Bharti Airtel, Reliance Jio, and Vodafone Idea (Vi) are set to see strong average revenue per user (ARPU) growth in Q4 FY22, said ICICI Securities in a note. This is because the private telecom operators will be able to see the impact of tariff hikes in a full quarter. In Q3 FY22, when the tariff hikes were announced, only the month of December was left. Thus the impact of tariff hikes was very short for the previous quarter. However, in the last quarter of FY22, the ARPU of the private telcos will grow at a much better rate.
ICICI Securities said that ARPU for Bharti Airtel, Vodafone Idea, and Reliance Jio would rise by 8.6%, 7%, and 8%. The analyst also added that Reliance Jio has a lot of long-term plan validity users; thus, the full impact of tariff hikes will be delayed compared to other operators.
High-Cost 4G Devices Limited Addition of 4G Subscribers
The high cost of 4G smartphones had limited the addition of new 4G subscribers, which resulted in limiting premiumisation. The ARPU growth will be better than revenue growth QoQ (quarter-on-quarter) because of the high SIM consolidation post the tariff hikes. Further, two fewer days during the quarter reduced some of the benefits of the tariff hikes for the telcos.
It is worth noting that the telecom operators are planning to hike prepaid tariffs again later this year. Both Bharti Airtel and Vodafone Idea (Vi) have said that they will go with another round of tariff hikes within 2022 and not wait for two years like last time. This will help the telecom operators in increasing their average revenue per user (ARPU) figure further.
The Q1 FY23 should be better for the telcos as the SIM consolidation level drops, which will help with market stabilisation. Many Jio users will recharge with the new tariffs for the first time in Q1 FY23. With the tariff hikes, the overall revenues for the operators should grow in the medium term. Vodafone Idea needs to arrest active subscriber loss to stay in the competition.
