Bharti Airtel and Reliance Jio are likely to report sequential gains in mobile revenue and operating income in the fiscal third quarter, helped by continued 4G subscriber additions and the fully captured impact of the December 2019 tariff hikes.
Loss-making Vodafone Idea, though, is likely to continue losing customers and report sequential dips in revenue and operating income in the December quarter, primarily hit by lower network-related capex spends that have shackled its ability to compete effectively with Airtel and Jio on the 4G turf.
Axis Capital estimates Sunil Mittal-led Airtel to report an Rs 81.3 crore net profit in the December quarter, helped by continuing average revenue per user (ARPU) growth momentum that is slated to boost the telco’s India wireless revenues by nearly 6% sequentially.
An analyst at a leading global brokerage, who did not wish to be named, said “Airtel should return to the black in the third quarter, assuming there are no exceptionals such as regulatory costs or any accelerated write-offs towards network costs as in past quarters.”
Nitin Soni, senior director at global ratings firm, Fitch, expects Airtel to report sequential Ebitda and revenue growth as the telco’s market execution has been better than its nearest competitors, particularly in the last two quarters, helping grab more 4G customers than Jio.
“We expect Airtel to report decent ARPU growth in the third quarter with many more 2G users likely to go 4G, in turn, boosting data consumption, a scenario further helped by the revival in smartphone sales growth post the pandemic-induced disruptions.”
Axis estimates Airtel and Jio will have added 11 million and 6.1 million users quarter-on-quarter respectively, and Vi to have lost another 7 million users in the October-December period.
Analysts estimate Airtel and Jio to each report 2% sequential growth in ARPU, with Vi reporting a 0.4% growth. Jio’s ARPU improvement, they said, would be helped by annual recharges by residual subscribers at higher tariffs after the December 2019 tariff hike, and a mix change from addition of high revenue generating subscribers (opting) for Jio Fiber home broadband services.
Axis expects Jio to report 8.3% sequential rise in net profit while revenue is estimated to grow 3.7% on-quarter. Airtel’s consolidated revenue, in turn, is estimated to grow 3.8% sequentially. By contrast, the brokerage estimates Vi to report a 0.5% sequential dip in revenue with losses widening in the third quarter.
“Vi needs to urgently invest and spruce up its 4G operations, failing which, the quality of its 4G network will suffer and trigger further customer losses in the coming quarters,” said Fitch’s Soni.
Vi’s has said that its plans to raise up to Rs 25,000 crore had elicited a strong response from a host of global funds and is likely to be concluded soon. The telco still has more than Rs 50,000 crore of adjusted gross revenue (AGR) dues payable to the government over 10 annual instalments through March 31, 2031.