According to a report by Bank of America (BofA) Securities, Indian telecom service providers (TSPs) are likely to raise tariffs by a significant 20 per cent after April-May 2024.
Meanwhile, BofA has also upgraded Bharti Airtel’s ratings to neutral from underperform, citing potential benefits from the tariff increases, which are expected after a two-year hiatus.
BofA noted that the extent of the tariff hike might take the market by surprise and consider Airtel to be in the most advantageous position among Indian telecom operators to leverage this hike, given its larger base of high-end users. It further added that telecom carriers could see greater overall benefits if Reliance Industries considers listing Reliance Jio, and if Airtel opts to list or sell equity in its data centre and payments bank businesses, thereby unlocking value.
As per the BoFA analysis, for the quarter-ended (QE) December 2023, Airtel, Vodafone Idea Limited (Vi), and Jio are expected to report steady financials. Revenue growth could reach up to 3 per cent, with earnings before interest, tax, depreciation, and amortisation (EBITDA) margins remaining flat compared to the previous quarter.
Furthermore, BofA analysis added that market share gains are likely to continue, favouring Jio and Airtel, owing to their ramped-up 5G services and increased capital expenditure. However, another potential boost could come from the fixed wireless access (FWA) business, which is expected to heighten data demand and increase broadband customer numbers for telecom operators.
