The latest notice from IIFL Securities also indicated that the tariff increase may not happen immediately and that instead there is a “high probability of a price increase in 12 to 18 months”.
“The reorganization of the industry after Jio entered the market has resulted in a 3 + 1 market configuration. In our view, the industry is moving into a nearly two-player structure – Jio and Bharti – with Vi (Vodafone Idea) likely to lose RMS because it has financial problems, “it said.
Voda Idea was expected to experience an “accelerated RMS loss” due to the tight timeframe for legal payments and “significant tariff increases at least 12 months away.”
Bharti continues to be well positioned to benefit from an improved industry structure, a likely expansion in the wallet share and a decline in the spectrum and intensity of equipment investment.
“We anticipate Bharti’s mobile sales market share (RMS) in India to increase from 33 percent in the second quarter of fiscal 21 to 37 percent in three years. The Indian non-wireless and African businesses remain strong,” said IIFL Securities in its announcement.
Jio’s revenue market share in the second quarter of FY21 was 38 percent, Vodafone Idea’s 22 percent and state-owned Bharat Sanchar Nigam Ltd seven percent.
It has also pointed out a high likelihood of a price spike in 12-18 months.
“Jio has been cutting industry prices to a very good level for the last 4 years, but with the upcoming launch of the Jio Google smartphone, a price increase will likely be favored given the currently very low ARPU (Average Revenue Per User) level and the need for RILs $ 45 billion plus investing in Jio to generate reasonable returns, “it said.
Overall, the wallet share of telecommunications could rise significantly after falling to less than half its level 10 years ago.
The industry has bid the regulator for frequencies worth Rs.3.6 trillion over the past 10 years due to intense competition, supply shortages and high reserve prices. In addition, insufficient frequencies also led to high device intensity.
The availability of large amounts of spectrum and fewer bidders in future auctions should support economic capacity expansion and significantly increase Bharti’s return on investment (ROCE), the report added.