Airtel Q2 revenue may grow 21% YoY; Vodafone could lose 4 mn subscribers

Telecom Q2 preview: Bharti Airtel is expected to add around 2 million overall subscribers this quarter, taking the tally to 329 million

Bharti Airtel, and Vodafone Idea are slated to announce their September quarter (Q2FY23) earnings on October 31, and November 3, respectively. While Airtel is projected to report low single digit growth in topline on a quarterly basis, Vodafone's earnings are expected to remain flat. 

So far this year, shares of Bharti Airtel have rallied 19.4 per cent, while those of Vodafone Idea have plunged 44.4 per cent. In comparison, the benchmark S&P BSE Sensex has risen 3 per cent. 

Here's how analysts expect Q2 results of the companies to play out:

Bharti Airtel

The telecom services provider is expected to add around 2 million overall subscribers this quarter, taking the tally to 329 million. ARPU (average revenue per user), meanwhile, is expected to rise up to 2.5 per cent quarter-on-quarter (QoQ) to Rs 188. 

Revenue is seen rising in the range of 2 per cent to 4.5 per cent sequentially, between Rs 33,421.7 crore and Rs 34,285.3 crore. This would be up to 21 per cent YoY growth. Ebitda (earnings before interest, tax, depreciation, and amortisation), too, is seen growing up to 4.5 per cent QoQ/25 per cent YoY to Rs 17,275 crore. 

That said, net profit estimates vary widely across brokerages with the lowest projection of Rs 2,134.8 crore (up 33 per cent QoQ), and the highest of Rs 3,119.3 crore (94 per cent QoQ). Net profit was Rs 1,134 crore in Q1FY23, and Rs 1,606.9 crore in Q2FY22. 

"Subscriber addition trend is likely to remain similar to last quarter's, with addition of 2 million. Data subscriber addition is likely to come in at 4.5 million. APRU is expected to  grow by 1 per cent QoQ. Consequently, the India mobility segment is likely to grow at 1 per cent QoQ. On the non-mobility front, the Homes and Enterprise segments are likely to report steady growth of 5 per cent, and 3 per cent, respectively, while DTH would decline by another 0.4 per cent QoQ," said analysts at Emkay Global. 

Vodafone Idea

Brokerages remain divided on the company's financial performance for the quarter as they expect flat-to-slight contraction in earnings. While Emkay Global expects revenue of Vodafone Idea to shrink 0.4 per cent QoQ, but grow 10 per cent YoY to Rs 10,372.8 crore. JM Financial expects a 1.5 per cent QoQ/12.4 per cent YoY rise in revenue to Rs 10,571.4 crore. Revenue was Rs 9,406.4 crore last year, and Rs 10,410 crore in Q1FY23. 

Projections for Ebitda, too, are spread widely from Rs 4,271.5 crore (down 1.3 per cent QoQ/up 10.6 per cent YoY) to Rs 4,770 crore (up 10.2 per cent QoQ/23.5 per cent YoY). Overall, net loss is seen anywhere between Rs 6,005 crore and Rs 7,460.6 crore. The loss was Rs 7,132.3 crore in Q2FY22, and Rs 7,297.1 crore in Q1FY23. 

Sounding an optimisitc note, JM Financial said Vi could see loss of 2.6 million overall subscribers in Q2FY23 (vs 3.4 million subscriber loss in Q1FY23). However, it is assumed that 1.5 million additions will be there for mobile broadband (MBB) subscribers. Hence, revenues are expected to increase by 1.5 per cent QoQ with ARPU rising to Rs 132 (from Rs 128 in Q1FY23).

On the flipside, Emkay Global said that Vodafone Idea's ARPU growth could be 1 per cenr QoQ, with subscriber decline of another 4 million this quarter. Within this, data subscribers are expected to grow by 1.4 million sequentially. 

"Overall revenue growth is likely to decline by 0.4 per cent QoQ. Margins are also likely to decline by 40bps QoQ. VIL requires a fund-raise at the earliest to invest in its network and restrict further subscriber decline. A fund-raise is also essential for ensuring that it does not fall behind in the 5G race, with peers already in the lead," it said.