Reliance Jio, Bharti Airtel to have 70% RMS by FY2025: Report

According to a report by Bernstein, India's two largest telcos, Reliance Jio and Bharti Airtel will account for 70% of the Revenue Market Share by FY2025. On the same side, Vodafone Idea will amount to 20% of RMS.

Reliance Jio, Bharti Airtel to Dominate

The numbers came through in a report titled "Pricing Power - Indian Telecom - Is it Time Yet?", and Bernstein analysts said in the report that the tariffs will rise, backed by the latest telecom relief package.

As the brokerage stated, Jio will have 47% and Airtel will have 31% revenue market share by the midway of the decade. More importantly, Bernstein has also said that the industry no longer requires price status quo. That implies that the telcos can, and should, increase the tariffs.

On Monday, the brokerage had said, "We expect further market consolidation in 2025 with a revenue share of Bharti ~ 31% & Jio ~ 47%. Jio revenue share is expected to reach 47% and subscriber share to reach 48%".

For context, the current estimated revenue market share for Jio stands at 44% and Airtel's at 31%. Therefore, according to Bernstein, only Jio will grow in RMS and Airtel will remain right there. Incidentally, the brokerage estimates that Vi will lose out on RMS; going from 22% right now to 20% by FY2025.

The primary reason for the government to devise a bailout package for the sector was because of its financial situation. The said situation rose from the highly competitive, yet very low tariffs in the sector, fueled by Jio's entry into the sector back in 2016. The sector last saw a tariff rise in 2019; back then, the telcos raised the pricing by as much as 30%. Since then, the telcos have only resorted to minor adjustments here and there.

However, Bernstein said that the pricing status quo is no longer necessary. "Bharti has recently made 2G prepaid increases, and also guided ARPU at Rs. 200/Rs. 300 in the short/medium term. Jio has the #1 position in subscribers (~47%) and Vodafone has benefitted from the reforms and wants to push up prices to control cash flows", it added.

It further said, "We believe the reforms have set the stage for an increase in ARPU in the coming months (equivalent to 25-30% in December 2019) and lead to better sector economies".

Finally, in addition to tariff rises, the telcos have a few "handles" that will play out.

"While tariff increases are the most important pricing bar, we are also seeing other levers play out. (1) Upgrade to 4G plans, (2) Increase in data usage and (3) Monetization of digital/value-added services", the report added.