In the upcoming fiscal fourth quarter, major private telecom operators in India, including Bharti Airtel, Vodafone Idea, and Reliance Jio, are anticipated to experience moderate growth. Analysts attribute this to the stabilizing effects of the July tariff increase and the shorter duration of the quarter. As the telecom sector adjusts to these changes, the average revenue per user (ARPU) is expected to reflect shifts in customer preferences and service upgrades.

ARPU Trends and Customer Base Dynamics

The trend towards premiumization of the customer base is set to play a crucial role in driving ARPU growth for these telecom giants. However, the impact of having fewer billing days in the quarter may temper these gains. Analysts note that all three companies have seen consistent increases in quarterly ARPU since the July 2024 tariff hikes, which raised entry-level plan prices and marked the beginning of monetizing 5G services.

• Bharti Airtel and Vodafone Idea have fully realized the benefits of the July tariff increases in the previous quarter, while Reliance Jio is expected to witness residual gains in the current quarter, according to insights from IIFL analysts.

Subscriber Growth Projections

According to Axis Capital, the effect of the recent tariff hikes on subscriber numbers has diminished, returning to pre-hike levels. They predict Reliance Jio will lead in user additions, followed by Airtel. Conversely, Vodafone Idea may continue to lose customers, although there’s optimism regarding its 4G user growth thanks to its recent network expansion investments.

• Reliance Jio is likely to benefit from a significant number of subscribers on long-duration plans, which will help cushion its earnings in Q4. Premiumization and customer upgrades to higher tariff plans will further bolster ARPU growth.

Impact of Network Investments on Vodafone Idea

Bharti Airtel is expected to see a positive impact from accounting for Indus Towers beginning November 2024. ICICI Securities forecasts an 8.7% quarter-on-quarter and 38% year-on-year increase in Airtel’s India revenue, estimating it will reach Rs 398 billion. The mobile segment may experience a slight dip of 0.1% QoQ but is projected to rise 19% YoY.

• Subscriber Predictions: Analysts expect Airtel to gain 3-4 million users and Jio to add 4-6 million subscribers in the March quarter. In contrast, Vodafone Idea is projected to lose 1-2 million users.

Gradual Gains in 4G and 5G Services

Despite the challenges, Vodafone Idea’s 4G subscriber growth should be steady, with an anticipated increase of 2 million users stemming from recent network enhancements. However, progress in 5G adoption will be gradual, as the company only launched commercial 5G services in March 2023.

With two fewer days in the quarter, analysts expect moderate ARPU growth, estimating a 0-1% increase for Vodafone Idea, and 1-2% for both Jio and Airtel. ICICI Securities notes that Airtel may feel the pinch more acutely, forecasting a 1.2% dip in ARPU quarter-on-quarter.

Conclusion

The blended ARPU for Airtel could also be affected by its decision to exit low-margin enterprise segments. As these telecom players navigate the evolving landscape, their ability to adapt and innovate will be crucial in maintaining subscriber growth and optimizing revenue streams. The coming quarter will be a test of their strategies as they continue to compete in a dynamic market.