Jio, Bharti Airtel and Vodafone Idea Phone Bills: What CLSA expects | All you need to know
Leader Jio has 100 mn Jio phone (4G feature phone) subscribers of total 398 mn while Bharti Airtel and Vodafone Idea have 131-144 mn feature phone.
In these corona pandemic-hit times, when an increasing number of people are using the internet, phone bills that need to be paid have become a reason to worry and everyone wants to know if there is relief on horizon. Well, CLSA has shed some light. CLSA has factored in 10-15% annual hikes for three telcos starting Q4 FY21. CLSA highlights the details about the intensified marketshare battle between Jio, Bharti Airtel and Vodafone Idea. They say the Telecom sector is awaiting TRAI decision on floor tariffs. CLSA remains positive on Jio and Bharti Airtel shares.
Why are tariff hikes delayed?
India mobile tariff hikes are delayed, as market share battle has intensified, with the sector remaining an oligopoly. Reliance Jio’s YTD revenue share gain has been 3% versus 20% in prior two years and Bharti Airtel at 32% share has had nil loss. Also, with all three operators’ postpaid tariffs at 150% premium to pre paid and Jio’s slowdown in 4G feature phone additions, likely tariff hikes will be led by 4G prepaid bundled plans. CLSA factors in 10-15% annual hikes for three telcos starting Q4 FY21 and with higher AGR / spectrum burden, Vodafone Idea will likely lead tariff hikes which are delayed, but inevitable. Sector also awaits a TRAI decision on floor tariffs.
Intensified market share battle
1) India mobile has remained an oligopoly as Vodafone Idea continued operations.
2) Further Vodafone Idea announced U.S. $3.4 bn fundraising and unleashed new brand / marketing.
3) With Vodafone Idea targeting to arrest share loss, the ground market share battle has intensified.
4) Reliance Jio YTD revenue share gain has been 3% vs 20% share gain in prior two years.
5) Bharti Airtel at 32% share has had nil loss even as Jio’s ramped up to 38% share.
6) Also Bharti Airtel had the highest flow among operators of Dec-19 tariff hikes.
Immobile postpaid subscribers
1) Post paid subscribers are least price sensitive and have 3x the average prepaid spend.
2) Bharti Airtel and Vodafone Idea postpaid base has remained resilient and with incumbent’s over 80% share of these high end subscribers Jio recently renewed effort to churn postpaid.
3) However all operators, including Jio postpaid tariffs are at 150% premium to pre-paid offers hence operators’ upcoming tariff hikes will unlikely be led by the postpaid segment.
Challenge of feature phone users
1) Leader Jio has 100 mn Jio phone (4G feature phone) subscribers of total 398 mn while Bharti Airtel and Vodafone Idea have 131-144 mn feature phone, mainly voice usage subscribers.
2) With these subscribers hit most by recession, this segment too will unlikely lead to tariff hikes.
3) Also Jio has seen a slowdown in 4G feature phone adds when it is a key target segment.
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Tariff hikes delayed but inevitable
1) In Dec-19 incumbents had increased bundled 4G (data + voice) prepaid tariffs by 25%.
2) Also Jio discount to incumbent’s tariff in postpaid has narrowed to 25% (from 100% earlier) and prepaid too Jio tariffs are now lower by only 0-20% (vs 100-50% earlier).
3) CLSA factors in 10-15% annual hikes for three telcos starting Q4 FY21 and with higher AGR / spectrum burden, Vodafone Idea will likely lead hikes which are delayed but inevitable.
4) Also awaited is TRAI decision on floor tariffs. CLSA remains positive on Jio & Bharti Airtel.
(Authored by Rahul Kamdar)
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