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

The Economic Times - - Companies: Pursuit Of Profit - Kalyan.Par­bat@ times­group.com

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.

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