Airtel and Jio Ride 5G Wave with Steady Growth; Vodafone Idea Struggles Amid Customer Losses

Reliance Jio and Bharti Airtel are likely to show steady growth in the June quarter, thanks to more broadband users. However, the full impact of recent price hikes won’t be seen until the December quarter, according to analysts. Meanwhile, Vodafone Idea (Vi), which has been losing money, is expected to see a drop in revenue for the June quarter due to ongoing customer losses.

Analysts View

Analysts believe Airtel will perform better in terms of average revenue per user (ARPU) compared to Jio. This is due to more customers switching from 2G to 4G and an increase in postpaid users.

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Airtel’s ARPU is expected to increase slightly by 0.5% to Rs 210, while Jio’s ARPU is likely to remain at Rs 182 due to more customers using unlimited 5G data packs. Vi’s ARPU is expected to stay at Rs 146 as it hasn’t gained many 4G users.

Q1FY25

Axis Capital noted in a research report that they expect Bharti Airtel and Jio to report steady earnings for Q1FY25, helped by growth in the mobile segment and continued broadband momentum. However, the full impact of recent tariff hikes will only be seen from Q3FY25 onwards.

The start of 5G monetization and an increase in postpaid tariffs provide a positive outlook for earnings beyond the prepaid hikes done so far. Jio, Airtel, and Vi raised their rates starting early July, marking the first significant price increases in the telecom sector since November 2021.

Prediction

ICICI Securities predicts that Airtel’s India revenue for the June quarter will increase by 1.5% due to higher ARPU and strong performance in its non-mobile segment. Jio’s revenue is expected to grow by 2%, driven by more mobile and fixed broadband subscribers, with the latter boosted by increased adoption of 5G-based fixed wireless access (FWA) services.

In contrast, analysts expect Vi’s Q1FY25 performance to be weak due to a lack of network expansion. They estimate Vi’s revenue will decrease by 0.9% due to ongoing subscriber losses and stagnant ARPU.

VI’s Loss

Vi is working to stop customer losses by using some of the ₹23,000-crore equity capital recently secured to strengthen its 4G operations and launch 5G in key markets. However, ICICI Securities expects Vi to lose another three million customers to Jio and Airtel, which have stronger 4G networks and nationwide 5G operations.

In Q1FY25, Jio and Airtel are estimated to add 7.5 million and 4 million customers, respectively. Jio’s profit after tax (PAT) is expected to rise by 2.5% to Rs 5,468.4 crore. Airtel’s consolidated net profit is expected to jump 91% to Rs 3,959 crore, as the issues with its Africa operations due to currency depreciation are now largely resolved.