Q1 Preview: Airtel ARPU may near Rs 200-mark; Voda to see muted subs churn

Bharti Airtel Q1 preview: On average, analysts expect Bharti Airtel's consolidated net profit to rise around 60 per cent year-on-year (YoY) to Rs 2,676 crore in Q1FY24

Telecom Q1 Preview: Telecom services providers, Bharti Airtel and Vodafone Idea, may see stable earnings in the April-June quarter (Q1FY24) as 4G mix benefit, market share gains (for Airtel), and slowdown in subscriber churn may support topline, analysts said.

Besides, the transition to 4G from 2G, premiumisation (moving to higher data plans/postpaid), and data monetisation could increase blended average revenue per user (ARPU) for telecom companies, they added.

On average, analysts expect Bharti Airtel’s consolidated net profit to rise around 60 per cent year-on-year (YoY) to Rs 2,676 crore during the period under study, from Rs 1,606.9 crore reported in the corresponding quarter of the previous fiscal. Sequentially, it would be around 11 per cent slide from Rs 3,005.6 crore profit clocked in Q4FY23.

 

Vodafone Idea, on the other hand, may narrow its net loss on YoY basis to Rs 6,634 crore, even as it may increase QoQ.

Bharti Airtel is scheduled to report its Q1FY24 earnings on Thursday, August 3, while Vodafone Idea is yet to notify the date for the results announcement.

Here’s what key brokerages expect from these companies:

Bharti Airtel

ICICI Securities: Bharti Airtel may add two million subscribers in this quarter, taking ARPU grow to 2.9 per cent QoQ to Rs 199, aided by premiumisation (2G to 4G, and strong add in postpaid), and price hike in minimum recharge plan. It expects Bharti’s India revenue to rise 3.4 per cent QoQ (12 per cent YoY) to Rs 26,300 crore led by mobile segment (up 3.7 per cent QoQ /11.3 per cent YoY). Its India Ebitda is likely to grow 4.6 per cent QoQ/18 per cent YoY to Rs 14,000 crore.

It forecasts net profit to slide 22 per cent QoQ to Rs 2,400 crore, impacted by higher forex losses and higher taxes.

Prabhudas Lilladher: It has factored in net subscriber addition of 3 million and ARPU of Rs 196. Sales are seen rising 11 per cent YoY/1 per cent QoQ to Rs 36,329.5 crore; Ebitda 14 per cent YoY/0.8 per cent QoQ to Rs 18,854.8 crore; PAT 23 per cent YoY/down 34.4 per cent QoQ to Rs 1,917.3 crore.

JM Financial: India wireless revenue is projected at Rs 20,013 crore, an increase of 2.4 per cent QoQ/10.3 per cent YoY, while India wireless Ebitda could grow 2.3 per cent QoQ/16.1 per cent YoY to Rs 10,762 crore. It expects addition of 357,000 households in FTTH (Fibre To The Home).

Overall, consolidated revenue may grow 12 per cent YoY/1.6 per cent QoQ to Rs 36,880.4 crore; Ebitda 16 per cent YoY/2.2 per cent QoQ to Rs 19,408.2 crore; PAT 104 per cent YoY/9 per cent QoQ to Rs 3,275.6 crore. Ebitda margin may expand 195bps YoY/32bps QoQ to 52.6 per cent.

Nuvama Institutional Equities: For Q1FY24, it is building in a 1.1 per cent QoQ growth in revenue (Rs 36,705.1 crore) with a 2.9 per cent QoQ growth for the India business. It expects the India mobile services business to grow by 3.4 per cent QoQ led by 2.5 per cent ARPU growth and 2.5 million subscriber addition. On a consolidated basis, it anticipates Ebitda margin to remain flattish.

Overall consolidated Ebitda is pegged at Rs 19,151.3 crore, and PAT at Rs 2,676.6 crore.

Key things to watch will be progress on the 5G rollout, 5G adoption and usage trends, capex intensity, 4G subscriber additions, and traction in home broadband and other new initiatives.

Vodafone Idea

Motilal Oswal: It expects net loss to come in at Rs 6,900 crore, down from Rs 7,296.7 crore YoY, but higher than Rs 6,418.9 crore in Q4FY24. Revenue, meanwhile, may rise 1.7 per cent YoY to Rs 10,600 crore.

It expects a 1.5 per cent sequential increase in blended ARPU, offset by a subscriber decline of 0.7 per cent, leading to flat revenue growth. Ebitda margin is likely to decrease 30bps sequentially to 39.7 per cent, led by high network cost. ARPU, it said, is expected to grow to Rs 137, led by an increase in 4G subscriber mix. Without fundraising, capex is projected to be minimal.

Kotak Institutional Equities: It, too, expects revenue to remain flat QoQ as sequentially higher ARPU is offset by continued subscriber churn (down 5 million this quarter). Reported Ebitda will likely decline by 2 per cent QoQ/5 per cent YoY, to Rs 10,537.2 crore, driven primarily by higher network opex. Net loss may come in at Rs 7,473 crore.

JM Financial: It estimates a loss of 5 million overall subscribers in Q1FY24 (vs 2.7 million subscriber loss in Q4FY23). However, it expects mobile broadband subscriber addition to continue to be muted at 1 million; ARPU is expected to rise 1.7 per cent QoQ to Rs 137.

Revenue may slip 1.2 per cent YoY/2.3 per cent QoQ to Rs 10,290.4 crore; Ebitda down 5.4 per cent YoY/2.8 per cent QoQ to Rs 4,094.3 crore; Net loss is seen at Rs 6,638.7 crore.

Nuvama Institutional Equities: It estimates revenue to decrease 0.2 per cent QoQ/up 1 per cent YoY to Rs 10,511.8 crore on 1 per cent ARPU increase and 2 million subscriber decline. Ebitda margins are likely to increase by 160bps led by lower ad spends and general expenses.

Ebitda is seen up 1 per cent YoY/4 per cent QoQ to Rs 4,376.4 crore; net loss at Rs 5,958 crore.

Key things to watch out would be ability to raise funds (given a weak balance sheet) plan to increase network capacity and arrest subscriber decline.