Telecom Consumer Spends Has Finally Crossed Pre-Jio Levels: ICICI Securities

During Q3 FY22, the 4G subscriber base dipped overall because of the inactive user base clearance of Reliance Jio. Bharti Airtel’s subscriber market share improved 26.3% while Jio’s market share fell to 55.9% (down 90bps).

Highlights

  • The consumer spends on mobile services has finally crossed the pre-Jio levels in Q3 FY22. The previous high was in Q1 FY17.
  • During Q3 FY22, the 4G subscriber base dipped overall because of the inactive user base clearance of Reliance Jio.
  • Fixed broadband subscribers grew during the quarter by 8.6% and 4.1 YoY (net add 2.1 million).

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The consumer spends on mobile services has finally crossed the pre-Jio levels in Q3 FY22. The previous high was in Q1 FY17. The total consumer spends during the quarter post-GST rose 4.2% QoQ and 8% YoY to Rs 420 billion, said ICICI Securities taking data from the TRAI (Telecom Regulatory Authority of India) report. The rise in consumer spends will be attributed a little to the prepaid tariff hikes introduced by the private telecom operators in December 2021.

Prepaid net revenues rose 3.1% QoQ and 10.8% YoY as ARPU (average revenue per user) rose 5.7% QoQ and 13.7% YoY to Rs 108. Postpaid revenues also jumped 15.7% QoQ and 20.9% YoY on rising subscriber (sub) base.

4G Subscriber Base Dipped During the Quarter

During Q3 FY22, the 4G subscriber base dipped overall because of the inactive user base clearance of Reliance Jio. Bharti Airtel’s subscriber market share improved by 26.3% while Jio’s market share fell to 55.9% (down 90bps).

Fixed broadband subscribers grew during the quarter by 8.6% and 4.1 YoY (net add 2.1 million). The numbers were driven by the growth in FTTH subscribers and the decline in DSL subscribers.

The telecom operators will be happy looking at the data as they want the consumers to spend more. The data for Q4 FY22 should be even better as the complete effect of the tariff hikes came during the last quarter. This is in line with the telcos’ strategy of raising the tariffs to increase ARPU.

The more the telcos earn, the more stable the sector will become. This will make the telecom sector of India an ideal ground for investors to dump their money for growth. Almost after five years, the figures for consumer spends on mobile services have gone past the pre-Jio numbers. This is a positive development for the sector and the operators who will be pushing the tariffs up even further to cover more ground for making fresh investments.

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