The recent tariff hikes by private telecom operators are elevating the financial position of the Indian telecom industry. The tariff hike for prepaid and postpaid services by Bharti Airtel is aimed to increase ARPU from Rs 200 to Rs 300. Gopal Vittal, Chief Executive Officer of Airtel, recently marked that the ARPUs in India are significantly low, and the return on capital for companies is in the low single-digit. As reported by ET Telecom, the tariff hikes have already started showing positive results in terms of revenue for the industry.
JioPhone Might Cause Delay in Next Round of Tariff Hikes
The renowned company Jefferies revealed that the sector revenue growth would be pick up, led by tariff hike from private telecom operators Vodafone Idea and Bharti Airtel. The analysts also reported that the launch of JioPhone might push the next round of tariff hikes. The renowned telco, Vodafone Idea has raised the rates of 2G services in nearly 13 to 14 circles. It is expected that the tariff hike by the telco will go nationwide in the coming months. The distressed balance sheets of Vodafone Idea will pump the market share of Bharti Airtel and Reliance Jio.
Reliance Jio Reported Highest Revenue Growth
The first quarter of the current fiscal year turned out to be beneficial for Reliance Jio. The telco recorded the highest revenue growth at 4% QoQ, while Bharti Airtel recorded 2% QoQ growth. Vodafone Idea, on the other side, reported a 5% QoQ decline. Reliance Jio and Bharti Airtel gained 120bps and 60bps market share vs FY21, respectively, whereas Vodafone Idea lost 180bps to 19% during 1Q. Strategically, Bharti Airtel overpowered all the telcos on operating metrics and recorded the highest average data and voice usage.
It is also speculated that the recent expansion and investments towards broadband sites will further drive the market share gains for Bharti Airtel. Since Vodafone Idea witnessed a reduction in 4G subscribers, the operating metrics were weak. The data traffic of Vodafone Idea was increased by 13% QoQ in 1Q, whereas Bharti Airtel and Reliance Jio recorded 17% QoQ and 22% QoQ. Even though Reliance Jio recorded healthy revenue growth, it continues to see limited benefits of operating leverage that is leading to low margins.