Telecom Giants' ARPU Rises Despite Subscriber Loss, Future Hinges on 5G Expansion

Private telecom operators in India saw a rise in average revenue per user (ARPU) due to tariff hikes, despite losing subscribers. Bharti Airtel, Reliance Jio, and Vodafone Idea reported higher ARPU figures. The sector anticipates further stability with 5G expansion and government support for VIL's revival.

In the latest quarterly analysis by Centrum, private telecom operators suffered a decline in subscriber numbers but witnessed a notable increase in average revenue per user (ARPU) attributed to recent tariff hikes. This uptick in ARPU, especially pronounced in the wireless segment, followed the tariff adjustments introduced in July 2024.

Bharti Airtel leads with an ARPU of Rs 233 per month for the quarter, climbing from Rs 211 per month at the start of FY25. Reliance Jio's ARPU increased to Rs 195 per month from Rs 182, while Vodafone Idea (VIL) reported a rise to Rs 156 per month from Rs 146. The report predicts the full impact of these tariff hikes, poised to further elevate ARPU, will manifest over the coming quarters. However, the price adjustments led to a decrease in subscriber numbers due to SIM consolidation.

During this period, Bharti Airtel shed 2.9 million mobile subscribers, bringing its total to 352 million. Reliance Jio experienced a loss of 10.9 million subscribers, totaling 479 million, and Vodafone Idea's subscriber base fell by 5.1 million, primarily within the 2G segment, reaching 205 million. The quarter also witnessed increased porting to BSNL, the government-owned telecom provider, which did not raise its tariffs, attracting users from private networks.

The report indicates SIM consolidation may conclude by the third quarter of the fiscal year, projecting continued ARPU growth as users transition from 2G to 4G and increase in post-paid subscribers. Data and voice usage are expected to rise with this migration. As Airtel and Reliance Jio expand their 5G coverage across India, data consumption is predicted to drive further revenue and ARPU increases.

With reforms brewing since September 2021, the telecom sector is inching towards stability. Consistent tariff hikes since December 2019 have steadily boosted operator ARPUs. VIL's revival strategy includes government equity, capital raise discussions, and significant CAPEX funding plans while eyeing a 5G launch. Although its debt remains high, Indus Towers' growth and expected resolution of receivable issues could bode well for VIL's fiscal health.

(With inputs from agencies.)