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Jio, Bharti Airtel may report over 10% growth in Q1FY25, say analysts

Consistent rise in mobile business, subscriber gains to help the two telcos

Airtel, Jio
Subhayan Chakraborty New Delhi
4 min read Last Updated : Jul 11 2024 | 12:19 AM IST
Reliance Jio and Bharti Airtel are likely to report at least 10 per cent sequential growth in their mobile business in the first quarter of financial year 2024-25 (Q4FY25), analysts said.

The impact of the recent price hike by the two telecom operators, they said, will most likely be felt in the third quarter of FY25. But all analysts expect Vodafone Idea’s (Vi’s) subscriber loss to continue in the April-June quarter (Q1).

Axis Capital expects Airtel and Jio to see continued momentum in the growth rate of its mobile business at 11 and 10 per cent respectively in Q1FY25.

While Kotak Institutional equities said it expected an 8 per cent annual growth in combined wireless revenue for the three private sector telecom operators, driven by a 10 million higher combined subscriber base.

Analysts also said that the modest pace of average revenue per user (Arpu) growth will continue, mainly powered by Jio users upgrading to 4G/5G and prepaid-to-postpaid conversion for Airtel, alongside higher data usage.

Morgan Stanley has predicted a 10.3 per cent Year-on-Year (Y-o-Y) growth in the Ebitda of Airtel’s Indian business, led by a 2 per cent revenue and 1 per cent subscriber growth. It expects Rs 26,500 crore revenue for Jio, led by incremental subscriber additions of 9 million, even as Arpu growth remains flat.

For Airtel, it believes revenue will come in at Rs 38,800 crore at a recurring net profit of Rs 35 billion.

JM Financial said the cash-strapped Vi’s net subscriber base may decline by 2 million. It had been witnessing decline of 2mn-5mn per quarter over the last few quarters due to churn in the lower Arpu segment.

Flat Arpu growth

Meanwhile, the impact of the latest tariff hikes, in effect from July 3-4, should be visible only from Q3FY25 onwards, around the same time as when Vi's fundraise initiatives trickle down into operational improvements, analysts said.

“Arpu trajectory will be influenced by upgrades to 4G/5G (from JIO Phone for Jio and from 2G for Bharti and Vi), prepaid-to-postpaid conversion (Bharti being the biggest beneficiary) and higher data usage,” IIFL Securities said.

“With telcos having taken a hike across a wider segment of subscriber base as well as Jio kick-starting 5G monetisation, Arpu growth for Bharti and Jio would be 14 and 17 per cent respectively in the next 12 months,” Axis Capital said in a report.

As part of the latest hike, Jio has made unlimited 5G available only to consumers on a 2GB/day or higher plan versus 1.5 GB/day earlier, thereby pushing consumers on its lowest priced Rs 239 plan to pay Rs 349 now.

While Airtel has not touched the segment so far, analysts expect it to follow the suit soon.

Meanwhile, Bharti’s Enterprise segment may see a 5 per cent Quarter-on-Quarter revenue growth, as Q1 is seasonally a strong quarter, IIFL Securities said in a note.

“That said, the underlying Y-o-Y enterprise revenue growth may remain modest at 8 per cent, due to sluggish spending by hyperscalers,” it added.

Jio Platforms Ltd (JPL), which runs India’s largest mobile network operator Reliance Jio, had reported a 12 per cent year-on-year (Y-o-Y) increase in net profit to Rs 5,583 crore on robust subscriber growth in Q4 (January-March) of FY24.

Annual net profit had risen by 12 per cent in FY24 to Rs 21,423 crore, up from Rs 19,124 crore in FY23.

Meanwhile, Bharti Airtel had seen a 31.1 per cent fall in consolidated net profit, which had slid to Rs 2,071 crore, impacted by the devaluation of African currencies, particularly the Nigerian Naira affecting Airtel's global business. Its annual profit had fallen to Rs 7,460 crore in FY24, down from Rs 8345 crore in FY23.

Currency devaluation may continue to be a headache for Airtel.

“Nigeria contributed 30 per cent to Airtel Africa’s revenue in FY24, and saw 7 per cent-plus currency depreciation vs the US Dollar in Q1 FY25,” IIFL Securities said.


Eyes on Q1 results
 
Jio tipped to lead on net subscriber additions
Enterprise business expected to ring in revenue for all telcos 
Devaluation of African currencies may affect Bharti’s overseas business 
Vi expected to continue seeing subscribers churn
Arpu growth set to be flat as tariff hike impact likely from Q3

Topics :Telecom Bharti Airteltelecom servicesIndian companiesIIFL

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