Airtel, not Jio, to gain the most from Vodafone Idea's troubles

Airtel, not Jio, to gain the most from Vodafone Idea's troubles
Sunil Mittal, chairman, Bharti AirtelBCCL
  • India’s second largest telecom company Bharti Airtel is likely to be the biggest beneficiary of Vodafone Idea’s troubles.
  • While Airtel already boasts of the industry-best average revenue per user (ARPU), thanks to higher quality subscribers, lower churn and higher consumption are now aiding the company’s bottom line.
  • Going forward, analysts have underlined why Airtel and not market leader Reliance Jio is expected to make the most out of Vodafone Idea’s troubles.
India’s second largest telecom company Bharti Airtel is likely to be the biggest beneficiary of Vi’s troubles, regardless of whether the Indian telecom market continues to operate as it is today with three players or becomes a duopoly.

Since Reliance Jio’s debut in 2016, the Indian telecom sector has seen a massive upheaval and consolidation. From nearly 9 active telecom companies in the private sector, only Jio, Airtel and Vodafone-Idea have active operations, and they account for 91% of India’s total subscriber base.

While Vodafone Idea is struggling to retain its subscribers and cut down on losses, Jio and Airtel have consolidated their leads and expanded their market share over the past two years. Vodafone Idea’s market share has fallen from 24% at the end of March 2021 to just 20.7% two years later.

Airtel reported a 50% YoY jump in its Q4 net profit to ₹3,006 crore. Better quality subscribers, increasing consumption and lower churn helped the company shore up its bottom line during the quarter.

“We are seeing lower churn and we are also seeing a growth in consumption,” said Gopal Vittal, chief executive officer and managing director, Bharti Airtel in a post-earnings call with analysts.


For context, while Vodafone Idea lost nearly 1.96 million subscribers per month in FY22 and FY23, Airtel added an average of 0.8 million subscribers per month while Jio added 0.3 million subscribers per month.

Net subscriber additions in FY22 and FY23

Reliance Jio-18.8 million26.1 million7.3 million
Bharti Airtel7.9 million10.5 million18.4 million
Vodafone Idea-22.9 million-24.0 million-46.9 million

Source: TRAI

Underlining Vodafone Idea’s steep fall is the fact that post the merger of Vodafone India and Idea Cellular in August 2018, the merged entity had 440 million subscribers. Fast forward to March 2023, its subscriber base has declined to 237 million, which is a decline of 203 million.

The analysts at Macquarie Research say that regardless of what happens to Vodafone Idea, the outlook looks bright for Airtel, ahead of market leader Reliance Jio.

Airtel the biggest winner regardless of Vodafone Idea’s survival

With Vodafone Idea’s troubles not showing any signs of receding anytime soon, analysts at Macquarie Research believe that Airtel could end up being the biggest winner instead of market leader Reliance Jio, estimating the telco’s subscriber base, average revenue per user (ARPU) and ROIC.

Return on invested capital, or ROIC, is a financial metric that measures a company’s ability to efficiently allocate assets to profitable ventures. Higher the ROIC, the better it is.

“The incremental operating leverage at Bharti Airtel is much higher than Jio due to an already optimized cost structure at Jio and with finance charges set to catch-up and sticky depreciation & amortization charges,” says Macquarie in its report, explaining why it expects Airtel and not Jio is expected to be the biggest winner regardless of what happens to Vodafone Idea.

The white knight


The first scenario involves the telco being bailed out via capital infusion and a growth in its ARPU to cover its liabilities over the next 10-15 years.

In this scenario, while Jio and Airtel are not expected to gain much in terms of subscribers, Airtel’s higher incremental operating leverage than Jio puts it in a better position. As a result, its ROIC is expected to rise from existing 6% to 10-14% by FY27, while Jio’s ROIC is expected to rise from 7% to 7-10% in the same period.

The slow grind

If things don’t change and Vi is unable to raise funds and invest in its network, analysts expect the telco to continue losing subscribers and its market share falling to just 15% by FY30.

In this scenario, Reliance Jio could expand its subscriber base to 500 million, followed by Airtel at 365 million and Vodafone Idea at 200 million.

Airtel is expected to take the lead in two other critical metrics – ARPU and ROIC. Its ARPU is expected to rise to ₹250 by FY27, while Jio is expected to remain in the second place at ₹235.

Airtel’s ROIC is expected to rise to 10-13%, with Jio once again in the second place at 7-10%.


Duopoly is the worst-case scenario for Vodafone Idea. If the telco winds down its operations, Jio and Airtel could gain in terms of subscribers as well as ROIC.

In this case, Jio’s subscriber base could rise up to 585 million by FY27, with Airtel coming in second place at 455 million.

However, Vodafone Idea’s exit could lead to even better ROIC for both Airtel and Jio, with Macquarie pegging Airtel’s ROIC to be in the range of 10-16%, while Jio is expected to remain in the second place with a ROIC of 8-12%.


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