Reliance Jio and Bharti Airtel, India’s top two telecom operators, are set to report modest sequential growth in their fiscal fourth-quarter India mobile revenue, supported mainly by strong broadband user additions in the absence of tariff hikes, analysts said.
Vodafone Idea (Vi) is likely to report a sequential dip in its March-quarter revenue, stung by continued heavy customer losses.
Jio and Airtel, though, are likely to report flattish operating margins, weighed down by higher 5G-related costs, the analysts said.
But experts expect Airtel to turn in a better average revenue per user (ARPU) than Jio, helped by strong 2G-to-4G conversions, rising postpaid user penetration and strong data usage. The one less calendar day in the fourth quarter could play spoiler for Jio on the ARPU front, they said.
However, overall Jio is slated to add more customers than Airtel amid continued market adoption of its affordable internet-enabled feature phone, Jio Bharat.
“We expect the overall telecom sector to see a moderate revenue growth of 2.1% QoQ (quarter-on-quarter), driven by both an increase in subscribers and mix led ARPU improvements,” Motilal Oswal said in research note. “But the absence of tariff hikes, slow market share shift from Vi, and the gradual 5G ramp-up have not significantly contributed to revenue growth, and may potentially lead to a moderation in revenue growth over the next few quarters, in contrast to the 4-5% sequential growth witnessed in the last few years.”
According to BofA Securities, Bharti’s ARPU may inch up QoQ, led by premiumisation and strong momentum of the broadband business, while it expects flattish QoQ ARPU growth for Jio. It further expects Airtel’s India cellular revenue to increase by 3.2% QoQ in Q4 of FY24, driven by 3.9 million net adds and 1.6% QoQ implied ARPU improvement.
Morgan Stanley, in turn, expects Jio’s March-quarter revenue to rise 2.3% sequentially, driven largely by 11.5 million subscriber additions. By contrast, Vi is expected to lose another 2 million customers, likely resulting in the company’s revenue dipping by 1.6% sequentially.
Vi’s pending 5G rollout has made it tougher for the cash-strapped telco to retain customers, especially as its financially-stronger rivals, Jio and Airtel, have concluded their pan-India rollouts. The telecom JV of UK’s Vodafone and India’s Aditya Birla Group, though, is counting on closing its targeted ₹45,000 crore fundraise in the June quarter, FY25, to help it catch up on the 5G deployments front.
Analysts estimate that Jio and Airtel’s India wireless service Ebitda (earnings before interest, taxes, depreciation and amortisation) margins will see flattish growth-around 7 basis points (bps) sequentially-in the fourth quarter. Kotak Institutional Equities said in Airtel’s case, this is due to higher 5G-related costs in the P&L and in Jio’s case as the latter continues to capitalise 5G-related costs.
Morgan Stanley expects Airtel’s India business capex to stay elevated at around ₹7,700 crore amid the high focus on expanding rural coverage, which should help the nation’s second-largest telecom operator gain revenue market share in the coming quarters.
The global brokerage estimates Jio’s Q4 profit after tax (PAT) to rise by 1.7% sequentially to ₹5,299 crore.
Airtel’s profit is estimated to dip 7.3% q-o-q to ₹2,264 crore. The Sunil-Mittal led company is estimated to report modest consolidated revenue growth (0.4% sequentially) to Rs 39,400 crore in the fiscal fourth quarter due to adverse currency movements in its Africa business.
