ICICI Direct: Telecom Sector Outlook - Postpaid — New Tariff Battleground
The Netflix Inc. application (app) is demonstrated on an Apple Inc. iPhone 5s (Photographer Andrew Harrer/Bloomberg)

ICICI Direct: Telecom Sector Outlook - Postpaid — New Tariff Battleground

Bookmark

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Direct Report

The rollout of postpaid tariff by the new operator has multiple ramifications for it as well as the incumbents.

The plans, while at similar tariff levels of incumbents (except for base tariff that is 20% cheaper than Bharti Airtel Ltd.’s offering), largely have the benefits of three major over the top (Netflix basic, Amazon Prime and Hotstar VIP) subscription as the key attraction, apart from family packs and international roaming in higher plans.

We see the offering having potential to drive at least some churn from incumbents, unless they match the OTT offers.

Matching of the offering, on the other hand, could result in additional annual costs to Airtel and Vodafone Idea Ltd.

However, a large chunk (more than two-thirds) of postpaid category in our view, is driven by corporate connections in India (more sticky and mutual terms based).

Thus, response of non-corporate segment will be key to churn. The announcement, however, puts Vodafone in a spot, as it would have to weather churn through cost increase as well as strive to raise tariff for survival.

Click on the attachment to read the full report:

ICICI Direct Telecom Sector Update.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.