By 2025, Reliance Jio Infocomm (Jio) and Bharti Airtel NSE 3.96 percent will control 47 percent and 31 percent of the revenue market, respectively, while rival Vodafone Idea NSE 5.76 percent (VI) will control 20 percent. According to the brokerage firm, the status quo in pricing is no longer necessary for the industry and the three telcos, and the government’s relief to the debt-laden sector will be the impetus needed for the trio to raise their tariffs.
According to Bernstein, further market consolidation is expected by 2025, with Bharti reporting for 31% of revenue and Jio accounting for 47%. Airtel’s expected revenue market share (RMS) for FY22 is 31 percent, while Jio’s is 44 percent.
So, while Airtel’s RMS will remain stable for the foreseeable future, VI’s RMS will fall from 22 percent to 20 percent in FY25. Even in terms of subscriber market share, Jio will take the lead as VI’s share is expected to fall from 20 percent to 17 percent, while Airtel’s share will fall from 25 percent to 24 percent. In a report titled “Pricing Power – India Telecom,” Bernstein analysts Rahul Malhotra and Ronald Ma predict that tariffs will rise as a result of the recent telecom alleviation package.
The government declared a debt relief package for the debt-ridden sector in September, including a four-year total ban on AGR and spectrum payments, lowered BGs, and the alternative to transform statutory dues to government equity. Tariff increases are critical for the sector, which last saw a 25%-30% price increase in 2019 and has only seen minor adjustments to the charts since then.
Tariff increases are critical for increasing average revenue per user (ARPU), a key metric for the sector. As of the end of the third quarter, Jio’s ARPU was Rs 143.60. Whereas Vodafone Idea and Airtel have yet to release their second-quarter outcomes, they had ARPUs of Rs 104 and Rs 146, respectively, as of the end of the June quarter. Aside from tariff increases, the brokerage firm anticipates the use of other “levers.”
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