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Telecom sector revenue to grow at 13 per cent CAGR to $35bn by FY25, Jefferies

Revenues of the telecom sector are expected to grow at 13 per cent compounded annual growth rate (CAGR) to $35 billion (around ₹2,87,000 crore) over fiscal year 2025, with market share gains for Bharti Airtel (Airtel) and Reliance Jio (Jio), due to their 5G investments and tariff hikes.

“We expect 10 per cent tariff hikes each in the fourth quarter of FY23/24/25, which in turn, will drive a 13 per cent CAGR in sector revenues over FY23-25 (estimated) to $35 billion by FY25. Bharti and Jio should continue growing faster, and we expect 120-140bps market share gains for both operators over FY23-25,” said a report by equity research firm Jefferies on Thursday.

According to the report, during the second quarter this year, sector revenue grew by 17 per cent year-on-year to peak levels, with growth being driven by B and C circles, and Jio and Airtel gained 90bps/70bps market share, while Vodafone-Idea’s (VIL) market share declined to 18 per cent (-60bps vs FY22), led by market share losses in its top-three markets.

“During second quarter this year, net mobile revenues grew further by 17 per cent YoY to a new peak of $27 billion (around ₹2,21,400 crore), driven mainly by a 14 per cent y-o-y increase in average revenue per user (ARPUs), which at ₹182, is at a decade high,” the report said.

The growth was driven by B&C circles, which grew at 18-22 per cent y-o-y, partly due to a lower base, it said adding that while growth in Metros (9 per cent y-o-y) was driven by strong growth in active subscribers, growth in other circles was driven predominantly by ARPU growth.

“ARPU growth in Metro markets was soft at 2 per cent YoY, potentially due to higher levels of ARPU (₹204) in these markets…With active subscriber growth for the sector remaining low at 2 per cent y-o-y, growth in revenues is hinged on the timing of the next tariff hikes,” it added. The Hindu BusinessLine

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