Bharti Airtel, Vodafone Idea: What CLSA says on market share post tariff hikes

Foreign brokerage CLSA on Wednesday said the continued decline in market share for Vodafone Idea Ltd (VIL), 168 basis points (bps) in 12 months, with continued subscriber losses, is concerning. Bharti Airtel Ltd gained 180 bps market share over the same period, it said in a report on telecom sector.

The brokerage said the latest TRAI data reveals that India’s mobile sector revenue was up 8 per cent sequentially or 14 per cent YoY in Q2FY25. On annualised basis, it comes in at Rs 2,69,100 crore or $32 billion. CLSA said Bharti Airtel reported the highest revenue growth at 10 per cent QoQ or 19 per cent YoY in Q2, while Vodafone Idea and RJio clocked 2-14 per cent YoY growth during the same period.

Jio commanded a 41.6 per cent market share in revenue terms, followed by Bharti Airtel (38.6 per cent) and Vodafone Idea (14.4 per cent).

"Sector revenue is now 50 per cent higher vs the historical high of 1QFY17. Although RJio leads with revenue share of 41.6 per cent, its share was down 51 bps QoQ. Vodafone Idea also lost 35 bps QoQ share to 14.4 per cent. Bharti Airtel’s revenue share gain was notable at 86 bps QoQ to 38.6 per cent with the highest flow through of July 2024 tariff hikes," CLSA said.

It said growth across A and B-circles was led by Bharti Airtel reporting 9-12 per cent QoQ revenue growth, while RJio reported 8 per cent QoQ growth in both circle category. CLSA said it sees share domination by the top two, rising to 84 per cent by FY27.

The brokerage said Vodafone Idea’s equity fund raise is a positive and that the telco remains in discussions with banks for a Rs 25,000 crore or $3 billion debt raise.

"Further flow through of tariff hikes could result in further market share shifts, with the top two operators already controlling a dominant combined 80 per cent of sector revenue," it said.

CLSA has an outperform rating for Bharti Airtel with a target price of Rs 1,860. The brokerage has an underperform rating for Vodafone Idea with a target price of Rs 6 per share.