The past few months have not necessarily been the best months for the incumbent telecom operators in the industry, Bharti Airtel and Vodafone Idea. These two telecom companies have come under the burden of the AGR dues which go as high as Rs 90,000 crore for them and have to paid off as early as in January. However, as per an ETTelecom report on the matter, the move of the competing telecom operator, Reliance Jio to charge its customers for the voice calls is going to be a positive thing for the other two players. As a result of this, Vodafone Idea and Bharti Airtel are expected to see improvement in wireless revenue in the third quarter of FY 2020 as per the brokerages.
Airtel and VIL Revenue to Witness Growth
ICICI Securities remarked on this matter by saying, “Airtel and VIL’s mobile revenues to grow by 4.2% and 1.5% quarter-on-quarter respectively on higher 4G subscriber addition, low base on seasonality, partially offset by lower interconnect usage revenue as Jio starts charging for voice calls.” As per the brokerage firm, Vodafone Idea will witness a rise of 1.5% in its revenue, whereas, the other incumbent, Bharti Airtel will witness a rise of 3% in its revenue which will be helped by Average Revenue Per User (ARPU) gains for both the telecom companies.
On similar lines, Emkay research has remarked, “For Bharti Airtel, the focus on consumer uptrend with ‘Airtel Xstream’ and ‘Airtel Thanks’ will complement revenues with growing data subscribers on the network. We estimate ARPU for Bharti and VIL to improve by 6% and 7% q-o-q, respectively.” Along with this, the brokerage firm noted that the consolidated EBITDA for the Sunil Bharti Mittal led telecom operator is unlikely to decline.
Vodafone Idea to Benefit By Expenditure Synergy
The brokerage firm also noted that the EBITDA of Bharti Airtel is expected to be muted because of the marketing spends towards the launch of Xstream, new tariff plans and last quarter had one-time provision write-back as well. It also added that the Africa arm of Airtel should continue its steady performance with revenue/EBITDA growth of 4.4%/4.5% q-o-q. Vodafone Idea Limited, on the other hand, will benefit by a 10% increase in EBITDA, and it will be driven by stability in wireless revenue. The telecom operator also continues to be benefitted by the combined operating expenditure synergies. ICICI Securities said on this matter, “We expect some synergy benefit on account of fewer towers and some saving accruing from the remaining costs.”
Reliance Jio to be Hit by IUC and Slow Subscriber Addition
In the third quarter, Bharti Airtel is expected to report losses of Rs 9 billion, whereas Vodafone Idea is expected to report losses of Rs 61 billion. Another thing which will be a highlight in the industry is that because of the IUC charges of 6 paise per minute which Jio has introduced for its subscribers are likely to hit the subscriber growth rate of the telco. As per the estimates of Emkay research, Jio’s subscriber base will grow by 5.9% as opposed to the previous figure of 11% growth in the last quarter. The brokerage firm has added that the data volume growth will be pegged around 6.8% q-o-q, which will be impacted by a moderation in subscriber addition growth and some impact of the Internet shutdown in various parts of the country.
