Analysts at ICICI Securities have estimated a 9.9 percent on-quarter and 24 percent on-year surge in revenue for Bharti Airtel India to Rs 34,900 crore, driven primarily by its mobile segment, which is expected to grow 5.3 percent sequentially and 20.9 percent annually in the third quarter of fiscal 2025.
JM Financials also forecasts a 4.8 percent QoQ growth in Airtel’s India wireless business revenue to Rs 26,000 crore and a 5.8 percent on-quarter rise in EBITDA to Rs 15,000 crore. The enterprise business is expected to post an EBITDA growth of only 1.9 percent QoQ, while the FTTH segment may see 7 lakh subscriber additions during the quarter.
Bharti's rival telecom service provider Vodafone Idea (Vi) too is likely to see a marginal 1 percent on-quarter and and 3.5 percent on-year growth in revenue to Rs 11,000 crore, mainly because of a churn in user base. Its average per-user revenue (ARPU) is, however, likely to improve due to implementation of tariff hikes, ICICI Securities noted.
A slightly different estimate has been put up by JM Financials with a projected 2.3 percent sequential growth in revenue to Rs 11,200 crore. The telco's EBITDA is expected to improve 3.7 percent QoQ to Rs 4,720 crore, despite a net subscriber loss of approximately 4 million.
“We have cut VIL’s FY25-27 revenue/EBITDA estimates by 2-8 percent, factoring in continued significant subs loss post the recent tariff hike and lower pass-through of tariff hike to its ARPU on account of higher subs down-trading practices given the high proportion of low ARPU segment subs in its subs mix,” JM Financials said.
Telecom operators implemented tariff hikes in July 2024, which boosted the ARPU in Q2FY25, and the residual benefit is expected to continue into Q3FY25, albeit with lower intensity.
Analysts project Bharti Airtel's ARPU to grow 5 percent QoQ and 17.7 percent YoY to Rs 245, while Reliance Jio's ARPU may rise 3.8 percent and 11.5 percent to Rs 203.
For Vodafone Idea, ICICI Securities expects the ARPU to increase 3 percent QoQ and 10.8 percent YoY to Rs 161, while JM Financials forecasts a slightly higher ARPU growth of 4.8 percent to Rs 164 for Q3FY25 from Rs 156 in the previous quarter.
Despite the ARPU growth, Vi is expected to continue losing subscribers, with a net base decline of around 4 million in Q3FY25. In contrast, ICICI Securities estimates that Jio may add 3 million subscribers, benefiting from strong net additions in fixed wireless access (FWA) 5G services, while Airtel is projected to gain 5 million subscribers.
"Jio's growth may appear lower optically compared to Bharti's, as Jio has a higher proportion of long-validity subscribers, causing a staggered tariff hike translation," ICICI Securities stated in a note.
During the quarter, JM Financials expects Indus Tower’s net tenancy additions to remain robust, driven by Bharti’s rural expansion and VIL network expansion rollouts.
“We build in 7,000 net tenancy additions in 3QFY25 for Indus Towers as against 4,300 in 2QFY25, driven by Bharti’s continued rural expansion and VIL network expansion rollouts. We expect tower additions at 4,800, primarily due to Bharti’s continued rural network expansion. However, rentals will likely continue to be flattish QoQ,” JM Financials said.
Indus Towers’ revenue is likely to grow 1.5 percent quarter-on-quarter (QoQ) to Rs 7,580 crore. In comparison, EBITDA is expected to decline 7.2 percent QoQ to Rs 4,550 crore in Q3FY25, assuming recovery of approximately Rs 550 crore of past dues from Vodafone Idea, compared to Rs 1,080 crore in Q2FY25. However, this decline is expected to be partially offset by the likely normalisation of energy EBITDA margin to nil compared to a negative Rs 140 crore in Q2FY25.
Vodafone Idea's Rs 24,000-crore equity fundraising and Rs 30,000 crore network equipment deal have ensured its medium-term sustainability.
However, for the company to transform into a sustainable telecom operator, several critical factors are needed, including significant tariff hikes, government relief either via conversion to equity or further extension of the moratorium and the ability to fund capex internally, JM Financials said in the note.
The brokerage added that multiple tariff increases are required to boost the ARPU for Vi to Rs 380 by FY27 from Rs 156 in Q2FY25 to meet the annual payment obligation of Rs 43,000 crore to the government over FY27–31 and approximately Rs 29,100 crore in FY26.
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