Bharti Airtel, Vodafone Idea (Vi), and Reliance Jio's Q3 FY23 results are out. The trend of average revenue per user (ARPU) is still the same, where Airtel is the leader, Reliance Jio is second, and then Vi is at the bottom, lagging behind by a huge margin from its competitors. Bharti Airtel and Reliance Jio made profits, while Vodafone Idea lost close to $1 billion USD during the quarter. When we talk about ARPU, Airtel leads despite having a smaller user base than Jio because of multiple reasons. The telco has a better postpaid subscriber base than Jio, and its prepaid plans are also slightly higher priced.
ARPU of Airtel, Jio and Vi in Q3 FY23
Bharti Airtel's ARPU during Q3 FY23 was Rs 193. At the same time, Vodafone Idea's ARPU increased to Rs 135, and Jio's ARPU reached Rs 178.2. Airtel's ARPU is the best in the industry and is very close to its short-term target of Rs 200. With time, the ARPU of Airtel would easily cross the Rs 220 level and move fast towards Rs 250. With two rounds of tariff hikes in the future and pushing customers to recharge with more premium plans, Airtel should be able to reach its goal of Rs 300 ARPU in the medium term.
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Airtel has already started hiking the tariffs. The telco has not raised the tariffs for any plan but instead removed the base Rs 99 plan for customers in 17 circles, and now the new base plan comes for Rs 155. This means that Airtel has given its users no other option but to recharge with the Rs 155 plan or more in 17 circles of India. This could lead to subscriber churn but would also help Airtel in boosting ARPU and maximising revenues.
Reliance Jio, even though it doesn't talk about ARPU, would like to improve it. For Jio, the ARPU growth QoQ has been slower than Airtel and Vodafone Idea. This is because its tariffs are at a lower level compared to Airtel and Vi. Jio won't move the tariffs up until and unless its competitors are done with it.
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Vodafone Idea desperately needs to improve its ARPU. The telco has not removed the Rs 99 plan for customers, which is odd because Vi often matches the tariffs of Airtel. This is a golden opportunity for Vi to get rid of the Rs 99 plan. However, there could also be the possibility that Vi won't go ahead with removing the Rs 99 plan like Airtel, as it wouldn't want the subscriber churn rate to go higher than where it stands at the moment.
Vi needs a tariff hike to improve margins and reduce losses. However, Vi can't be the first to raise tariffs. It has to be Airtel or Jio. Vi can lose subscribers really fast in case it doesn't time the tariff hikes perfectly.
