2023 likely a decisive year for VIL as third largest telecom player: Key factors
2 min read . Updated: 10 Jan 2023, 07:16 PM IST
Premium- VIL's financial crisis pertains and that may lead to market share loss for the company. Airtel is expected to lead the tariff war while peers, on the other hand, any development on Reliance Jio's public offer will be keenly watched.
The year 2023 is seen to be a decisive year for Vodafone Idea (VIL) as the third-largest player in the Indian telecom industry. Among the key monitorable for the sector in the current year are data adoption, tariff hike-led revenue growth, and 5G rollouts. VIL's financial crisis pertains and that may lead to market share loss for the company. Airtel is expected to lead the tariff war while peers, on the other hand, any development on Reliance Jio's public offer will be keenly watched.
Leading brokerage CLSA said in its report said that the telecom sector's Average Revenue Per User (ARPU) when adjusted for inflation is still 17% below the pre-Reliance Jio launch. It added, "...we expect Bharti (Airtel) to lead tariff hikes to ARPU of ₹236 by FY25, while Bharti targets ₹300 ARPU," as reported by PTI.
In its report, CLSA listed three trends to watch out for in the telecom sector such as 5G rollouts, monetisation led by top-end subscribers, and tariff hikes. Among other events to look out for will also be Reliance Jio's much-anticipated IPO.
The brokerage believes Bharti Airtel will lead in terms of tariff hikes, while Vodafone Idea and Reliance Jio will follow suit.
Highlighting VIL's financial crisis has not been averted, CLSA in the report stated that the company's fundraising is critical for 4G CAPEX and 5G rollout while delays may trigger further share loss --- which is expected to be a gaining factor for Reliance Jio and Airtel who are ramping up their 5G rollouts and are likely to continue in 2023.
For the December 2022 quarter, ICICI Direct said, "We expect Reliance Jio (Jio) to lead subscriber (sub) addition with ~6 million (mn) net sub additions during Q3. Bharti Airtel (Airtel) is likely to add a modest ~1 mn subscribers amid SIM consolidation. On the other hand, elevated churn at Vodafone Idea (VIL) is likely with a subscriber loss of ~6 mn."
ICICI Direct's note added, "ARPU growth is expected to be seen for all telcos with some subscriber mix benefits. We expect Jio, Airtel, VIL’s reported ARPU to be up 1.5%, 2%, and 2% QoQ at ₹180, ₹194, and ₹134, respectively. For Jio, revenues are expected at ₹23,206 crore, up 3% QoQ. Airtel’s India wireless revenue is expected to be up 2.1% QoQ at ₹19,359 crore. For Vodafone Idea, we expect overall revenues to be flattish QoQ at ₹10,620 crore."
"Telcos are expected to see residual benefits of lower SUC emanating from their recent spectrum purchase, while network opex for top two telcos will go up with 5G rollout," ICICI Direct's note added.
(With inputs from PTI) .
