India’s telecom sector has been undergoing a phase of distress ever since Mukesh Ambani’s Reliance Jio made call and data tariff dirt cheap, and later AGR dues aggravated the problems for telecom operators. However, the fortunes of the telecom industry are expected to turn for good with the sector entering a ‘tariff discipline’ phase. Mobile revenues, realisation per user in India may double by FY25, according to a recent report by Jefferies. “A comparative analysis of over 25 markets indicates that mobile revenues/ARPUs in India could double over FY20-25 to USD 38 billion,” it said, PTI reported. Bharti Airtel is expected to be the key beneficiary of the rising tariffs and ongoing consolidation in the Indian telecom space, the report added. Currently, India’s mobile revenues-to-GDP ratio is among the lowest at 0.7% according to a comparison of mobile ARPUs (average revenue per users) of over 25 countries.
Tariff discipline for Indian telecom companies is likely to sustain and the ARPU may witness a rise of 3-5% annually even beyond 2024-25. Similar trends have been witnessed in the fast-moving consumer goods (FMCG) sector and two-wheelers over the last decade. “Our analysis also shows that countries with low competition have higher mobile revenue/GDP ratios. For example, Philippines, a duopoly historically, has mobile revenue/GDP ratio of 1.2-1.7% versus Indonesia, a five-player market, where this ratio has been lower at 0.6-0.8%,” the report said.
Meanwhile, India’s telecom sector has been gaining attention of the US-based tech giants with Mukesh Ambani’s Reliance Jio securing over Rs 43,000 crore from social-media platform Facebook for about 9.99% equity. Since then, reports have circulated regarding Google eyeing a stake in Vodafone-Idea and Amazon being in talks with Bharti Airtel for a minor stake. The same were denied by Vodafone-Idea and Bharti Airtel later. India has a burgeoning mobile user base making it especially attractive for tech companies.