Bharti Airtel has been leading the Indian Telecom Sector with Tariff Hikes as the struggling sector sees a meagre investment return. Bharti Airtel selectively implemented its first tariff hike in Haryana and Odisha circles, where the telco withdrew its entry-level minimum recharge pack of Rs 99, which used to offer a validity of 28 days. After testing the response, as the results were encouraging, Bharti Airtel has progressively implemented the entry-level tariff plan Rs 155 in 19 of 22 telecom circles. For Q3FY23, Bharti Airtel reported an ARPU of Rs 193, the highest in the Industry.
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Bharti Airtel's ARPU to touch Rs 199
According to CLSA, the Tariff Hike implemented first in November 2022 and followed in other circles in February 2023 could result in a 3% rise in the ARPU of Bharti Airtel, taking the estimated ARPU to Rs 199. The estimated number of voice subscribers on minimum recharge plans is 40 million out of total subscribers of 332 million. According to the report, Voice subscribers account for 32% of Airtel's 332 million mobile subscribers and an estimated approximately 15% of India mobile revenue.
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CLSA also considered the comments made by Sunil Mittal, Bharti Airtel Chairman, at the Mobile World Congress 2023, Barcelona. Mittal said the company has a strong balance sheet, but the return on capital of the industry is very low, and he hopes for small increments in tariff hikes by mid (half) of the year.
According to the report, the latest tariff increase comes 14 months before India's general elections with a hefty 57% hike for its entry level tariff plans. This recent tariff hike should achieve Bharti Airtel's short-term target of Rs 200 ARPU. However, Airtel focuses on a long-term ARPU target of Rs 300 through price hikes for sustainable operations.
Also Read: How Tariff Hikes Can Help Improve the Telecom Industry
Hike Pattern as November 2021 Hikes
CLSA noted the November 2021 tariff hikes, which boosted ARPU by 26% to Rs 193. Airtel also reported increased postpaid subscribers, which will be a positive gain for ARPU.
Airtel 5G Plus
Airtel 5G will also boost the ARPU targets, as Bharti Airtel's postpaid gains will likely continue with the ramp-up of the 5G Network and Vodafone Idea's lack of 5G rollout. As of date, Airtel 5G Plus is launched in over 265 cities and Bharti Airtel is on track to cover all towns and key rural areas by March 2024. For all the positive reasons, CLSA has Retained BUY with Rs 1,015 SOTP target price.
As a TelecomTalk Reader, You can check out the exact Airtel 5G Plus launch details, circles, spectrum holdings and locations of 5G availability in India on the page here.