A recent report has highlighted that the telecom industry is likely to hike the tariff by 15 to 17% post the Lok Sabha elections, results of which are scheduled to be announced on June 4.
It said that the tariff increase in the sector is “imminent” with Airtel as the biggest beneficiary.
Notably, the last hike in the telecom industry of about 20% was in December 2021.
A report by Antique Stock Broking said, “We expect the industry to take a 15-17% tariff hike post the elections,” and it described the tariff hike as imminent and Bharti as the biggest beneficiary.
Offering a break-up of ARPU (Average Revenue Per User) for India’s second-largest telco, the brokerage note said Bharti’s industry-leading current ARPU of Rs 208 is set to go up to Rs 286 by the end of FY27.
This will be driven by a tariff hike contributing Rs 55, upgradation of 2G customers to 4G contributing Rs 10, and customer upgradation to a higher data plan (both 4G and 5G) and moving to postpaid delivering Rs 14 gain.
“We expect Bharti’s subscriber base to grow at about two per cent per annum, against the industry growth of one per cent per annum,” it said.
According to the report, Sunil Mittal-led Airtel to ride its best financial performance phase in over a decade driven by tariff hike, 2G upgradation, strong growth of enterprise and Fibre-to-the-Home, and a fall in capex post the 5G rollout, over the next three years.
“While challenges do exist as Bharti has chosen a different 5G rollout path versus key competitors, we believe it is unlikely to dent Bharti’s subscriber base or growth significantly. We also believe valuations do not reflect the emerging highly positive macro telecom sector environment,” it noted.
Bharti has guided for a capex of about Rs 75,000 crore over FY24-26, including the 5G rollout, it said, adding that post the rollout, the capex intensity is likely to fall significantly.
“We estimate a capex of about Rs 75,000 crore over five years starting FY27, a significant drop from about Rs 19,000-20,000 crore per annum current run-rate for the wireless business, while the total India capex including wireless, DTH, FTTH/ FWA, and Enterprise is likely to decline from the current Rs 26,500 crore per annum run rate to Rs 23,000 crore per annum (ex-spectrum/ AGR payment),” it said.
The top two telecom players in India have been gaining subscriber market share over the last almost 5.5 years, at the expense of Vodafone Idea and state-owned BSNL – the former due to its financial woes and the latter its execution troubles.
The general election in the world’s largest democracy is scheduled to be held in seven phases between April 19 and June 1, and results will be declared on June 4.