Kotak said its channel checks suggest that Jio has seen a higher degree of success with JioPhone monsoon hungama exchange offer plan than it did with the initial JioPhone plan
The consistent pricing competition from Reliance Jio is likely to stay, due to which, experts feel telecom companies are likely to report weak set of earnings for another quarter in Q1Fy19.
"We expect another quarter of weak earnings prints for the wireless names as well as Bhart Infratel (a) postpaid re-pricing, continued prepaid ARPU down-trading, seasonality and initial impact of JioPhone monsoon hungama result in a higher sequential revenue decline for the wireless names, and (b) loss of Vodafone Idea tenancies hits Bharti Infratel's financials," said Kotak Securities in a report.
The research house expects these following factors to drive higher sequential revenue pressure for the incumbents:
1> Accelerated postpaid re-pricing as the incumbents look to protect their postpaid subscribers base from switching to Reliance-Jio.
2> Continued prepaid ARPU (average revenue per user) down-trading.
3> Seasonality – the usual Q2 weakness for the incumbents.
4> Initial impact of JioPhone monsoon hungama exchange offer.
Kotak said its channel checks suggest that Jio has seen a higher degree of success with JioPhone monsoon hungama exchange offer plan than it did with the initial JioPhone plan.
Incumbents will see bigger hit from Q3 as the impact in Q2 was limited to less than half a quarter, the research house feels.
Kotak expects all these factors to drive a sharper sequential pressure on revenues of incumbent operators. For Bharti Airtel, it has baked in 3 percent QoQ decline in reported India wireless revenues (3.5 percent organic).
For Idea, it expects a 5.7 percent like-on-like (Vodafone+Idea, full-quarter proforma) QoQ decline in wireless revenues.
On a reported (Idea + 1 month of Vodafone for Q2) basis, it expects Idea to report a 28 percent QoQ growth in revenues to Rs 7,600 crore.
"We expect (a) Bharti to report a 16 percent QoQ and 45 percent YoY decline in India wireless EBITDA and (b) Idea to report a 6 percent QoQ EBITDA growth on a reported basis," Kotak said.
On a like-on-like basis, Kotak estimates a 34 percent QoQ and 71 percent YoY EBITDA decline.
On the telecom tower front, Kotak said Bharti Infratel's financials are likely to look weak on account of the one-month impact of the Vodafone-Idea tenancy exits even as it believes the company has seen a slight pickup in gross tenancy additions primarily from Reliance Jio.
The research house expects a 4.5 percent QoQ and 10.1 percent YoY decline in EBITDA and around an 8 percent QoQ as well as YoY decline in recurring PAT for Bharti Infratel.
However, only for Tata Communications, it expects a modest 3 percent sequential improvement in EBITDA led by a slight improvement in the revenue growth trajectory in the traditional data business and further reduction in EBITDA losses in the growth services segment.
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