"After steady 8-9 million subscriber additions in the last few months, Jio net adds for September slowed to 6.9 million. We remain uncertain if this was led by the tariff change impact or a one-off slowing month," the BofAML report said.
"Bharti and VIL Vodafone Idea Ltd) showed negative net adds in Sept-19. In the coming months as telcos take tariff hikes, we see continued SIM consolidation leading to slower net adds for the industry", the broking house said in its analysis of the consequence of the tariff hike decided by the companies.
Earlier this week, Reliance Jio, Airtel and Vodafone all announced tariff hikes to be effective from next month.
As per the September figures of telecom regulator Trai, Vodafone Idea and Bharti Airtel lost over 49 lakh users in September, while Reliance Jio added 69.83 lakh new users to its network.
Jio had added 84 lakh subscribers in August. In October, Reliance Jio announced that it will start charging 6 paise per minute for calls that are made to other networks.
The BOfAS ML report further said as Bharti has a higher proportion of high-end users and through them it is looking to improve their average revenue per user (ARPU), it expects the company to face the least negative elasticity impact.
"We also expect capex investments to remain low as highly unsustainable data allowances reduce," the report said.
The report also says there is a high expectation from industry of the government providing relief.
" While the government has not yet indicated the sector relief package, we consider market expectations for relief to be high and hence see risks of disappointment. If there are no material up-front relief offerings by the government, then we believe it doesna't help the sector much. It appears that the government/regulator wants telcos to focus on improving their revenue momentum to repair the sector over any material sector relief benefits", the report said.
The report noted that the latest tariff hike is real and sustainable.
"The Indian telcos have disappointed in the past with tariff hikes, as they have not materialized as expected and negative elasticity has forced telcos to reverse or one of the telcos tried to cut to gain traction. We believe it's different this time," the report said.
"Given sector stress and government focus, we expect the tariff hike to be sustained for the next few months. We consider VIL to be the biggest beneficiary, but overhang from the AGR (adjusted gross revenue) case still puts a question on long-term recovery," it said.
"We find Bharti Airtel to be the best telco to play this tariff hike as we believe a sustained tariff hikes, market share gains and government relief will help business momentum," it added.
( With inputs from IANS )