According to new findings from analysts, the three private telcos of India, Reliance Jio, Bharti Airtel and Vodafone Idea are on their way to reporting strong average revenue per user (ARPU) along with India mobile revenue sequential growth in the fiscal fourth quarter. This growth will be the consequence of steep tariff hikes imposed by the telcos in November-December 2021. To recall, Airtel, Vi and Jio had raised prepaid tariffs by 20-25% around end-November-early-December, 2021.
Growth on the Back of Tariff Hikes
According to a report from ET Telecom, as per the estimation provided by Jefferies, Airtel and Jio will witness a 10% sequential jump in their India mobile revenues in the March quarter. BNP Paribas on the other hand evaluates Vi’s to rising by around 5.5%. Furthermore, a note from BofA Securities states that there will be a robust Quarter-on-Quarter growth of cellular revenues by Indian telcos in the fourth quarter.
Even though analysts believe, that there will be significant growth in the telcos' March quarter margins on the back of higher ARPUs, the subscribers’ addition is however expected to stay muted because of the price hikes and continued clean-up of low-paying users by Jio. Going by what analysts believe, only Airtel will be adding new subscribers in the quarter while Jio and Vi will go through subscriber loss because of steep tariff hikes.
As far as the ARPUs are considered, Airtel is expected to report the highest ARPU growth among the three private players with a 14% on-quarter to Rs 185, according to BNP. Jefferies on the other hand estimates that Jio’s will rise 12.1% sequentially to Rs 170. A note from BNP suggests that Vi will report a 7.4% sequential rise in its ARPU to Rs 123 in the March quarter.
BNP further estimates that the overall revenue growth of the telecom sector will more than double at 9% sequentially in the fourth quarter of FY22 due to the high tariff hikes imposed in late 2021. BNP stated that the growth is expected despite the multiple factors such as moderation in user additions due to higher tariffs and handset prices, SIM card consolidation and more adversely affecting it. Notably, the telecom sector’s revenues grew by 4.5% and 4.2% sequentially in the second and third quarters of FY22.