Telecom Sector Check - Tariff Hike At Last, But No Structural Changes: ICICI Securities
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ICICI Securities Report
The much anticipated tariff hike has finally come – about two years from the previous hike in December 2019. The resultant ~17% increase in blended average revenue per user for Bharti Airtel Ltd./ Vodafone Idea Ltd. is in line with our anticipation.
The tariff hike will translate into consolidated Ebitda (ceteris paribus) increase of 12.6% for Bharti Airtel and 25% for Vodafone Idea (on low base).
Operators have effected the tariff increase across prepaid plans, but the significant hike in base 2G plans could lead to some slippage of subs.
We would have liked it more if the players had taken steeper hike in 4G data plans while maintaining affordability of 2G mobile services.
We were anticipating a change in tariff structure (despite assigning it a very low probability!) with moving away from unlimited data in base plan, which would have paved the way for premiumisation.
Reliance Jio’s introduction of Freedom plan did increase our hopes; hence, to that extent, the surprise element is missing which could have meant sustained ARPU increase.
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