Bharti Airtel and Hexacom are likely to experience the highest tariff transmission, with ARPU projected to increase by 15-17 percent compared to 1QFY25. Reliance Jio and Vodafone Idea (VIL) are anticipated to see ARPU growth of 12 percent and 11 percent, respectively. While there may be some limited residual benefits in 4Q, ARPU growth is expected to remain steady thereafter, driven by subscriber premiumisation, consistent with trends observed before the tariff hike, according to an Axis Capital report dated January 8, 2025.
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Impact Post-Tariff Hike
Axis Capital anticipates continued benefits from the tariff hike in 3QFY25, although at a lower level than the previous quarter. "The trend of drop in subscriber base from the initial sticker shock of tariff hikes also appears to have waned," the report noted, adding, "Hexacom is expected to register the strongest EBITDA growth, followed by Bharti and Jio. VIL will be more muted, due to the lower tariff to ARPU transmission."
Impact on Subscribers Waned
According to the report, "The initial shock of the tariff hike has expectedly started to wane, as reflected in the October 2024 subscriber data trends disclosed by TRAI. Bharti saw positive subs adds after three months. Jio continued to see an overall subscriber decline, but it was accompanied by a rise in VLR proportion (indicating active subscribers), which implies churn/removal of inactive subscribers." The report added that there is further potential for subscriber declines for VIL in the coming quarters.
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Fixed wireless broadband
Fixed wireless broadband (FWA), according to the report, "is seeing increasing traction, reflected in its accelerating subscriber adds. Jio took an early lead, though Bharti too has started to focus on it."
"Standalone Jio Platforms (JPL), which is primarily Jio's enterprise segment, should continue to see strong growth. Bharti's will continue to see muted growth in the segment," the report added, saying Jio's Enterprise growth remains strong.
