Telcos Likely to Post Flat Voice Revenue
Data volumes growth may be sluggish in Jan-Mar period due to slow 4G uptake, but rising call volumes may bring cheer: Analysts
Kolkata: 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 telecom carrier Bharti Airtel and No. 3 Idea’s capex intensity to stay high in the current fiscal year, which began on April 1, since both are in an accelerated network rollout mode amid risks of spectrum auctions and Reliance Jio Infocomm’s expected commercial launch. However, they are of the view that the delay in Jio's launch gives Bharti Airtel and Idea crucial headroom to lock in their high average revenue per user (ARPU) subscribers.
But the cheap voice rates are likely to have pushed Bharti Airtel’s and Idea's users to make more calls, with the two carriers likely to report 8 billion and 10 billion minutes growth, respectively, said Morgan Stanley. Analysts are split on Bharti Airtel’s consolidated net profit, with some predicting 3.6% to 30.7% year-on-year growth. Some others expect a 19.7% on-year decline from .₹ 1,255 crore on expectations that strong growth in the company’s India wireless business may be offset by lower data realisation amid rising competitive intensity.
Kotak said it expects Bharti’s India wireless revenue to grow 3.6% sequentially to .₹ 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 market leader’s consolidated revenue to grow 6.1% year-on-year to .₹ 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 to .₹ 194 from .₹ 198, year-on-year. The company is expected to report a year-on-year 41-54% fall in consolidated net profit from .₹ 941.8 crore amid slowing data volume growth, continuing high capex intensity and the full-quarter impact of rising interest and amortisation expenses linked to the past two airwave auctions.
“For Idea, we build stable data realisations, but with a corresponding slowdown in volume trajectory, the overall data revenue growth is expected to be closer to 40% year-on-year,” said Kotak in a note to clients.
Goldman Sachs, however, expects Idea’s consolidated revenue to increase nearly 12% on-year to .₹ 9,390 crore, helped by strong subscriber additions and overall growth in its wireless business.
Morgan Stanley, in turn, expects Idea to report 5.2% and 6.6% sequential growth in revenue and Ebit- da, respectively, but sees PAT down 45% quarter-on-quarter. Credit Suisse expects the No. 3 carrier’s monthly ARPU to inch up to .₹ 180 from .₹ 179 last year. India’s fourth-largest mobile phone operator is expected to report a year-on-year 37-70% fall in fourthquarter consolidated net profit from .₹ 228 crore, stung by plunging minutes of use and reduced voice revenue. Morgan Stanley said RCom is tipped to lose 3 billion minutes following the loss of 900 MHz airwaves in five circles.
The brokerage, accordingly, expects the company’s consolidated revenue to fall nearly 8% year-onyear to .₹ 5,254 crore, hit by mounting interest costs. RCom’s net interest payout is projected to rise 7.3% on-year to nearly .₹ 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 .₹ 104 from .₹ 110 last year.