Mobile services are indispensible as fuel: Say Analysts

Mobile services are now essential fuel and immune to price hikes as consumers are hooked to data and video services on their smartphones further goaded by the mass popularity of UPI-based mobile payments even in villages, analysts said.

The phenomenon was underlined by the negligible impact of the price hikes last November-December on the active mobile user bases of India's top telcos: Reliance Jio, Bharti Airtel and Vodafone Idea.

BNP estimates that the total volume of UPI-based mobile payment transactions jumped 95% on year to a whopping Rs 8.3 lakh-crore (roughly, $110 billion) in February 2022. In fact, the market share of UPI as a preferred payment mode has jumped to 22% in February 2022 from 14% in February 2021.

The Unified Payments Interface (UPI) is a payments system that enables people to instantly transfer cash from their accounts to another account linked to a mobile phone. With rising mobile penetration in rural India, the ubiquitous cell phone is seen as a powerful tool to drive digital financial inclusion.

Analysts said the limited impact of the November-December 2021 tariff hikes on telcos' active user base also underscores that mobile services are viewed as essential and that the telecom sector has regained high pricing power.

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 struggling Vi lost fewer active users in January (0.7 million), compared to 2.1 million in December, which suggests its active user base was largely stable.

Active, or visitor location register (VLR), data put out every month by the telecom regulator indicates the number of customers actively using a mobile network. BNP’s Vora said the telecom industry was largely holding on to an active mobile user base month-on- month despite the sharp tariff hike by operators, a slowdown in consumption, and higher handset costs are positive indicators.