5G Monetization Challenges for Indian Telecoms Amid Tariff Hikes

Indian telecom companies, including Bharti Airtel, Reliance Jio, and Vodafone Idea, are struggling to raise tariffs amid the 5G rollout, with average revenue per user (ARPU) increasing only 1-3% sequentially in the December quarter. Significant capital expenditures and a competitive landscape contribute to the delay in tariff hikes, which impacts investors' concerns. Revenue growth is expected to moderate, while limited 5G use-cases and monetization opportunities also hinder ARPU growth.
5G Monetization Challenges for Indian Telecoms Amid Tariff Hikes

In the December quarter, the average revenue per user (ARPU) for Bharti Airtel Ltd, Reliance Jio, and Vodafone Idea Ltd ranged between ₹135-193, marking a modest 1-3% increase sequentially. The growth potential for Indian telecom companies due to the 5G rollout is significant, yet it comes with challenges like substantial capital expenditures (CAPEX) and increased debt. Consequently, investors are primarily concerned about the companies’ inability to raise tariffs.

Airtel highlighted that a ₹300 ARPU is essential for an acceptable return on capital employed, which was below 9% for its India business. However, the short-term outlook for tariff increases remains weak. Jefferies India believes that Jio’s underperformance in subscriber numbers and Bharti’s decision to capture market share from Jio in rural areas could postpone tariff hikes.

The competitive landscape is a key factor in delaying tariff hikes.

Avishek Datta, a research analyst at Prabhudas Lilladher, stated that elevated churn rates in the industry hinder any significant price hikes. Until subscriber migration slows down and operators reach a consensus, the reluctance to raise tariff rates is expected to continue.

Revenue growth for these companies is anticipated to decelerate in upcoming quarters, and there is no clear timeline from management for hikes. Additionally, limited 5G use cases and a lack of monetization opportunities in the short term do not bode well for ARPU increases. Telecom companies are concentrating on expanding 5G penetration and migrating users from 4G to 5G services. An anonymous analyst commented that 5G premium monetization is unlikely until this transition occurs.

Airtel and Jio are expected to gain market share at Vodafone Idea’s expense, but the extent of the benefit remains uncertain. Airtel’s shares have dropped by 11% from their 52-week high, while Vodafone Idea’s shares have plunged by nearly 42%. Government reforms will support Vodafone in the short term, but delays in fundraising continue to be a burden. According to JM Financial Institutional Securities, Vodafone Idea’s ARPU must soar to about ₹380 by FY27 to meet its payment obligations.

Jefferies asserts that the long-term outlook for tariff hikes has improved due to the government acquiring a 33% stake in Vodafone Idea. However, the weak near-term outlook on tariff hikes may limit potential upsides for these stocks.

Additional News

The Icelandic government has initiated a program to assess the suitability of Low Earth Orbit (LEO) space-based connectivity across the Arctic nation in partnership with a satellite communications company, OneWeb. Iceland will initially evaluate OneWeb’s Global Connectivity Solution over the course of a three-month trial period. It will then have the option to extend services indefinitely, which could include the deployment of additional ground-based infrastructure as well as airborne, maritime, and on-the-pause/on-the-move UTs.
SCF announced the winners of the SCF Industry Awards 2023 at an awards ceremony during Small Cells World Summit in London. The SCF Industry Awards is independent awards event supporting technical innovation in, and the deployment of agile, cost-effective, scalable, cellular infrastructure and solutions by established and emerging service providers.
Meta Platforms is in negotiations with Magic Leap for a possible long-term collaboration. While this partnership could aid Meta’s metaverse goals, Magic Leap’s waveguide technology, despite its flaws, is regarded as valuable. This comes as Meta continues investing in the metaverse despite investor dissatisfaction, and as it strives to reduce reliance on Chinese manufacturing.
Thailand the market for data centers is predicted to grow at a rate of about 25% over the years 2019-2028. The country is home to more than 47 million Internet users, which means the dependence on digital infrastructure for the rapidly expanding economy and society is increasing and numerous Chinese, US Cloud companies are preparing in the country to offer Cloud solutions to the market.
The article explores how the combination of 5G, AI, and automation changes the job market and creates new opportunities for workers and employers. It highlights the importance of 5G for remote workers, the role of AI in automating routine tasks and providing insights, and the impact of automation on the job market. The article also discusses the need for workers and employers to stay ahead of these changes by acquiring new skills and preparing for the jobs of the future.
The article explores the transformative impacts of 5G networks and augmented reality (AR) / virtual reality (VR) on consumer interactions, shopping habits, and entertainment preferences. These technologies enhance the user experience with real-time, immersive applications, consequently reshaping purchasing decisions and engagement with brands. Industries like retail and entertainment have embraced this shift, offering immersive and interactive experiences like virtual try-ons and immersive gaming. Moreover, sectors such as healthcare and education have harnessed these technologies to increase accessibility and improve service delivery. However, the article also highlights challenges such as privacy, security, and the potential digital divide. It emphasizes the importance of inclusive technologies and services, as well as the ethical use of these technologies, advocating for industry standards and best practices to ensure equitable benefits and minimize negative impacts.
The article explores how 5G, AI, and AR/VR are transforming a range of vertical industries, including manufacturing, transportation, energy and utilities, healthcare, education, retail, mining, agriculture/agritech, and smart cities. It highlights the benefits of these technologies, including increased efficiency and productivity, improved customer satisfaction, and new opportunities for growth. The article also discusses the challenges associated with these technologies, including privacy and security concerns and accessibility issues. The article concludes by emphasizing the importance of inclusive technologies and services, and the responsible and ethical use of these technologies, in order to ensure that the benefits of 5G, AI, and AR/VR are accessible to all and used for the betterment of society.
The private network revolution is transforming how businesses secure their operations and data by leveraging connectivity and emerging technologies. These dedicated private networks offer enhanced security, improved network performance, scalability, better control, and support for edge computing, network slicing, and IoT applications. As a result, businesses can embrace Industry 4.0, leading to increased efficiency and automation. While there are challenges to consider, such as cost, regulatory requirements, and integration with existing infrastructure, businesses are adopting these technologies and securing their future in the digital landscape.
Scroll to Top