Jio and Airtel will have a combined 70% revenue market share by fiscal 2025, Telecom News, ET Telecom
“We anticipate further market consolidation by 2025 with Bharti revenue share of around 31% and Jio around 47%. Jio’s revenue share is expected to reach 47% and subscriber share to 48%, ”Bernstein said on Monday.
FY22 estimated revenue market share (RMS) for Airtel is 31% while Jio’s is 44%. So while Airtel will remain the status quo for the next few years, Vi will see a considerable drop in RMS from 22% to 20% in FY25. Even on the subscriber market share front, Jio will take the lead as Vi is expected to lose its grip from 20% to 17% and Airtel will experience a marginal decline of 25% to 24%.
In a report titled “Pricing Power – India Telecom – Is There Still Time?” Bernstein analysts Rahul Malhotra and Ronald Ma expect tariff increases, catapulted by the recent telecommunications aid plan.
“The price status quo is no longer necessary for the industry. Bharti had recently done 2G prepaid treks, was also guiding an ARPU of Rs 200 / Rs 300 in the short / medium term. Jio ranks first among subscribers (~ 47%) and no longer demands a price reduction. Vodafone has benefited from the reforms and would like to increase prices to manage cash flow, ”analysts said.
In September, the government announced a debt relief plan that included a four-year moratorium on Adjusted Gross Income (AGR) and spectrum payments, a reduction in BGs and the ability to convert statutory contributions into government equity.
Tariff hikes are crucial for the industry which last saw a 25% to 30% price increase in 2019 and since then there have only been adjustments in the charts. For example, Airtel recently increased the price of the minimum recharge plan (Rs 49 to Rs 79).
“We believe that the reforms have set the stage for an increase in ARPU in the coming months (similar to 25-30% in December 19) and lead to a better economy for the sector,” said Bernstein.
The price increase is important to increase the average revenue per user (ARPU), a key parameter for the industry. Jio has an ARPU of Rs 143.60 at the end of the September quarter. While Vi and Airtel have yet to announce their second quarter results, they recorded an ARPU of Rs 104 and Rs 146 respectively at the end of the June quarter. Besides the price increases, there are other “levers” that the brokerage firm expects to use.
“Although the price increase is the most important pricing lever, we are also seeing other levers play. (1) Upgrade to 4G plans, (2) Increase smartphone penetration / increase data usage, and (3) Monetize digital / value-added services, ”Malhotra and Ma said in the report.