Bharti to record highest ARPU rise in Q4; Jio EBITDA expected to grow 15% QoQ: Emkay

Emkay expects Bharti Airtel to record healthy performance with 17 percent sequential growth in wireless revenue, driven by an ARPU increase of 13 percent.

April 08, 2020 / 01:20 PM IST
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The tariff hikes implemented by telecom companies since December are expected to support their January-March quarter earnings, as a result, average revenue per user could be higher than previous quarters, though gross subscriber additions may be affected by the 10-day lockdown in March.

"The flow-through of tariff hikes (effective December 3-6, 2019) will be reflected in Q4 revenues though it would also be dependent on the recharge cycle which differs between operators. However, we believe that Bharti Airtel will record the highest average revenue per user (ARPU) increase in Q4 compared with others," said Emkay in its research note.

The steep tariff hikes (15-50 percent) should also lead to SIM consolidation, resulting in subscriber losses of 1 million and 8 million for Bharti and Vodafone Idea, respectively, it added.

In addition, gross subscriber additions should see some impact of 10 days of lockdown in March, but data subscriber addition is expected to remain decent, which should also support ARPU partially, the brokerage said.

Emkay expects Bharti Airtel to record healthy performance with 17 percent sequential growth in wireless revenue, driven by an ARPU increase of 13 percent. "Vodafone Idea should record relatively lower growth in underlying ARPU, while subscriber loss should aid ARPU growth of 12 percent QoQ."


Data volume should rise 13/10 percent for Bharti/Vodafone Idea, it feels.

At the operating level, Emkay said Bharti's earnings before interest, tax, depreciation and amortisation (EBITDA) should rise 11 percent sequentially, with margins expanding 132bps, boosted by mobile revenue growth. "The Africa business is expected to see stable performance in a seasonally weak quarter."

In case of Vodafone Idea, EBITDA growth is expected to be at 13 percent, with a margin expansion of 205bps QoQ in quarter ended March 2020, said the brokerage.

Reliance Jio

It feels the tariff hike will fully reflect from first quarter of FY21 as the majority of the subscriber base is on long-tenure plans.

Subscriber additions are expected to be higher at 20 million during March quarter against 15 million in the last quarter, said Emkay, adding the ARPU is estimated to increase 5 percent QoQ to Rs 134.

At operating level, EBITDA should see 15 percent growth QoQ, it said.

Bharti Infratel

Emkay expects the tower infrastructure company to see a marginal improvement in net tenancy adds on a sequential basis. "We estimate consolidated tower additions of 544 and a net tenancy increase of 1,207 in Q4 against 744 in Q3FY20, resulting in a tenancy ratio of 1.85x, flat QoQ."

The brokerage continued to be upbeat about Bharti Airtel's long-term prospects and the stock remained its top pick in the sector.

The future prospects of Vodafone Idea and Bharti Infratel are dependent on final adjusted gross revenue (AGR) penalty and payment timelines, along with potential tariff hikes or the implementation of floor pricing, it said.

Disclaimer: The above report is compiled from information available on public platforms. advises users to check with certified experts before taking any investment decisions.

'Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.'
Moneycontrol News
first published: Apr 8, 2020 01:20 pm

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