Analysts predict that Bharti Airtel and Reliance Jio will achieve their highest returns on capital invested this fiscal year. This comes as these top telecom companies complete 95% of their nationwide 5G rollouts and focus on increasing returns.
Macquarie Research estimates that Bharti Airtel’s return on capital employed (ROCE) will surge to 10-19% between FY25-28 from 2-6% over the past decade. This is expected due to tariff hikes, improved subscriber mix, and reduced capital expenditure. Airtel’s India mobile average revenue per user (ARPU) has increased to ₹209 in 4QFY24, and it is projected to reach ₹275 per month by FY27.
For Jio, returns are expected to improve from 6-7% to 11-12%, despite higher deployments. Jio’s cost structure is already optimized, making the impact of ARPU increase less pronounced on earnings.
Credit rating and research firm India Ratings (Ind-Ra) sees this as an “inflection point” for telcos, with 5G investments peaking in FY24. They expect revenue growth to remain in double digits over the next five years, driven by tariff hikes and reduced capital expenditure.
According to Axis Capital, Bharti Airtel invested ₹25,200 crore in its mobile segment, while Jio’s investment was estimated at ₹58,000 crore in FY24.
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