Shares of Vodafone Idea Ltd rose over 2 per cent in Tuesday's trade ahead of the telecom operator's March quarter earnings on May 16. Ahead of its results, a report by Axis Capital suggested that a meaningful hike of around 25 per cent by telecom operators is likely post general elections.
Vodafone Idea's average revenue per user (ARPU) at Rs 145 in the December quarter was lowest among peers. Bharti Airtel reported APRU of Rs 208 and Reliance Jio Rs 145 in Q3.
Vodafone Idea offers highest leverage for tariff hike as a pure-play telecom operator, BofA Securities said in a note earlier this month. It noted that a 5 per cent ARPU increase leads to 12 per cent earnings per share (EPS) increase for Vodafone Idea.
Citi in a note this month said the Vodafone Idea management was optimistic on tariff hikes, expecting it anytime after elections, which it believes are imperative for the industry, given significant network & spectrum spends.
"Besides tariff hikes, ARPUs should additionally benefit from upgrading 2G subs to 4G, given 42 per cent of Vodafone Idea's subscribers are not yet on 4G (vs 29 per cent for Bharti," Citi said recently.
Citi expected two rounds of 15 per cent each 4G tariff hikes in 2QFY25E and 3QFY26E.
On Tuesday, Vodafone Idea shares rose 2.2 per cent to hit a high of Rs 12.88 on BSE.
“We expect a meaningful hike of around 25% by the operators in the near term on the back of a stable competitive environment, their need to improve profitability following heavy 5G investment, and continued government support,” ET quoted Axis Capital report as saying.
Vodafone Idea Q4 earnings
Ahead of its Q4 results, Emkay Global said it expects subscriber loss to continue for Vodafone Idea. It sees a loss of 45 subscribers against 46 lakh loss in the December quarter.
"We believe Vi would add 10 lakh 4G subscribers against 9 lakh additions in Q3FY24. ARPU is set to rise 1.1 per cent QoQ to Rs 147, led by increased prices of entry-level plans and up-trending, though it was slightly offset by 1 less day in Q4 vs Q3," Emkay said.
Overall, Emkay Global expects for Vodafone Idea to decline 0.8 per cent QoQ. It said Q4 margin growth would be flattish, with margin increasing a tad by 10 bps QoQ to 40.9 per cent, owing to lower marketing expenses.