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New Delhi, The telecom industry is expected to take a 15-17 per cent tariff hike post general elections, according to an analyst report that termed the tariff increase in the sector as "imminent" with Airtel as the biggest beneficiary. The general election in the world's largest democracy is scheduled to be held in seven phases between April 19 and June 1, and results will be declared on June 4. "We expect the industry to take a 15-17 per cent tariff hike post the elections," a report by Antique Stock Broking said, as it described the tariff hike as imminent and Bharti as the biggest beneficiary. The last hike of about 20 per cent was in December 2021, it said. Offering a break-up of ARPU (Average Revenue Per User) for India's second largest telco, the brokerage note said Bharti's industry-leading current ARPU of Rs 208 is set to go up to Rs 286 by end of FY27. This will be driven by a tariff hike contributing Rs 55, upgradation of 2G customers to 4G contributing Rs 10, and customer upgradation to a higher data plan (both 4G and 5G) and moving to postpaid delivering Rs 14 gain. "We expect Bharti's subscriber base to grow at about two per cent per annum, against the industry growth of one per cent per annum," it said. The brokerage expects Sunil Mittal-led Airtel to ride its best financial performance phase in over a decade driven by tariff hike, 2G upgradation, strong growth of enterprise and Fibre-to-the-Home, and a fall in capex post the 5G rollout, over the next three years. "While challenges do exist as Bharti has chosen a different 5G rollout path versus key competitors, we believe it is unlikely to dent Bharti's subscriber base or growth significantly. We also believe valuations do not reflect the emerging highly positive macro telecom sector environment," it noted. Bharti has guided for a capex of about Rs 75,000 crore over FY24- 26, including the 5G rollout, it said, adding that post the rollout, the capex intensity is likely to fall significantly. "We estimate a capex of about Rs 75,000 crore over five years starting FY27, a significant drop from about Rs 19,000- 20,000 crore per annum current run-rate for the wireless business, while the total India capex including wireless, DTH, FTTH/ FWA, and Enterprise is likely to decline from the current Rs 26,500 crore per annum run rate (FY24' 26) to Rs 23,000 crore per annum (ex-spectrum/ AGR payment)," it said. The decline is "stark" as a percentage of revenue (down to 12 per cent from the current 21 per cent), given the long-term revenue growth of 10 per cent CAGR (compounded annual growth rate) primarily driven by ARPU growth that has been assumed. The top two telecom players in India have been gaining subscriber market share over the last almost 5.5 years, at the expense of Vodafone Idea and state-owned BSNL -- the former due to its financial woes and the latter its execution troubles. "While Vodafone Idea is down from 37.2 per cent in September 2018 to almost half at 19.3 per cent in December 2023, Bharti's market share is up from 29.4 per cent to 33 per cent during this period. Jio is the biggest gainer rising from 21.6 per cent to 39.7 per cent," it said. Revenue market share changes are directionally similar, although the swing is lower on account of varying price changes and the 2G versus 4G mix. "VIL was down from 35.3 per cent in 4QFY18 to 19.3 per cent in 4QFY23, while Jio was up from 24.4 per cent to 44.5 per cent and Bharti was up from 28.7 per cent to 35.8 per cent," the note by Antique Stock Broking said, outlining that while there has been some consolidation so far, yet there is no let-up in the competitive intensity.

The yen's fresh slide to a 34-year low complicates the Bank of Japan's deliberations on the timing of a next interest rate hike, as a resulting rise in import costs pushes up inflation but also hurts already weak consumption and the broader economy. If that weakness persists and discourages small firms from hiking pay, the central bank may prefer to wait at least until autumn before hiking, say five government officials and sources familiar with its thinking. The BOJ is seen raising this year's price forecast at the next meeting on April 26 and project inflation to stay near its 2% target through 2026, said two of the sources, underscoring its readiness to jack up rates from zero later this year. But the central bank is also likely to cut this year's economic growth forecast in the fresh quarterly projections, due in part to sluggish consumption and factory output, they said. "While wages might rise as projected, rising import prices from a weak yen could weigh on already soft consumption," said one of the sources. The inclination to go slow on interest rate hikes contrasts with the expectations of some currency traders and BOJ watchers who think the weak yen is a reason the central bank might lift rates soon. That expectation is based partly on the BOJ's tweaks last year to its bond yield control policy as efforts to cap long-term rates caused unwelcome yen declines that drew heat from politicians. Former BOJ official Nobuyasu Atago said the central bank's new "data-dependent" approach would mean it will wait until the April-June gross domestic product data, due on Aug. 15, to confirm whether growth would indeed rebound, before raising interest rates. "Unless the yen's fall become very rapid, the chance of the BOJ hiking rates by summer is very low," said Atago, chief economist at Rakuten Securities Economic Research Institute. MIXED BLESSING The weak yen is a mixed blessing for the economy. While giving a boost to exports, the yen's fall would hit households and smaller retailers by inflating the cost of fuel, food and raw material imports. The fallout from the weak yen comes at a delicate time for the BOJ. Having ended eight years of negative interest rates last month, central bank policymakers are carefully gauging the right timing to hike rates again. BOJ Governor Kazuo Ueda has said the threshold for another hike would be for big firms' bumper wage hikes to spread to smaller companies, and services prices to rise more reflecting the increase in labour costs. The signs have been mixed so far. Consumption has lacked momentum as rising living costs hit households, which may discourage firms from pushing up prices further. The BOJ said in a recent report that smaller firms may hike wages by as much as last year or even more. But actual data on smaller firms' pay won't be available until later this year, analysts say. "There are some positive signs on small firms' wage outlook but actual wage increases aren't broad-based yet," said one of the sources. "It might take until autumn to determine whether a positive wage-inflation cycle is firmly in place." Waiting until autumn would eliminate the chance of a rate hike in June or July, and heighten the possibility of action in the BOJ's September, October or December meetings. While the market's favourite projection on the rate hike timing is in October-December, some analysts are betting on the chance of action in July after Ueda's recent comments signaling scope of reducing monetary stimulus. While yen moves have contributed to the economic conditions that have triggered past BOJ policy shifts, the central bank's policy itself does not explicitly target the currency. In that context, Ueda has said the BOJ was ready to respond if yen moves have a huge impact on the economy and inflation. For now, however, concerns over Japan's fragile economy are likely to prevail and prod the BOJ to move cautiously. Two of the BOJ's nine board members dissented to the March decision to end negative rates. Even a hawkish policymaker like Naoki Tamura has said he prefers a "slow but steady" approach from here. Political factors also raise the hurdle for an early rate hike. On the day the BOJ ended negative rates, Prime Minister Fumio Kishida told reporters it was "appropriate that accommodative monetary environment will continue" in a sign of his preference of sustained ultra-low interest rates. "It was okay to end negative rates. But an additional rate hike is out of the question," a ruling party executive told Reuters. "Consumption is weak and it's unclear whether inflation will keep rising," said a finance ministry official. "There's no reason for the BOJ to rush into hiking rates again."

New Delhi, India's economic growth performance is 'good' and efforts now will be needed to sustain it, as there are concerns about the external environment, which are not quite settled, Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal said on Thursday. Sanyal noted that if the weather condition and the monsoon turns out to be favorable, then food prices will hopefully get tempered as well. This will lay out conditions that will be quite conductive for a growth momentum of 7 per cent or so, to be carried through even under somewhat uncertain global situations. "Our current economic growth performance, I would argue, (is) rather good. And the game now from here on is to be able to sustain it," he told PTI in a video interview. India's economy grew by better-than-expected 8.4 per cent in the final three months of 2023 -- the fastest pace in one-and-half years. The growth rate in October-December was higher than 7.6 per cent in the previous three years, and it helped take the estimate for the previous fiscal (April 2023 to March 2024) to 7.6 per cent. Recently, the Reserve Bank retained the GDP growth forecast of 7 per cent for 2024-25 financial year. "... While we are very confident of our domestic growth momentum in our economy, there are certainly concerns about the external environments, which are not quite settled," he said. Sanyal explained that exports continue to be quite weak, and there is not yet any momentum in global exports. Moreover, "very recently, there was spike in oil prices... going up to USD 91 per barrel because of tensions in the Middle East, destruction of Russian oil facilities by Ukrainian attacks and a variety of other reasons," the EAC-PM said. Asked about long-term solutions to high food prices, Sanyal said high food prices to a large extent is not a production problem, but actually a storage problem. "After all, Singapore and Dubai do not grow tomatoes and onions. Their onion and tomato prices don't go spiking in the way we have this and every year. Some vegetable or the other, onion, tomato, potato, whatever, something will go spiking off the charts," he said. Emphasising that investment in storage also means that private markets in agriculture become more vibrant and strengthened, Sanyal said, the issue can be solved by states by formulating various kinds of mechanisms for storage of vegetables. "Of course, the import and export of food material is also an issue. But yeah, but this (high) vegetable price issue... ultimately the solution to this issue is private markets and storage," he said. Asked why foreign direct investment is slowing down in India, Sanyal said it is not only happening in India, worldwide foreign direct investment has significantly come down. "But given the inquiries, we are getting the projects that are getting going, I am more than certain that the underlying momentum of FDI is very, very strong," he asserted. According to OECD data, India's share of global FDI fell from 3.5 per cent in the first nine months of 2022 to 2.19 per cent in the same period in 2023. The sharp drop of 54 per cent is much steeper than the overall global FDI inflow decline of 26 per cent in the first nine months. To a question on India's China-plus one strategy, he said what India needs to do is create conditions for certain kinds of industries to build up enough capacity. Sanyal pointed out that Apple not only moved its iPhone manufacturing facilities in India, it has also moved a large ecosystem here. "A lot of big companies are in the process of moving," he said, adding it takes a little bit of time. Responding to a question on unemployment in India, Sanyal said the fact of the matter is, there is a need to generate jobs. Emphasising that growth ultimately is the single most important solution for unemployment, he said therefore compounding this growth over the next several years is absolutely critical. Sanyal said he is not a believer that in the medium-to-long-run, there is any such thing as jobless growth. "All growth ultimately generates jobs. You can have skill mismatches. You can have all kinds of other problems, but you can not generate jobless growth over long periods of time," he opined. According to a recent International Labour Organisation (ILO) report, more than 80 per cent cent of India's unemployed workforce comprises its youth.

Traders spooked by Wednesday’s hotter-than-expected inflation print need not to worry, according to Jefferies’ David Zervos, who says risk assets can thrive with or without interest rate cuts by the Federal Reserve.The S&P 500 Index dropped more than 1% Wednesday after the latest consumer price index topped economists’ forecasts, renewing concerns that the Fed will delay any cuts. The technology-heavy Nasdaq 100 Stock Index slumped 1.2% as Treasury yields soared to a fresh year-to-date high near 4.5%.However, US equities are likely to continue their uptrend based on good economic news, which Zervos, the bank’s chief market strategist, expects to swamp discussions about keeping rates higher for longer.Continued strength in US economic data and signals from the Fed that there’s no rush to ease monetary policy have prompted investors to recalibrate their expectations for the timing and frequency of interest rate cuts. After Wednesday’s inflation reading, traders are now signaling that they anticipate policymakers dialing back rates just twice this year starting in September.Zervos said market expectations at the start of 2024 for six cuts by December was “almost as silly” as pricing in two cuts at the start of last year.While he sees hefty cuts as wishful thinking, he also argues that policy is still less restrictive than traditional measures. He points to the Fed’s balance sheet as a sign “the stimulative vestiges of quantitative easing are still with us.”“The market has been predicting doom on the economy because of high rate levels for a very long time,” Zervos wrote. “The missing link for the true economic storyline has been stimulative central bank balance sheets.”Minutes from the Fed’s last policy meeting released Wednesday also showed that policymakers “generally favored” slowing the pace at which they’re shrinking the central bank’s asset portfolio by roughly half.Moreover, Zervos said the market appears confident the Fed won’t lose control of inflation, pointing to the so-called breakeven rate on five-year, five-year forwards, an indicator of future inflation pressure, which he noted was hardly moving.“Risk assets should stabilize here and resume their uptrend as good news on the economic growth front will dominate the headwinds from a Fed that needs to stay a little higher for a little longer to fully anchor long-run inflation expectations,” Zervos said. He praised Fed Chair Jerome Powell for pushing back against cutting interest rates last year.“He looks more than vindicated today in his hawkish wait-and-see stance,” Zervos said, adding that former Fed Chair Paul Volcker “would be proud.”