Bharti Airtel continues to demonstrate outstanding growth in the Indian telecom industry, benefiting significantly from the recent tariff hikes, Motilal Oswal Financial Services said in a report.
The telecom industry’s Adjusted Gross Revenue (AGR), including National Long Distance (NLD), rose by 8 percent quarter-on-quarter (QoQ) to INR 674 billion (+13 percent year-on-year), driven by the tariff adjustments.
The implied industry ARPU increased by 9 percent QoQ to INR 194 per month, while the subscriber base declined by approximately 17 million (~1.5 percent) QoQ. Telecom expenditure as a percentage of nominal GDP inched up to ~0.9 percent in Q2FY25 (vs. 0.8 percent in Q1), still below the ~1.4 percent level seen before Reliance Jio’s launch.
Airtel emerged as the biggest gainer from the tariff hikes, securing ~49 percent of the incremental revenue market share (RMS) compared to its overall RMS of ~39 percent in Q2FY25. The industry’s revenue growth is expected to remain strong in the near term as the full impact of the tariff hikes unfolds over the next two quarters with subscriber churn stabilizing.
Bharti Airtel’s AGR, including NLD, increased by 11 percent QoQ to INR 260 billion (+19 percent YoY), with implied ARPU rising to INR 224 (+11 percent QoQ). Airtel’s incremental RMS was robust at ~49 percent in Q2FY25, highlighting its ability to capture a disproportionate share of industry growth. In comparison,
Reliance Jio’s AGR, including NLD, grew by 7 percent QoQ to INR 280 billion (+14 percent YoY) as its implied ARPU improved by ~7 percent QoQ to INR 199.
Vodafone Idea (Vi) continued to lag behind, as its 7 percent QoQ ARPU improvement was countered by a decline in subscribers, leading to a modest 5 percent QoQ revenue growth to INR 97 billion. Other players, primarily BSNL, witnessed an 8 percent QoQ increase in revenue (+7 percent YoY) to INR 38 billion, driven by subscriber share gains and a ~6 percent QoQ increase in implied ARPU.
The decline in the overall subscriber base was consistent across all circle categories at ~1.3-1.6 percent QoQ. However, the impact of tariff hikes was most pronounced in Circles A and B, where ARPU increased by 9-10 percent QoQ, whereas Metros and C Circles saw ~7 percent QoQ ARPU growth.
This trend led to a revenue uptick of ~10 percent and 8 percent in Circles A and B, respectively, while Metros and C Circles recorded a lower ~7 percent QoQ revenue growth. Bharti Airtel was the biggest gainer across A, B, and C category circles, while Vi led revenue growth in Metros with a 14 percent QoQ increase.
Since September 2019, the telecom industry’s ARPU has nearly doubled from INR 98 to INR 193 in September 2024, mainly driven by three rounds of tariff hikes in December 2019, December 2021, and July 2024.
Despite this significant ARPU growth (~15 percent CAGR over the past five years), the industry’s total subscriber base has declined to 1.15 billion in September 2024 from 1.17 billion in September 2019. Adjusting for the growth in M2M/IoT SIMs, the decline in core subscribers would have been even more pronounced. As a result, India’s quarterly telecom revenue has nearly doubled (+96 percent) since September 2019, reflecting a ~14 percent five-year CAGR.
Bharti Airtel and Reliance Jio together accounted for ~97 percent of the industry’s incremental revenue since September 2019, with Bharti Airtel emerging as the biggest beneficiary of tariff hikes. Airtel’s implied ARPU has surged 2.2x over this period, delivering a ~17 percent five-year CAGR, ahead of Jio’s ~13 percent and Vi’s ~12 percent CAGR.
The significant improvement in the proportion of data subscribers has been a key factor in Airtel’s industry-leading ARPU. Bharti Airtel’s revenue has grown ~2.6x since September 2019, reflecting a ~21 percent five-year CAGR, with its incremental revenue market share at ~48 percent, much higher than its current ~39 percent RMS.
Reliance Jio’s incremental RMS over the same period stood at ~49 percent, driving a ~2.4x increase in revenue (~19 percent five-year CAGR). In contrast, Vi’s revenue increase was a modest INR 6 billion (~7 percent) since September 2019, with subscriber churn offsetting the benefits of tariff hikes, resulting in only ~2 percent incremental RMS.
Bharti Airtel’s consistent ability to capture the highest share of incremental industry revenue, sustain superior ARPU growth, and expand its market leadership underscores its strong positioning in the Indian telecom market. The company remains well-placed to benefit from future industry trends, supported by its premium customer base, network investments, and strategic execution.
Baburajan Kizhakedath
