Consumer spending on mobile services set to cross pre-Jio levels in 4Q: Analysts

The average consumer spending on mobile services is set to rise sharply in the fiscal fourth quarter – the highest since Reliance Jio’s entry in late-2016 – on the back of steep tariff hikes taken last November-December by India’s top private carriers say analysts. 

“Consumer spending on mobile services is estimated to grow by around 8-9% sequentially in the March quarter – significantly higher than in the October-December period — on the back of sharp tariff hikes taken last November-December by the telcos,” said Kunal Vora, Head of Equity Research at BNP Paribas. 

Analysts reckon that consumer spending on mobile services in the fourth quarter of FY22 will be the highest in a quarter since Jio’s entry.

The telecom industry has been recovering from sustained price wars after Jio’s entry in September 2016. Jio had disrupted markets with free voice calls and low data prices that led to rapid consolidation and shrunk the sector down to just three large private players from as many as 10 operators per circle not too long ago. 

But subsequently, the sharp price hikes taken by Airtel, Jio, and Vi in the December quarter signalled the days of intense price competition in India’s debt-laden telecom sector. 

Overall “postpaid net revenues grew 15.7% on-quarter to Rs 4,450 crore in Q3FY22, while prepaid net revenues rose 3.1% sequentially to Rs 34,800 crore,” ICICI Securities said in a note analyzing the latest telecom sector performance data collated by the regulator. 

It added that net revenues for telcos (after deducting inter-company settlements) rose 4.4% on quarter to Rs 39,200 crore while (industry) ARPU (based on consumer spending) rose 5.3% sequentially to Rs 121 in the December quarter.