Bharti Airtel tariff hike imminent; Voda Idea may lose 50-70 mln subscribers in next 12 months: Fitch

“Our forecast is that we believe that blended ARPUs can actually improve to around 170 to 180 levels in the next 12 months. This could be because of two factors -- one is the headline tariff increase, and also the fact that there is an increasing migration of the 2G users to 4G higher-priced plan and as the smartphone growth will recover in the market that will also aid the ARPU growth,” said Soni.

He believes Bharti Airtel's rights issue will accelerate the capex investment in the company to exploit the opportunity given weakness at Vodafone Idea. He is of the view that Vodafone idea will lose 50 to 70 million subscribers in the next 12 months.

"So there is an opportunity for both Jio and Bharti to gain subscribers and revenue market share at the expense of Vodafone Idea. These investments through the rights issuance will help them to further strengthen their network position and to gain more subscribers, especially at the expense of Vodafone Idea," he said.

Bharti Airtel board approves up to Rs 21,000 crore rights issue

Bharti does have a very good balance sheet and have a strong position right now in terms of cash availability and cash access to the capital market and Indian banks. So this rights issuance is a positive move from the company. It demonstrates confidence in the strong growth potential in the next few years from the promoter group, Soni added.

According to Soni, Reliance Jio enjoys a strong market position given its better marketing execution as seen in the last few years.

“Reliance Jio is the market leader in terms of both revenue market share and subscriber market share and it has deep pockets now with all the equity the company has raised in the last few years. So its ability to capture the growth opportunities is probably higher at this point of time given their stronger balance sheet,” he said.

Moreover, the subscriber losses at Vodafone Idea -- over 50 percent of that will go to Reliance Jio given its better reach and better market execution, said Soni, adding that at the same time Bharti will also benefit from that because this is a large industry.

He believes as Vodafone Idea is weakening, both Bharti Airtel and Jio are going to benefit in terms of subscriber additions.

According to him, the telecom industry can easily accommodate three large players. But we are in a situation now where we are moving towards a private duopoly as it looks like there is no resolution on the balance sheet weakness at Vodafone Idea,, he said.

On ratings, he said, “We rate Reliance Industries at triple BBB flat, on a negative outlook but on the local currency idea, we actually rate Reliance at BBB plus with a stable outlook. Please note that this negative outlook really reflects the negative outlook on the sovereign, the underlying credit profile of both Reliance and Bharti is quite strong given their strong balance sheet.”

Currently, he said they rate Bharti at BBB minus with a negative outlook and believe that this Rs 2.8 billion equity issuance will improve their leverage profile, and will allow them to invest in the acquisition of 5G spectrum assets, and further invest in the critical fibre infrastructure, which they need to strengthen their market position and also to launch 4G in a couple of years.

Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.