Analyst Expects Airtel to Soon Hike Tariffs

Bharti Airtel, the second largest wireless operator in India is soon expected to hike tariffs, Motilal Oswal said in a report on Wednesday. The firm said that the tariff hike “which looked uncertain” in the past six to nine month period “has now started to look imminent” due to the “weakening of industry subscriber growth.” However, Motilal Oswal highlighted that the earnings outlook of Airtel “remains strong” due to the “steady 4G subscriber additions.” The steady increase in 4G subscribers is said to result in 2% to 3% quarter-on-quarter (QoQ) average revenue per user (ARPU) growth for Airtel.

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Motilal Oswal Expects 15% to 20% Increase in Tariffs

The Telecom Subscription Data for the period ended September 30, 2020, as released by the Telecom Regulatory Authority of India (Trai) highlights that Airtel gained over 3.7 million users in September. The second largest wireless operator in India gained 10 million users in the last three months after registering a cumulative loss of 12.4 million users during the lockdown. Airtel is now said to have 316 million active users as on September 30, 2020, while Reliance Jio is ahead with 318 million active users.

Motilal Oswal said that the recent hikes in Vodafone Idea postpaid plans “creates a positive environment” for the sector.

“Our recent interactions with industry experts indicate a potential price hike of 15-20% in the next two months,” Motilal Oswal said in its report.

The firm said that Vodafone Idea “could take the lead” in further hiking its tariffs due to multiple factors such as “reducing subscriber growth, weak liquidity position and requirement for fund raising.”