The revenue of Reliance Jio, Bharti Airtel and Vodafone Idea is likely to grow by 20-25 per cent in fiscal 2023 because of the tariff hikes taken late last year, rating agency Crisil said in a report.
The ARPU (average revenue per user) should grow 15-20 per cent in fiscal 2023 due to the full-year impact of tariff increases in FY 22 and FY 2023 (anticipated in the second half). However, this will somewhat offset by the ‘downtrading’ of recharges,” the rating agency mentioned in a research note.
Telcos are expected to spend incrementally on network and regulatory capex in fiscal 2023, ARPU growth and tariff hikes could ease some pressure on their books, it added.
As a result, the revenue of the Big 3 telcos may jump 20-25 per cent this fiscal. Earnings before interest, tax, depreciation, and amortisation) is seen expanding 180-220 bps for the year, Crisil mentioned.
Meanwhile, global research firm Morgan Stanley has predicted that the industry ARPU to rise by 50 per cent over the next four-five years.
“With a favourable market structure and supportive regulations, we expect wireless telecom services revenues for the industry to grow to 1. 6x of the current size over the next 5 years,” ET reported, citing the research firm’s latest research note.
Growth in ARPU is a must for realising a healthy bottom line and sustaining profit growth. Lower ARPU limits players’ capacity to invest in network and spectrum, resulting in poor service offerings.
Earlier, telecom operators had increased tariffs in December 2019, the effects of which were first felt in FY 21 with the average ARPU rising 11 per cent to ~Rs 149, fuelled by a higher realisation amid tariff hikes and customer ‘uptrading’, Crisil noted.
“In fiscal 2022, ARPU growth slowed down to around 5 per cent, driven by customer upgradations to 4G and the partial impact of tariff hikes taken in November 2021.”
The three private telecom operators lost 37 million subscribers last fiscal as SIM consolidation weeded out inactive ones. But their active subscriber base grew 3 per cent on-year, or by 29 million.
Reliance Jio—the telecom services arm of Reliance Industries (RIL)—saw its total subscriber base fall sharply between August 2021 and February 2022. However, the share of its active subscribers reached about 94 per cent in March 2022, as against 78 per cent in the first quarter of last fiscal as the active subscriber base remained unaffected because of SIM consolidation.
Likewise, for Bharti Airtel, the share of active subscribers improved by a percentage point to about 99 per cent in the fourth quarter. It added approximately 11 million active subscribers during fiscal 2022.
