Saturday, September 23, 2023

Tariff-led growth, 5G key events for telecom in 2023, decisive year for VIL: CLSA

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The adoption of data and revenue growth led by rate increases, as well as the roll-out of 5G are important metrics for 2023, which according to a report will also be a decisive year for Vodafone Idea as a viable third player. Telecom industry average revenue per user (ARPU), adjusted for inflation, is still 17 percent below pre-Reliance levels Jio launch. “…we expect Bharti (Airtel) Leads Rate Increases to ARPU of Rs 236 by FY25, while Bharti Targets Rs 300 ARPU”, Leading Brokerage CLSA said the report on the telecom sector.

According to CLSA’s outlook, there will be three trends to watch out for when it comes to India’s mobile market in 2023. Among them are 5G rollout and monetization led by top subscribers.

“We see multiple events to watch led by likely rate increases and Trust Jio‘s (RJio) highly anticipated IPO,” the company said.

Private networks, if allowed, can take advantage of the business services of 5G operators.

India’s mobile sector revenues, after rising 14 percent in 2022, should grow again in 2023, driven by tariff increases, rising data penetration and usage.

CLSA expects that Bharti (Airtel) may lead to rate increases VI (Vodafone Idea Ltd) and Reliance Jio are likely to follow.

VIL’s financial crisis has not averted, with delays in fundraising and pending conversion of four-year interest on spectrum and AGR (Adjusted Gross Revenue) payments into equity for the government.

With VIL shares falling, Bharti and Jio together control 77 percent and should continue to gain market share, the report said.

“VIL fundraising is critical to 4G and 5G rollouts, while delays could lead to further share losses, which would be gains for RJio and Bharti, who will ramp up 5G rollouts in 2023,” it added .

The rollout of Jio and Bharti 5G will coincide with growing subscriber base and market share.

“We forecast that rising ARPU and data penetration will boost a CAGR of 14 percent in industry revenue to Rs 2,84,600 crore (USD 36 billion) in FY25,” it said.

According to the report, the new telecom bill will be “positive” for VIL.

“VIL, which is currently in a four-year moratorium on government contributions, could benefit from this law, which could have write-off options,” the report said.


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