Jefferies denotes: By FY25 mobile revenues, realisation per user could double in India
By MYBRANDBOOK
According to a recent note by Jefferies, mobile revenues and realisation per user in India may be double between financial years 2020 and 2025. With this the telecom sector has entered a phase of "tariff discipline" that is likely to sustain.
A comparison of mobile ARPUs (average revenue per users) of over 25 countries shows that India's mobile revenues-to-GDP ratio at 0.7 per cent is among the lowest versus countries with similar per-capita GDP, implying scope for a rise in ARPU. Jefferies claims ARPU could rise 3-5 per cent annually even beyond 2024-25, in line with trends across fast-moving consumer goods (FMCG) products and two-wheelers over the past decade.
India could see a doubling of sector revenues from an estimated USD 19 billion in 2019-20 to USD 38 billion in 2024-25. The report was issued last week. It further said that the Indian telecom sector has entered a phase of tariff discipline which is likely to sustain. This is because competition is at the lowest it has ever been, the market being a virtual duopoly.
It also remarked, "Secondly, Reliance Jio is now the market leader with 35 per cent revenue market share and continues to gain subscribers at an encouraging pace. Thirdly, Vodafone Idea is unlikely to be a potential price disruptor, given that it already faces cashflow pressures driven by USD 16 billion debt and USD 7 billion AGR (adjusted gross revenue) liabilities.”
The note said that even after the high growth phase, ARPUs in India can rise further by 3-5 per cent beyond 2024-25 as pricing discipline sustains. The Jefferies note on Bharti Airtel said the company is the key beneficiary of the rising tariffs and ongoing consolidation in the Indian telecom space.
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