Private telcos Bharti Airtel, Vodafone Idea, and Reliance Jio are expected to report moderate growth in the fiscal fourth quarter led by stabilising of the July tariff hike impact, and fewer days in the quarter, analysts said.
Average revenue per user (ARPU) for the telcos is expected to be driven by premiumisation of the customer base, though it is partially likely to be offset by fewer days in the quarter, they added.
All three telcos have been reporting jumps in quarterly ARPU over the past few quarters as a result of the July 2024 tariff hikes, which raised the entry-level pack prices, and saw green shoots of attempts to monetise 5G services by Airtel and Jio.
“While Bharti and Vi saw the full flow-through of Jul’24 tariff hikes in 3Q itself, JIO will see residual gains in 4Q,” analysts from IIFL said.
Analysts from Axis Capital said that the impact of the tariff hike on the subscriber base has waned and returned to pre-hike levels. The brokerage expects Jio to see the highest user addition, followed by Airtel.
Vodafone Idea is expected to continue bleeding customers, though analysts are more positive about its 4G userbase growth given the network expansion investments it has undertaken in the quarter.
Since Jio has a larger proportion of its subscriber base on longer duration plans, some residual impact of the hikes taken at the start of FY25 is expected to positively impact the telco’s Q4 earnings, analysts said.
In case of ARPU, premiumisation and customer upgrades to higher tariff plans are also expected to drive growth.
Airtel is also expected to be positively impacted by the consolidation of Indus Towers accounting into its books as of November 2024.
“We see Bharti’s India revenue rising 8.7% QoQ and 38% YoY to Rs 398 billion and its mobile segment may dip 0.1% QoQ and (rise) 19% YoY in Q4FY25E. India EBITDA should grow 0.1% QoQ (like to like) to Rs 240 billion,” ICICI Securities said.
Analysts expect Airtel to add three to four million users and Jio to add four to six million subscribers in the March quarter. Vodafone Idea is expected to see subscriber loss of one to two million from its userbase.
“Bharti’s 4G/5G net additions should remain stable at 6 million (while) VIL’s 4G subs may rise by 2 million from initial benefits of network expansion,” analysts from ICICI Securities added.
Analysts said that 4G user additions for Vodafone Idea will be gradual since its network upgradation efforts started only in November. It will be even slower for 5G, which it commercially launched in March this year, starting with Mumbai.
The two fewer days in the quarter are expected to result in moderate quarterly ARPU growth, with analysts forecasting growth of 0-1% for Vodafone Idea, and 1-2% for Jio and Airtel.
ICICI Securities, however expects Airtel to be more impacted by the fewer days in the quarter, forecasting a 1.2% dip in ARPU quarter on quarter.
Blended ARPU for Airtel may also be impacted due to its exit from low margin business on the enterprise side, analysts added.