Expanding base of 4G users to drive up ARPU at top telcos

India’s top three telcos are expected to see an increase in average revenue per user (ARPU) in the June quarter, on the back of a consistent increase in the number of higher paying 4G subscribers, led by Jio’s addition of 3.1 million subscribers.

Brokerage reports said Reliance Jio, Bharti Airtel and Vodafone Idea added 5.6 million 4G subscribers in May, the highest in the past 10 months, on top of 4 million 4G subscribers added in April.

“Wireless broadband data subs addition of 5.6 million month-on-month was the strongest in 10 months,” Morgan Stanley Research said in a note. It added that a gradual market share shift is expected to continue to play out in favour of Jio and Airtel on an incremental basis.

Analysts said that trends point to a steady outlook for tariff hikes in the latter half of the year. “With Bharti focusing on raising ARPUs and Jio leading active subscribers, outlook for future tariff hikes looks steady,” said analysts at Jefferies.

Nomura Global Equities Research also expects the No. 1 and No. 2 carriers to continue making market gains. “Bharti and R-Jio’s market share gains will likely continue at Vi’s expense. Further, with the 5G launch, we expect market share gains to accelerate for Bharti and R-Jio,” they said.

Vi added 1.3 million 4G subscribers in May, its highest in 10 months, even as Jio and Airtel strengthened their market shares across most circles.

Jio added the highest number of 4G customers in the past 10 months at 3.1 million, taking its market share to 53%, which has been stable for the past few months after a decline due to the clean-up of inactive subscribers.

Bharti Airtel’s 4G subscriber addition was robust at 1.9 million in May, lower than additions of 2 million plus in the previous months, but its active subscribers also rose by 2.2 million, analysts at JM Financial said in a note. “Some moderation in mobile broadband (3G and 4G) subs addition is partly driven by limited availability of smartphones due to chip shortage, resulting in a rise in the average price of smartphones, as highlighted by the Bharti management,” they noted.

According to ICICI Securities and ICICI Direct, Reliance Jio’s ARPU is expected to rise to ₹174, while Vodafone Idea’s will grow by 2% to ₹126 in the quarter ended June. Bharti Airtel’s ARPU is expected to grow by 3.1% to ₹184, the highest in absolute terms among the carriers.

Analysts also highlighted that the rural-urban mix was largely stable for the three operators; rural proportion now stands at 44%, 49% and 50% for Jio, Bharti and Vi, respectively.

“While Jio saw healthy subscriber growth in both rural and urban areas, Bharti saw flat growth in urban subscribers. However, Vi lost both rural and urban subscribers,” said analysts at Emkay Global in a note. Livemint