Telecom Sector I Tariff Increase Impact - Empirical Outcomes & What To Expect: ICICI Securities' Thematic View

ICICI Securities Report

In this note, we are trying to outline three topics relating to tariff increase:

1. Why track AGR market share?

2. AGR market share outcome during past two tariff increases.

3. Expectation for the upcoming three quarters from the recent tariff increase.

The empirical evidence suggests that stock performance closely tracks the market share trajectory. During the past two tariff increases, Bharti Airtel Ltd. performed well on revenue translation and Jio on AGR market share.

We estimate revenues in next three quarters may grow by ~20.5% each for Bharti and RJio, while Vodafone Idea Ltd.’s revenue may jump by 18.7%.

This implies market share for telcos may broadly remain unchanged.

Key to watch - translation to revenue from tariff increase (expect slight downside risk to our estimates), and AGR market share for next three quarters.

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