Under the leadership of Bharti Airtel, telecommunications service providers have been among the biggest winners in the telecommunications industry in recent trading sessions. It is on expectations that the rate increases in the previous quarter and the floor rates will help them offset the blow on revenues and subscribers in the context of the current foreclosure. Bharti has gained more than 9% in the last four days.
Emkay Research analysts believe that telecommunications remains one of the safest places in the current scenario. Telecommunications is one of the few services that has been exempted from the scope of the lock. Although brokerages have reduced subscriber estimates for telecom operators, such as Bharti and Reliance Jio, they have not reduced estimates of average revenue per user (ARPU).
They reduced Jio’s net subscribers for the March quarter to 14 million from previous estimates of 19 million. While the closure is expected to hinder subscriber additions, analysts believe rate hikes of up to 30% in December should help offset some of the blow on the revenue front.
CLSA analysts believe that if the risk of a decline in low-end subscribers and a reduction in dual SIM cannot be ruled out, there will likely be an increase in use, particularly among data users who account for approximately half of Bharti Airtel’s 283 million customers. In addition, 45 to 50% of its recharges are made online, which is positive.
The other positive element could be the implementation of floor rates, as requested by telecommunications operators. This could lead to a 50% increase in prices and thus contribute to improving achievements and average revenue per user. Motilal Oswal Financial Services expects operating profit of Bharti Airtel to increase by 15% during the fiscal year to reach 40,000 crore rupees and additional growth to come from ARPU or gains from market shares. The short-term trigger for telecom operators is the result of the ongoing Supreme Court hearing on the relaxation of payments for adjusted gross income.