According to the analysts, the telecom sector is expected to grow more than double to nearly 10% sequentially in the Q4FY22 when the full beneficial impact of sharp tariff hikes of last November hits home.
The revenue of the telecom industry grew at 4.5% and 4.2% sequentially in the second and third quarters of FY22.
Kunal Vora, head of India Equity Research, BNP Paribas, gives this information. He said that the telecom industry’s revenue is likely to see a jump in March FY22 due to the full impact tariff taken by the operators last November. However, the pace of 4G upgrades is likely to slow down in the coming quarters due to the increased cost of services.
However, Vora is expecting to grow the industry to the 4-5% level sequentially in April-June FY23, seeing the impact of the last tariff hike is likely to be largely captured in this quarter.
He added that the Vodaphone Idea, Reliance Jio, and Bharti Airtel’s combined revenue increased by Rs. 110 billion (13,700 Crore), which after adjusting for the elimination of ICU (Interconnect Usage Charges), reflects a revenue increase by 50% during the period.
The telecom companies have hiked their tariff recently, leading active users with a minimum cost of mobile services doubled to Rs 99 over the last two quarters, which are post hikes taken in July and November 2021.
This phenomenon is already reflected massive in clean-up of the low-paying customers in the second and third quarter of the FY22, which led the telecom market to boost active users base and improve its VLR (Visitor Location Registration) ratio to 87.6% in December 2021.
Gopal Vittal, MD of Bharti Airtel, said that we won’t hesitate to take another round of tariff hikes in 2022 as it looks to boost its ARPU to Rs. 200 in this calendar year. Although, he clarifies that the next price hike would only happen after the current wave of SIM consolidation eases.
SIM consolidation leads to a high drop in the number of mobile SIM cards in the market. This happens when the customers make their fresh choices about their preferred brand on quality service after the hike in prices.