Jio, Airtel profitability to get a boost as 5G capex, customer churn moderate
India's top two telecom operators, Reliance Jio and Bharti Airtel, are likely to post improved profitability and cash generation through fiscal 2025, on the back of a likely moderation in 5G capital expenditure and customer churn from this quarter, FY24 onwards, said analysts.
«Capex will remain elevated in 2QFY24, but we expect moderation in 2HFY24, which will help improve profitability and cash generation...Airtel and Jio are well positioned over the medium-term with growth levers such as subscriber upgrades, market share gains and tariff hikes that are just a matter of time,» BNP Paribas said in a note.
Jio and Airtel managements have been guiding for a moderation in network capex from FY25 onwards with accelerated pan-India 5G rollouts likely to be concluded by December 2023 and March 2024, respectively.
«Bharti's management capex guidance implies (annual) India business capex could decline to ₹20,000 crore from FY25 (versus ₹28,000 crore in FY23 and a similar guidance in FY24), though we continue to conservatively build in ₹27,000 crore for FY25,» JM Financial said.
Jio, with more than 62 million 5G users, and Airtel, with over 50 million subscribers for the service, have been expanding their networks since the launch in October 2022.
Loss-making Vodafone Idea (Vi) has yet to announce its 5G services launch as it is yet to close its much-delayed fundraising.
Analysts, though, believe serious monetisation of 5G services is at least a year away despite Jio and Airtel recently taking first steps by launching AirFiber or 5G-based fixed wireless access (FWA) services in a few markets.
Some analysts expect Jio to take the lead in hastening monetisation of its 5G-based FWA services by bundling PayTV.
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