Bharti Airtel and Vodafone Idea (Vi) are expected to see higher average revenue per user (ARPU) in the second quarter of FY22. The analysts believe that because of the removal of the base plan (Rs 49 plan) by both the telcos, their ARPU will see a 4.5% to 6% sequential growth. At the same time, both operators will also see a higher subscriber churn rate because of the increase in tariffs.
According to a PTI report citing IIFL Securities, the second quarter should be healthy for the private operators. This is because of the indirect tariff hike from Vodafone Idea and Bharti Airtel.
The Urgency of Tariff Hike for Vodafone Idea Reduced Now
With the cash flow position getting a little better for Vodafone Idea because of the relief package, the third-largest telecom operator won’t have to urgently push for tariff hikes. The report mentions that Bharti Airtel might marginally outperform Reliance Jio when it comes to sequential Indian mobile revenue growth.
This could be due to more users recharging with the Rs 79 pack instead of the Rs 49 pack which was discontinued. However, analysts believe that Vodafone Idea will again lose more than 10 million customers in Q2 FY22. This will make it the second quarter for Vodafone Idea to see such results.
The removal of the Rs 49 plan by Vodafone Idea is naturally going to increase the subscriber churn rate for the company. However, it is good looking at the long-term goal of the company. Even though Vi will lose some customers, it will be able to increase its ARPU. The tariff hikes might not come until the time 5G is introduced in India. Even then, the telcos might focus on going passively with the tariff raise because they wouldn’t want to hurt their subscriber market share. It will be actually interesting to see the reports of the operators for the second quarter of FY22.
