Bharti Airtel, one of the leading telecom operators in India, will need another four to five years to reach its average revenue per user (ARPU) goal of Rs 250. Morgan Stanley, in a note, said that ARPU growth would boost the telco’s revenues and increase free cash flow. The ARPU will go up to the Rs 250 level only with multiple tariff hikes. But here’s what we have to consider. Over the next four to five years, a substantial number of users will also start purchasing 5G services. While 5G isn’t expected to come at a huge premium, it will still be more expensive than 5G. in addition to that, Airtel’s 4G customer base is also expected to expand as more legacy network users shift to 4G/5G. This will also boost the ARPU of the company. Bharti Airtel’s ARPU for Q4 FY22 stood at Rs 178, which is not far from Rs 200 now. In a single tariff hike, the telco would easily be able to cross the Rs 200 figure.
Bharti Airtel’s ARPU to Grow 41% Over the Next Five Years
According to an ET report, Morgan Stanley said that Airtel’s ARPU would grow by 41% over the next five years. But it feels like that is a very conservative number. In five years, I expect Airtel’s ARPU to easily touch Rs 300 levels. The telco has been expanding its product lines, and Airtel Thanks is something that users should not forget. There are millions of customers still consuming 2G services, and once they convert into 4G, the ARPU will go up again. Bharti Airtel wants to play itself as the premium player. Hence, its tariffs are always a notch above what Jio’s plans cost. Thus, the telco will always be at a certain advantage over Jio when it comes to ARPU comparison. With 5G, over time, the telco’s mobile revenues should go up significantly.
