According to analysts, Bharti Airtel'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, Economic Times reported.
Analysts have added that strong ARPU growth is likely to translate into high incremental operating margins and free cash flows to support Airtel's future investments, starting with an estimated $3 billion towards 5G-related spending, including spectrum costs in the upcoming auction likely next month.
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 Rs. 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.
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 smartphone daily segment after the last price hike in December 2021."
Further, BNP Paribas anticipates that Airtel will report strong revenue growth, improved profitability, and FCF (free cash flows) over the next three years, owing to higher tariffs and market share gains.
Airtel has announced a roughly 25% increase in retail prices in November 2021. The tariff hikes resulted in an increase in ARPU from ₹163 to ₹178 in the March quarter. As a result of tariff hikes, the company's consolidated net profit increased to 2,008 crores.
According to Trai data, Jio had the greatest share of the market with 35.28 per cent, Airtel was second (31.37 per cent), and Vodafone Idea was third (23.09 per cent) at the end of February. BSNL and MTNL, respectively, have 9.98 per cent and 0.28 per cent of the market.