ARPUs to rise, user churn to subside for telcos in Q3FY25, say analysts

Rising data usage, premiumisation may push existing users towards postpaid in FY26

Telecom operators (telcos) are expected to report continuing growth in average revenue per user (ARPU) in the third quarter (October-December) of the current financial year (Q3FY25), analysts believe. The impact of SIM (subscriber identity module) consolidation, as a result of July's tariff hike, is also expected to subside, they said.

 

In Q3, Bharti Airtel is expected to see 17.7 per cent year-on-year (Y-o-Y) growth in ARPU to Rs 245, while Jio is likely to witness an 11 per cent rise to Rs 203, a note by ICICI Securities said. While Jio's growth may appear lower, it has a higher proportion of long validity subscribers, which translates to a staggered rise in tariff hike-led earnings, it pointed out. Meanwhile, Vodafone Idea (Vi)’s ARPU is set to rise 10.8 per cent to Rs 161.

 

"We see Bharti’s India revenue rising 24 per cent Y-o-Y to Rs 349 billion (Rs 34,900 crore) led by its mobile segment (20.9 per cent Y-o-Y) in Q3. Jio’s revenue is estimated to rise 15 per cent Y-o-Y to Rs 292 billion (Rs 29,200 crore), benefiting from tariff hike and fixed broadband. We expect Vi's revenue to grow 3.5 per cent Y-o-Y to Rs 110 billion (Rs 11,000 crore) due to subscriber losses, while its ARPU will likely rise on implementation of tariff hike. We expect a dip in 4G subscribers, as network rollout started only from November 2024," ICICI Securities said. 

 

ARPU growth for all players will be aided by the ongoing upgrades to smartphone/postpaid plans, a note by financial services group JM Financial said. It expects Jio’s ARPU to rise 4.5 per cent on a sequential basis to Rs 204, driving its revenue growth by 3.1 per cent sequentially, while Airtel is expected to register 4.8 per cent quarter-on-quarter (Q-o-Q) growth in its India wireless revenue, leading it to an ARPU of Rs 244.

 

Bharti Airtel's reported India numbers would include Indus Towers’ complete consolidation due to the change in company status to subsidiary, from earlier associate.

 

On the other hand, Vi's revenue is expected to grow only by 2.3 per cent as a net subscriber loss of 4 million partly offsets the 4.8 per cent sequential growth in ARPU to Rs 164.

 

After a brief impact of SIM consolidation, subscriber numbers of private telcos will likely start growing again from Q3. Airtel and Jio are estimated to add a total of 5 million and 3 million subscribers, respectively, while Vi’s subscribers may dip by 4 million, ICICI Securities said. The key metric of 4G/5G subscribers should remain stable for Airtel, which is expected to add up to 6 million subscribers in that category in Q3, while Vi is likely to lose 1 million subscribers.

 

Since the tariff hike was implemented, all three private sector telcos have seen major hits to their subscription numbers. Since July, Jio has lost the most subscribers at 16.48 million, while Airtel has managed to course through with a much smaller 3.6 million user loss. Vi has seen 6.8 million users abandon its service.

 

Telecom sector ARPU growth will remain strong at 14 per cent, while subscriber addition will come in at 4 per cent in 2025-26, global investment and asset management giant Bernstein said in a note on Monday.

 

"We expect higher data consumption, higher tariffs, and premiumisation of existing data users to high-value packs to continue, driving stronger ARPU. Indian telecom tariffs are low in absolute terms as compared with other global comparable markets, which should support potential tariff hikes going forward," it said.