Airtel shines as price hikes, healthy subscriber growth and Jio’s disappointing performance send the stock rallying

• Airtel shares were buzzing in the stock market on Monday (May 3) even as the benchmark indices were deep in the red for most of the day.
• Strong performance driven by price hikes, healthy average revenue per user (ARPU) jump and subscriber growth could propel Airtel ahead of its rival, Jio.
• Jio’s disappointing performance in the March 2021 quarter has also given Airtel investors another reason to celebrate.

Airtel’s fortunes are getting another boost as the telecom provider started reaping the benefits of price hikes combined with healthy subscriber growth.

To top it off, Jio’s disappointing performance in the March 2021 quarter has sparked investor sentiment in its rival – Airtel’s shares were buzzing even as the share market gyrated by nearly 800 points before staging a late recovery.

Since the beginning of this financial year (April 1), Airtel’s shares have surged by over 7% despite the increasing uncertainties in the market. In the same period, the benchmark Sensex has fallen by nearly 3%, while Reliance Industries – Jio’s parent company – has also fallen by nearly 3%.


Airtel’s strong showing over the last few quarters is visible – it has managed to add more subscribers in the second half of 2020 when compared to Jio. Not just that, Airtel also has a much higher active subscriber rate at 97%, while Jio’s active subscriber rate is just 79%.

Airtel subscribers spend more than Jio’s – and the gap is widening

Airtel subscribers spend more than Jio’s, which has actually seen its average revenue per user (ARPU) register a significant decline in the previous quarter.

According to a report by Motilal Oswal dated April 27, Airtel’s ARPU has increased by over 17% in the financial year 2020-21. In comparison, Jio’s ARPU fell by over 8% in the previous quarter alone.


The gap between Airtel and Jio’s ARPUs has widened from just ₹5 at the beginning of the previous financial year to ₹20 at the end of it.

Airtel doesn’t have the JioPhone baggage pulling it down

Unlike Reliance Jio, Airtel doesn’t have to worry about low-ARPU plans that Jio offers with the JioPhone.

For instance, between April and December 2020, Jio’s ARPU jumped by 16% – from ₹130 to ₹151.

However, the launch of JioPhone 2 – the company’s new low cost phone – dragged down the ARPU to ₹138 in the March 2021 quarter.

While this is still a positive jump overall for the entire year, it is an increase of just 6% year-on-year. JioPhone 2 alone could have resulted in a 10-percentage point hit to Jio’s ARPU.

Analysts are bullish on Airtel

The latest report by ICICI Securities, dated April 28, has given a thumbs up to Airtel’s performance in the last year.

Its analysis of data from the Telecom Regulatory Authority of India (TRAI) has revealed that Airtel has performed better than its rivals across metrics like 4G subscriber base, ARPU and data usage.

For instance, Airtel’s 4G subscriber base increased by 1.1 percentage point while Jio recorded a decline of 1.25 percentage point, quarter-on-quarter.

And as explained earlier, Airtel’s ARPU performance was also better than Jio’s – Airtel recorded a growth of 17% while Jio’s ARPU increased by just 6% at the end of FY21.

Based on Airtel’s performance, analyst house Motilal Oswal gave the company a ‘Buy’ rating with a target price of ₹720 – this is an upside of 28% when compared to the closing price of ₹561 as on May 3.

UBS, a multinational investment bank, gave Airtel the ‘Most Favoured’ rating.

While it remains to be seen if Airtel can sustain the rally its shares have seen today, the foundation has been laid by strong growth in ARPU and subscribers.

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