Higher number of days in the last quarter, lower spectrum usage charges, tariff hikes, and lower fuel costs are seen lifting sector majors Bharti Airtel and Reliance Jio Infocomm’s earnings in Q2, according to analysts.
“We believe
is well-positioned to report strong revenue growth and improvement in profitability, led by higher tariffs and market share gains,” said in its report.
Additional days in the quarter and improved mix of subscribers are seen driving a 2-3 per cent sequential growth in the average revenue per user (Arpu) for Airtel and Jio. While
could also see growth in the Arpu, it will continue to languish given the structural challenges in business.
In terms of subscriber additions, Jio is set to lead, with brokerage Credit Suisse expecting the company to report net additions of 6 million for the quarter.
“We expect Jio to add the highest number of subscribers (9 million) for the second quarter in a row. Wireline subscriber addition momentum is likely to continue this quarter too, with addition of 0.8 million subscribers,” Emkay Global Financial Services said in its report.
For Airtel, brokerage house ICICIdirect expects the net subscriber additions to be modest at 2 million.
Analysts expect a 2-5 per cent sequential growth in Jio’s revenue for the quarter, aided by subscriber additions and higher Arpu.
“For
Jio, we forecast revenue to rise 3% QoQ, led by an increase in the subscribers’ base as the consolidation phase for Jio users is over, in our view,” BNP Paribas said.
For Bharti Airtel’s India business, analysts have pegged a 2-3 per cent sequential rise in revenue. The consolidated revenue and operating profit are expected to increase 2-4 per cent on -quarter, due to continued growth in the home broadband business, enterprise, and Africa operations.
Compared with Airtel and Jio, Vodafone Idea’s quarterly performance is expected to be sub-par due to continued loss of subscribers. However, higher Arpu and lower spectrum usage charges would provide some cushion to the operational numbers.
Analysts have pencilled in net subscriber loss of 3-4 million for Vodafone Idea in the reporting quarter.
Brokerage house ICICIdirect sees 2 per cent QoQ growth in Arpu for Vodafone Idea, while revenue is seen rising by a meagre 1.2 per cent to Rs. 10,538 crores. The rise in operation profit is also seen at a marginal 0.7 per cent QoQ.
Monitorables
The capital expenditure for Airtel and Jio has moved up in the last quarter with the rollout of 5G services, and this is seen rising further in the future.
Analysts will seek guidance on the planned capital investments towards 5G rollout from these telecom operators.
In August, parent
had committed a total investment of Rs 2 lakh crore for building 5G network, with plans to roll out 5G pan-India by December 2023.
Besides 5G capex plans, analysts will also look for an outlook on the trajectory of ARPU from sector leaders.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)