airtel, and in turn, retain subscribers.

Analysts, in fact, said holding on to customers could become a big challenge for Vi if fresh lockdowns lead to reduced net-adds, as stronger rivals, Jio and Airtel are likely to abandon any near-term tariff hike plans, and instead, target Vi’s customers even more aggressively in the current quarter.“Both Jio and Airtel are focusing on customer adds, and if there’s a slowdown in overall net-adds due to a Covid spike, they won’t raise rates anytime soon, and are more likely to dole out juicy offers to grab Vi’s customers through the mobile number portability (MNP) route,” said an analyst at a leading global brokerage.

Analysts estimate Vi has lost 1.8 million users in the March quarter, and see that number rising further in the April-June period if the latest Covid lockdowns and movement curbs lead to reduced user-adds at the industry level. By contrast, Airtel is estimated to have added 14 million users in the March quarter and Jio, 7 million.

They expect Airtel and Jio to grow their home broadband revenues in the June quarter, by likely selling more fibre-to-the-home (FTTH) connections if lockdowns continue in key markets with more people likely to work from home.

At press time, Vi, Airtel and Jio did not respond to ET’s queries.

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