In Short:
Telecom industry expected to see a 15-17% tariff hike post general elections, benefiting Airtel. Trends show a growth in ARPU for Airtel, with significant capex planned for 5G rollout. Airtel expected to see substantial financial growth over the next three years. Market share dynamics show Vodafone Idea losing ground to Airtel and Jio. Despite consolidation, competitive intensity remains high in the telecom sector.
Telecom Industry Expected to Experience Tariff Hike Post General Elections
The telecom industry is anticipated to witness a tariff hike of 15-17 per cent following the general elections, according to an analyst report. The report highlighted Airtel as the primary beneficiary of this tariff increase.
Key Details
- The general elections in India are scheduled to be held in seven phases between April 19 and June 1, with results declared on June 4.
- The last tariff hike of around 20 per cent took place in December 2021.
- Bharti, the second-largest telco in India, is expected to see its industry-leading ARPU rise from Rs 208 to Rs 286 by the end of FY27.
Future Outlook for Airtel
The brokerage report predicts a positive financial outlook for Airtel over the next three years, driven by factors such as tariff hikes, 2G customer upgrades, enterprise growth, and more.
Despite challenges in the 5G rollout strategy, the report believes that Airtel’s subscriber base and growth will remain robust. The current market valuations are also seen as underestimating the favorable macro environment in the telecom sector.
Capex and Market Share Analysis
Bharti has outlined a capex of approximately Rs 75,000 crore over FY24-26, which is expected to decrease significantly post the 5G rollout. The overall capex in India across various segments is projected to decline as well.
Over the past few years, the top two players in the telecom sector have gained market share at the expense of Vodafone Idea and BSNL. Jio has emerged as a prominent player with substantial market share growth.
While revenue market share changes have been somewhat consistent, competitive intensity in the telecom sector continues unabated.
