Telecom Sector Update : Steady quarter by Prabhudas Liladhar Pvt Ltd
Steady quarter
Telecom companies are likely to report a steady Q1FY27, supported by stable subscriber base and double-digit YoY growth in broadband subscriber additions. With limited clarity on tariff hike in the short term, premiumization will remain the primary average revenue per user (ARPU) growth driver. We expect double-digit top-line growth and EBITDA growth for Bharti Airtel, and Reliance Jio (Not Listed) while Bharat Hexacom and Indus Tower are set to deliver mid-single digit, top-line growth.
Subscriber additions continue: Total wireless subscribers increased by ~12.1mn, up ~1%, between March and May 2026. BHARTI and Reliance Jio continue to add subscribers while Vodafone (IDEA IN, Not Rated, CMP: INR 14), has managed to arrest its subscriber loss. Its Visitor Location Register(VLR) subscriber base has stabilized at 169mn. The industry added 1.3mn broadband subscribers during the similar period, driven by Fixed Wireless Access(FWA) additions (10-12mn YoY).
Non-tariff efforts continue to push up ARPU: Reliance Jio has introduced new plans in short validity periods of 30 days and 28 days. Cricket and gaming data packs have been introduced to rev up ARPU. On the contrary, BHARTI has introduced a new 365-day plan. It has increased tariff price of its 84-day recharge pack from INR 859 to INR 899 as well as tweaked offerings in its 28-day recharge packs.
Steady outlook for Q1; robust long-term stance: Q1 is likely to be a steady quarter. Apart from financial performance, near-term stock price performance of telecom operators may hinge on valuation that Jio Platform garners in its upcoming IPO. Jio Platforms has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on 19 June. It is a fresh-issue-only IPO of up to INR 270mn shares. Proceeds are earmarked to repay debt of Reliance Jio. In our view, India’s telecom sector is in a multi-year recovery, driven by ARPU improvement, structural data demand, and lower incremental capex. We are positive on BHARTI and BHARTIHE.
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