Slow 4G uptake may hurt Airtel, Idea and Reliance's revenue

Bharti Airtel, Idea Cellular and Reliance Communications are seen reporting flattish voice revenue and sluggish data volumes growth in the January-March period, stung by slow uptake of 4G amid mounting interest and amortisation costs linked to past spectrum purchases, but analysts said rising call volumes could bring some cheer.
“4G uptake has been slow and is unlikely to help the surprisingly slow momentum of data volume growth,” said brokerage Kotak in a note.

Analysts expect No. 1 carrier Bharti Airtel and No. 3 Idea’s capex intensity to stay high this fiscal since both are in accelerated network rollout mode amid risks of spectrum auctions and Reliance Jio’s expected commercial launch.

However, they are of the view that delay in Jio's launch gives Bharti Airtel and Idea crucial headroom to lock in their high average revenue per user subscribers. But cheap voice rates are likely to have pushed Bharti Airtel’s and Idea's users to make more calls, with the two likely to report 8 billion and 10 billion minutes growth, respectively, said Morgan Stanley.

Bharti Airtel

Reporting on April 27 Analysts are split on Bharti Airtel consolidated net profit, with some predicting 3.6% to 30.7% year-on-year growth.

Others expect a 19.7% on-year decline from Rs 1,255 crore on expectations that strong growth in India wireless business may be offset by lower data realisation amid rising competition.

Kotak said it expects Bharti’s India wireless revenue to grow 3.6% sequentially to Rs 14,470 crore but its voice revenue per minute (RPM) could dip marginally.

It also expects the Sunil Mittal-led telco to report a “year-on-year slowdown in data revenue growth to sub-50% levels, pulled down by continued competitive intensity, leading to lower realisations”.

But Goldman Sachs expects the leader’s consolidated revenue to grow 6.1% year-on-year toRs 24,420 crore, helped by momentum in Bharti’s non-wireless businesses, like DTH, and sequential growth in Africa revenue after six quarters of decline. Credit Suisse expects the carrier’s monthly average revenue per user (ARPU) to dip toRs 194 from Rs 198, year-on-year.

Idea Cellular

Reporting on April 28 The company is expected to report a year-on-year 41-54% fall in consolidated net profit from Rs 941.8 crore amid slowing data volume growth, continuing high capex intensity and full quarter impact of rising interest and amortisation expenses linked to past two airwave auctions. “For Idea, we build stable data realisations but with a corresponding slowdown in volume trajectory, overall data revenue growth is expected to be closer to 40% y-o-y,” said Kotak in a note to clients.

Goldman Sachs, however, expects consolidated revenue to grow nearly 12% on-year to Rs 9,390 crore, helped by strong subscriber additions and overall growth in wireless business.

Morgan Stanley, in turn, expects Idea to report 5.2% and 6.6% sequential growth in revenue and Ebitda, respectively, but sees PAT down 45% quarter-on-quarter. Credit Suisse expects the No. 3 carrier’s monthly ARPU to inch up to Rs 180 from Rs 179 last year.

Reliance Communications

Likely reporting on May 7 India’s fourth-largest mobile phone operator is expected to report year-on-year 37-70% fall in Q4 consolidated net profit from Rs 228 crore, stung by plunging minutes of use and reduced voice revenue.

Morgan Stanley said RCom is tipped to lose 3 billion minutes following loss of 900 MHz airwaves in five circles. Accordingly, it expects consolidated revenue to fall nearly 8% year-on-year to Rs 5,254 crore, hit by mounting interest costs. RCom’s net interest payout is projected to rise 7.3% on-year to nearly Rs 715 crore.

It also expects RCom to report a “largely flat sequential revenue and Ebitda growth,” adding that “asset unlocking would be the key stock trigger”.

Goldman Sachs expects RCom’s monthly voice ARPU to fall to Rs 104 from Rs 110 last year