Bharti Airtel and Idea Cellular are likely to contain a sequential fall in revenue in the first quarter of this financial year, with rival Reliance Jio Infocomm ending its free offers and switching to paid 4G services from April, said analysts, who cautioned that growth could still be some quarters away.
Bank of America-Merrill Lynch expects market leader Airtel and No. 3 Idea to report a modest 0.5-2 percent sequential dip in revenue in the April-June period compared with 6-7 percent declines during the previous few quarters. Kotak Institutional Equities backed the view, saying Airtel and Idea are likely to report "meaningful improvement" in sequential wireless revenue, although a "return to growth" could still be a couple of quarters away.
Both companies were bruised after Jio started services in September with free data and voice plans until March.
Analysts, however, reckon that the big phone companies will be weighed down by the full impact of their high-end customers choosing cheaper tariffs offered in response to Jio's aggressive plans.
Brokerages expect Airtel to report an 84-86 percent fall in net profit in the June quarter from Rs 1,462 crore last year. For Idea, they expect a third successive quarterly loss from a consolidated net profit of Rs 220.4 crore last year.
Airtel's consolidated revenue is estimated to fall by about 14 percent from Rs 25,546 crore a year earlier. Brokerages peg Idea's on year fall in consolidated revenue in the 14.6-16 percent range from almost Rs 9,487 crore last year.
Kotak expects earnings before interest, taxes, depreciation & amortization trends of these listed telcos to remain weak due to sequential cost upticks, typically seen in the first quarter. BankAm-Merrill Lynch expects weaker margins due to rising interconnect costs and one-off cost control initiatives of the previous quarter that are "unlikely to be repeated."
According to experts, higher adoption of bundled plans among prepaid customers coupled with the increasing proportion of incoming minutes may dent Airtel and Idea's voice realizations. While the introduction of Jio's paid services is likely to stem the fall in monthly average revenue per user (ARPU) of the listed telcos, experts see the downtrend continuing in the June quarter. Kotak expects Airtel's monthly ARPU to decline 4.3 percent on-quarter to Rs 151 and predicts Idea's will dip 3 percent sequentially to Rs 138.
Brokerage PhillipCapital expects Jio's aggressive plans to continue impacting data realization for its rivals, estimating a 10 percent on-quarter drop. The global brokerage house said Airtel may report data market share gains over Idea as its footprint is larger. Kotak seconded the view, estimating a 55 percent on-quarter jump in Bharti's data volumes, while pegging Idea's sequential growth on this metric at 45 percent. The brokerage, however, expects their data revenue to dip sequentially as the higher volumes " essentially reflect increase in data allowances for the same or lower price." -ET