Connect with us

Headlines of the Day

Jio, Airtel to have combined 70% revenue market share by FY2025

Reliance Jio Infocomm (Jio) and Bharti Airtel will gain 47% and 31% revenue market share respectively in 2025, while rival Vodafone Idea (Vi) will own 20%, brokerage firm Bernstein said. The brokerage firm says the price status quo is no longer necessary for the industry and that the three telecommunications companies and the government’s relief to the debt-laden sector will be the amount needed for the trio to raise their tariffs.

“We expect further market consolidation in 2025 with a revenue share of Bharti ~ 31% & Jio ~ 47%. Jio revenue share is expected to reach 47% and subscriber share to reach 48%,” Bernstein said on Monday.

Estimated revenue market share (RMS) for FY22 for Airtel is 31%, while Jio’s is 44%. So while Airtels will remain the status quo for the next few years, We will see a significant drop in RMS from 22% to 20% in FY25. Even on the subscriber market share front, Jio will take the lead, as We are estimated to lose its grip from 20% -17%, and Airtel will see a marginal decline from 25% to 24%

In a report called ‘Pricing Power – India Telecom – Is It Time Yet?’ Bernstein’s analysts Rahul Malhotra and Ronald Ma expect tariffs to rise, tossed around by the latest telecoms assistance package.

“Pricing status quo is no longer necessary for the industry. Bharti had recently made 2G prepaid increases, and also guided ARPU at Rs 200 / Rs 300 in the short / medium term. Jio has # 1 position in subscribers (~ 47%) and “Vodafone has benefited from the reforms and wants to push up prices to control cash flows,” said analysts.

In September, the government announced a relief package for the debt-laden sector, which included a four-year moratorium on adjusted gross income (AGR) and frequency payments, reduced BGs and the ability to convert statutory taxes to government equity.

Tariff increases are crucial for the sector, which last saw a price increase of 25% -30% in 2019, and since then there have only been adjustments in the charts. For example, Airtel recently raised the price of the minimum charge plan (49 to 79 Rs).

“We believe the reforms have set the stage for an increase in ARPU in the coming months (equivalent to 25-30% in December 19) and lead to better sector economies,” Bernstein said.

Tariff increases are important to increase the average turnover per. user (ARPU), a key parameter for the sector. Jio has an ARPU of Rs 143.60 at the end of September. While Vi and Airtel have not yet announced their second quarter results, they had an ARPU of Rs 104 and Rs 146 at the end of June, respectively. In addition to tariff increases, there are other “handles” that the brokerage firm expects to play out.

“While tariff increases are the most important pricing bar, we are also seeing other levers play out. (1) Upgrade to 4G plans, (2) Increase in smartphone penetration / increase in data usage and (3) Monetization of digital / value-added services,” said Malhotra and Ma in the report. MPT

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!