InvestorQ : Why are telecom stocks like Bharti and Vodafone Idea seeing heightened interest? Is it because of the Jio factor?
Riya Dwivedi made post

Why are telecom stocks like Bharti and Vodafone Idea seeing heightened interest? Is it because of the Jio factor?

Answer
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rhea Babu answered.
4 months ago


While Jio is surely one of the key factors, there is expected to be a fundamental shift in mobile revenues and the ARPUs too and that is likely to favour the telecom companies. In a recent note by Jefferies, mobile revenues and ARPUs in India could double over the next five years. The brokerage has also noted that the tendency to undercut may not exist any longer as the industry has been now reduced to an oligopoly. Currently, India's mobile revenues-to-GDP ratio is at 0.7% which is among the lowest among various countries of similar economic stature. Even a plain normalization could lead to Indian telecom revenues doubling in the next five years resulting in a CAGR growth in revenues of close to 14.3%. The oligopolistic nature of the market will ensure that ARPUs could rise by 3-5% annually. Telecom sector revenues stand at $19 billion and that could double to $38 billion by 2025.