Airtel ARPU News: Airtel’s ARPU likely to jump 41% in next 4-5 years to Rs 250

Bharti ‘s average revenue per user (ARPU) is estimated to jump nearly 41% in the next four to five years to ₹250, propelled by strong revenue and subscriber market share gains, say analysts.

These, they added, are likely to come on the back of multiple tariff hikes and steady subscriber gains despite the likely continuation of Airtel’s price premium over

Jio.

Strong ARPU growth, they added, is likely to translate in high incremental operating margins and free cash flows to support Airtel’s future investments, starting with an estimated $3 billion towards 5G-related spends, including spectrum costs in the upcoming auction likely next month.

Sunil Mittal-led Airtel’s ARPU, key performance metric for telcos, grew to ₹178 in the March quarter from Rs 163 in the one ended December.

Analysts estimate the telco’s revenue market share (RMS) to grow to 37% by FY24 from the 35.4% reported in the December quarter.

“Airtel’s domestic wireless business ARPU will improve to ₹250 over the next 4-5 years, which will generate high incremental Ebitda margins and free cash flow to support future investments,” Morgan Stanley said in a note seen by ET.

It added that Airtel gained subscriber market share across circles even after maintaining its price premium over Jio-currently at 3-25%. It expects the trend to continue, noting that “Airtel’s price premium over Jio is currently being maintained at 13% in the 4G smartphones daily segment after the last price hike in December 2021”.

Analysts said the phenomenon is reflected in narrowing of the subscriber market share gap between Airtel and Jio to 3.8% in the March quarter from as much as 6% in the quarter to September, FY22.

too expects Airtel to report strong revenue growth and improved profitability and FCF (free cash flows) over the next three years, led by its higher tariffs and market share gains.

It expects the telco to premiumise its prepaid subscribers to postpaid and offer them additional services, including broadband, that could drive ARPU further.