• Mobile pricing unsustainable, but unlikely to change. Mobile pricing came under significant pressure, with Reliance Jio (Jio) using it as a key tool to gain market share. Given it is still short of its stated objective (50% share), no major improvement in pricing over the next 18 months. It should increase over long term as current pricing is unsustainable given the sector’s negative return profile.
• Jio's entry to expand the fixed broadband market. Fixed line in India has largely been a neglected sector so far by the operators and government. However, launch of services by Jio can provide the much-needed impetus, as the company can alleviate some of the constraints faced by the sector.
• Mobile pricing is one of the key drivers of Indian telecoms stock and analysis suggests that Vodafone Idea’s and Bharti Airtel’s stock prices are already building in ~30% increase in mobile ARPU by FY22E, suggesting limited upside in stock prices.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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