Recent reports are hinting at potential telecom tariff hikes of 10-15%, which could have significant implications for both Indian consumers and investors. With the Indian telecom sector already being one of the most competitive in the world, these hikes could reshape pricing structures, service offerings, and the competitive landscape.
What is Happening
Telecom companies are exploring 5G-specific pricing strategies to enhance revenue in the evolving telecom landscape. Analysts from Jefferies suggest that Reliance Jio’s anticipated public listing in 2025 may drive the company to adopt higher tariffs to bolster growth.
Reliance Jio, Bharti Airtel, and Vodafone Idea, are considering a tariff increase of up to 10% in 2025. This follows a significant 25% hike implemented in July 2024 after a two-year hiatus.
The proposed tariff hikes could lead to a substantial increase in ARPU, potentially exceeding 25%. This boost is expected to support the telecom sector’s expansion in 2025. However, it’s noteworthy that Jio experienced a loss of 11 million subscribers following the previous tariff hike.
Reliance Jio
The shares of Reliance Industries are currently trading at Rs 1,326, up 4.75 percent from its previous close price of Rs 1266.45.
Reliance Jio Infocomm reported a 23.4% year-over-year increase in consolidated net profit for the September quarter, reaching ₹6,539 crore, up from ₹5,299 crore in the same period last year.
Revenue from operations rose by 18% to ₹31,709 crore, compared to ₹26,875 crore in the corresponding quarter of the previous financial year.
Additionally, the company achieved a 7.4% year-over-year increase in average revenue per user (ARPU), which stood at ₹195.1. Further, the company’s total subscriber base reached 478.8 million, marking a 4.2% increase compared to last year.
Bharti Airtel
The shares of Bharti Airtel are currently trading at Rs 1,639, at nearly 0.5 percent upside from its previous close price of Rs 1,630.20.
Bharti Airtel’s net profit for the September 2024 quarter increased by 168% year-over-year to ₹3,593 crore, up from ₹1,341 crore in the same period last year.
Revenue from operations rose by 12% to ₹41,473 crore, compared to ₹37,044 crore in the corresponding quarter of the previous fiscal year. The average revenue per user (ARPU) increased by 15% year-over-year, reaching ₹233, up from ₹203 in Q2FY24. As of December 2024, Airtel’s user base rose to 385.41 million.
Vodafone Idea
The shares of Vodafone Idea are currently trading at Rs 9.25 at an upside of nearly 3.5 percent from its previous close price of Rs 8.93.
Vodafone Idea reduced its net loss to ₹7,176 crore in the September quarter of FY25, down from ₹8,738 crore in the same period last year. Revenue from operations increased by 2% year-on-year to ₹10,932 crore. The 4G subscriber base stood at 125.9 million at the end of Q2FY25 vs 126.7 million as of Q1FY25.
Conclusion
While the proposed tariff hikes present opportunities for increased revenue and profitability, they also carry risks related to subscriber retention and market competition. Investors should monitor these developments closely to assess their impact on the telecom sector’s financial health.
Written by Shwetha Sairam
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