Revenue of Big 3 telcos may grow robustly by 20-25% in fiscal 2023: CRISIL

The revenue of the Big 3 telcos – Reliance Jio, Bharti Airtel and Vodafone Idea – may rise by 20-25% in fiscal 2023 on the back of the tariff hikes taken last year, according to CRISIL.

“In fiscal 2023, ARPU should grow 15-20% due to the full-year impact of tariff hikes in fiscal 2022 and fiscal 2023 (anticipated in the second half). However, this will be partially offset by the ‘downtrading’ of recharges,” the rating agency said in a research note.

Telecom operators are also expected to spend incrementally on networks and regulatory Capex in fiscal 2023, which may impact the average revenue per user (ARPU) growth, and tariff hikes “could ease some pressure”.

“As a result, revenue of the top three players is expected to grow a robust 20-25% this fiscal. Earnings before interest, tax, depreciation, and amortisation) is seen expanding 180-220 bps for the year,” CRISIL said.

Fiscal 2021 was the first full year to include the December 2019 tariff hikes. During the year, ARPU rose 11% to nearly Rs 149, fuelled by a higher realization amid tariff hikes and customer ‘uptrading’, it noted.

“In fiscal 2022, ARPU growth slowed down to ~5%, driven by customer upgradations to 4G and the partial impact of tariff hikes taken in November 2021.”

CRISIL said Vodafone Idea’s loss of active subscribers led to losing of leadership in five circles, while its chief rival Reliance Jio gained six more.

“Interestingly, the increase in active subscribers has been driven by an increase in rural subscribers across category A, B, and C circles,” it added.

CRISIL Research expects rural teledensity to increase in fiscal 2023, aiding a 3-5% increase in total wireless subscribers, while the active-subscriber base is expected to grow faster at 4-6%. “This will drive aggressive competition in the rural markets where teledensity is low at 58% as of last fiscal”.

The private telcos lost 37 million subscribers last fiscal as SIM consolidation led to the shedding of inactive ones. But their active subscriber base grew 3% on year, or by about 29 million.

While Jio saw its total subscriber base fall sharply between August 2021 and February 2022, the share of its active subscribers reached ~94% in March 2022, compared with 78% in the first quarter of last fiscal as the active subscriber base remained unaffected because of SIM consolidation.

Similarly, for Airtel, the share of active subscribers improved by a percentage point to ~99% in the fourth quarter. It added ~11 million active subscribers during fiscal 2022.

But Vodafone Idea ~30 million active subscribers in fiscal 2022. It continued to witness a decline in its subscriber base because of low Capex in 4G and deterioration of services, while its peers have incrementally invested in 4G sites, CRISIL said.