Bharti Airtel is expected to lead the industry with around 5 percent QoQ revenue growth. The maximum benefits of tariff hikes in Q3 are anticipated for Bharti Airtel and Hexacom. Vi's continued subscriber loss and adverse subscriber mix are likely to limit the extent of its gains. "Telcos should witness decent revenue growth in Q3, led by residual benefits from the July tariff hikes. Bharti is likely to see the highest QoQ mobile revenue growth in Q3, followed by Reliance Jio, which may see tariff hike tailwinds in Q4 as well," IIFL said in a report on January 9, 2025.
According to the report, Q3 revenue growth will be influenced by residual benefits from the July 2024 tariff hike, and IIFL estimates 5.5, 12.3, and 8 percent QoQ EBITDA growth for Jio, Bharti, Vi, and Hexacom, respectively.
"We estimate 3 percent QoQ mobile revenue growth each for Jio and Vi; Bharti and Hexacom should fare better at 5 percent. Jio's overall revenue growth of 4 percent is likely to be aided by brisk FWA subscriber additions," the report said, adding, "Bharti's Home BB segment should also perform well, while Enterprise, DTH, and Africa should see steady performances."
Bharti may also witness the highest mobile revenue growth over 1Q-4Q FY25, post-tariff hikes, with estimates indicating Jio will clock 17 percent revenue growth during the period, with around 2 ppt coming from FWA (Fixed Wireless Access).
As per the report, Bharti should witness 16 percent mobile revenue growth, while Vi's gains may be around 6 percent, constrained by continued subscriber loss and slower 2G-to-4G upgradation. Additionally, Bharti Airtel continues its rural rollout. For Vi, EBITDA is expected to see a cut due to lower-than-expected flow-through from the July 2024 tariff hikes and downtrading by low-end customers.
Overall, for both Bharti and Vi, almost all the benefits from the July 2024 hike should accrue by Q3. Jio is likely to see a fairly healthy Q4 as well, the report said, adding, "Vi's mobile revenue growth will likely be the lowest, at around 5.5 percent."
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Enterprise Segment
As per the report, the enterprise segment may see marginal QoQ revenue decline due to weakness in the global business. Enterprise segment EBITDA is expected to remain flat QoQ.
"Since Jio has a higher proportion of customers on longer-duration plans, we estimate tariff hike benefits to accrue over Q2, Q3, and Q4 FY25," IIFL said.
According to the report, Jio has been adding more than 0.6 million fixed BB (Broadband) subscribers per month due to strong traction on 5G FWA, with around 2 million net additions estimated in Q3.
For both Jio and Vi, IIFL cuts revenue estimates due to lower-than-expected ARPU flow-through from the July 2024 tariff hikes on account of downtrading by low-end customers and SIM consolidation.
