Telcos to gain as 2G user base shrinks, pin tariff hopes on 4G

The loss of millions of 2G subscribers due to Covid-19 lockdowns is likely to help Bharti Airtel Ltd’s and Vodafone Idea Ltd’s bottom-lines as they will save significantly in fixed costs on servicing low-margin 2G users, analysts said. A fall in the number of low-paying 2G customers could, in fact, boost the average revenue per user (Arpu).

The lockdowns led to an exodus of workers from urban to rural India following job losses, resulting in a fall in the 2G subscriber base. Limited access to recharge centres also led to 2G service disruptions, as 4G customers prefer digital modes for recharge.

“We believe that the loss of subscribers may not hurt the telecom companies much. This could be due to two reasons—loss of customers mainly in the 2G space owing to labour migration, and not using dual SIM cards and moving to a single SIM,” said Sanjeev Hota, head of research, Sharekhan by BNP Paribas.