Telecom Q3 review: Airtel triumphs in Arpu battle, but Jio could win the war

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Subscribe to enjoy similar stories. Investors who wish to bet on India’s telecom sector have few pure-play options until Reliance Jio Infocomm is listed as a separate company. For now, tariff hikes have lifted all boats as far as the average revenue per user (Arpu) is concerned.

Vodafone Idea Ltd’s Arpu rose by ₹7 sequentially to ₹173 in the December quarter (Q3FY25) on a subscriber base of 200 million. However, it still makes losses. With nearly ₹2 trillion of debt, a significant portion being government dues, Vodafone Idea will spend most of its future cash flows on repaying this, even if its profitability improves.

This leaves little on the table for shareholders. Plus, its equity base continues to expand with frequent dilution. There’s hope the company will get some relief from the government in the form of a debt waiver, but this appears unlikely as of now.

Also read | ABB India at a crossroads: Profits soar but stock slump hints at trouble Meanwhile, Bharti Airtel Ltd’s Arpu of ₹245 in Q3 was way ahead of Jio’s ₹203. The gap widened to ₹42 from ₹38 in Q2, with Bharti’s Q3 Arpu rising by ₹12 sequentially and Jio’s by ₹8. This difference in the Arpu increase can be explained by two factors – Bharti Airtel has a higher share of postpaid users than Jio and the former’s 2G users are paying more after migrating to 4G.

While the gap between Arpu of the two rivals could continue, future tariff hikes for both should be similar. Consequently, the absolute revenue gain could be higher for Jio because of its larger mobile subscriber base of about 460 million versus 360 million for Bharti Airtel at the end of Q3 (excluding Bharti Hexacom’s 28 million or so subscribers). Hence, there is greater scope for an upside surprise in