The Indian telecom industry is like to see a 15 to 17 per cent tariff hike after the upcoming Lok Sabha elections, says an analyst report, adding that Bharti Airtel will be the biggest beneficiary.
"We expect the industry to take a 15-17 per cent tariff hike post the elections," stated the report by Antique Stock Broking.
Telecom tariffs were previously revised in December 2021 when the rates were increased by nearly 20 per cent.
Antique Stock Broking said Sunil Mittal-led Bharti Airtel has the highest ARPU (Average Revenue Per User) at Rs 208 and this is expected to jump to around Rs 286 by FY27. Major factors contributing to this include a tariff hike delivering Rs 55, 2G to 4G upgrade contributing Rs 10 and prepaid to postpaid shift bring in Rs 14,
"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," read the brokerage note.
The agency believes that Airtel will see its best financial performance in over a decade over the next 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," the brokerage said.
It added that Airtel's capex is expected to come down sharply once the 5G rollout is complete.
"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 (FY24'?26) to Rs 23,000 crore per annum (ex-spectrum/ AGR payment)," Antique Stock Broking said.
Airtel and Jio have been significantly broadening their subscriber base over the past half-a-decade, wooing the customers of Vodafone Idea and BSNL. "While Vodafone Idea is down from 37.2 per cent in September 2018 to almost half at 19.3 per cent in December 2023, Bharti's market share is up from 29.4 per cent to 33 per cent during this period. Jio is the biggest gainer rising from 21.6 per cent to 39.7 per cent," added the brokerage.
