Airtel is poised to surpass both Reliance Jio and Vodafone Idea in revenue growth for the 3rd quarter
Analysts predict that Bharti Airtel will surpass Reliance Jio and Vodafone Idea (Vi) in the fiscal third quarter by achieving stronger sequential revenue growth. This success is attributed to the residual impact of tariff hikes in July 2024 and an increase in mobile broadband users.
The effects of last year’s rate increases are expected to raise the average revenue per user (ARPU) for all three private telecom companies, with Airtel benefiting the most. Airtel and Jio are anticipated to gain subscribers in the December quarter, while Vi is likely to experience significant customer losses, particularly among price-sensitive users.
Airtel and Jio are projected to expand their user base in Q3FY25 as mobile users who initially switched to BSNL due to unchanged rates are returning due to network quality issues. Jio’s growth in broadband subscribers is also expected to be driven by the popularity of its 5G-based fixed wireless access (FWA) service.
Last July, private carriers implemented significant price increases, resulting in revenue growth of 5.3% for Bharti Airtel, compared to 3% for RJio and 1% for Vi in Q3FY25. Airtel’s ARPU is estimated to rise by 5% to Rs 245, while Jio and Vi are expected to increase by 3.8% and 3% to Rs 203 and Rs 161, respectively.
Airtel’s ARPU growth is likely due to the transition from 2G to 4G/5G, resulting in an estimated 5 million net additions of 4G/5G users and an increase in postpaid adoption.
Jio’s Average Revenue Per User (ARPU) is expected to grow at a slower pace due to a high number of subscribers on longer-validity plans, with user additions projected to be lower at 3 million. Analysts anticipate that Jio will fully benefit from the rate hikes implemented in July 2024 by the fourth quarter of FY25 and the first quarter of FY26.
On the other hand, Vi is expected to lose 4 million users, including 1 million 4G users, in Q3FY25. Analysts believe that Vi will only start to reduce customer losses once it expands its 4G operations and launches 5G services in March.
JM Financial predicts a structural increase in industry ARPU, estimating a growth rate of 10-12% annually over the next 3-4 years. This growth is attributed to the consolidated industry structure and the higher ARPU requirement for Jio to justify its significant 5G capital expenditure, especially in anticipation of its potential IPO.
Analysts had previously noted that Jio’s actions, such as raising mobile tariffs in July 2024 and monetizing its 5G business, indicated preparations for a potential initial public offering, which could be the largest in India.
Furthermore, analysts expect Jio to experience the highest growth in data usage levels among private telecom companies, driven by the rapid adoption of its 5G-based FWA service, Jio AirFiber.
JM Financial estimates that Jio’s Average Monthly Data Usage (AMDU) per subscriber will increase by 2% sequentially to 31.6 GB in Q3FY25. In contrast, Airtel and Vi’s AMDUs per subscriber are expected to rise by 0.5% and 1% sequentially to 24GB and 15.5 GB, respectively.
ICICI Securities projects a 48% quarter-on-quarter increase in Airtel’s consolidated net profit to Rs 5320 crore in Q3, supported
Analysts project that Airtel’s India EBITDA will increase by approximately 11% sequentially, thanks to the recent consolidation of Indus Towers. This consolidation has resulted in Indus Towers transitioning from an associate to a subsidiary of Airtel, effective November 19, 2024.
In contrast, Jio is expected to see a 5% sequential increase in net profit in the September quarter, reaching around Rs 6,546 crore. However, analysts predict that Vi’s net loss in the December quarter will widen to approximately Rs 7,198 crore due to ongoing significant customer losses.
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