The telecom industry is poised for a 15% to 17% tariff hike following India’s general elections, according to an analyst report cited by Moneycontrol. The primary beneficiary of this anticipated increase is expected to be Bharti Airtel.
An analysis by Antique Stock Broking underscores the imminent nature of the tariff hike, emphasizing Bharti Airtel’s advantageous position. The last significant tariff adjustment, around 20%, took place in December 2021.
Bharti Airtel’s Growth Projection
Detailing Bharti’s average revenue per user (ARPU), the brokerage projects an increase from the current Rs. 208 to Rs. 286 by the end of FY27. This growth is expected to stem from various factors:
- A tariff increase of Rs. 55,
- Upgrading 2G customers to 4G brings in Rs. 10,
- Customers switching to higher data plans (4G and 5G) and postpaid services contribute Rs. 14.
Additionally, Bharti Airtel’s subscriber base is forecasted to grow at 2% annually, surpassing the industry’s growth rate of 1% per annum.
Antique Stock Broking anticipates Bharti Airtel entering its most financially robust phase in over a decade, driven by the tariff hike, 2G upgrades, robust enterprise, and fiber-to-the-home growth, and reduced capital expenditure post-5G rollout over the next three years.
Despite challenges such as Bharti’s unique 5G rollout strategy compared to competitors, the brokerage remains optimistic about Airtel’s subscriber base and growth trajectory. It suggests that current valuations do not yet reflect the emerging positive macro environment in the telecom sector.
Expected Timeline for Tariff Increase
These changes reflect a dynamic and evolving telecom landscape in India. And the expected timeline for the tariff increase is between post-elections, i.e., July to October 2024.
The elections, occurring across seven phases from April 19 to June 1, with results announced on June 4, have laid the groundwork for this impending shift.
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