Bharti Airtel has been adding more subscribers than any other telco in India for the last few months. In a report, ICICI securities has highlighted that the telco will continue adding subscribers and gain more market share in the Q4 FY21.
The key highlight of the report was the Rs 1 billion benefit that Airtel is likely to receive post the scrapping of Interconnect Usage Charges (IUC) on January 1, 2021. Earlier, every call to any user subscribed to services of any other operator attracted an IUC of 6 paise per minute.
Airtel never took IUC from its customers which meant more costs for the company. But after the removal of IUC, Airtel’s cost should come down and its earnings before interest, taxes, depreciation, and amortisation (EBITDA) is expected to grow by Rs 1 billion.
Vodafone Idea (Vi) on the other hand is expected to lose out on Rs 0.8 million in IUC this quarter since the telco used to receive IUC instead of paying it.
ARPU of Airtel and Vi Expected to Increase
The average revenue per user (ARPU) for Airtel and Vi is expected to grow QoQ on the back of a good subscriber addition rate. Vi lost subscribers but the trend of decreasing subscribers was found to be on a negative slope. This means that the telco lost fewer subscribers than it used to.
Airtel added around 8 million subscribers this quarter while Vi lost 1.5 million of them. ICICI Securities has estimated a net profit of Rs 2.9 billion for Airtel during the quarter. At the same time, Vi’s EBITDA is expected to decrease by 2.4% QoQ to Rs 42 billion. Vi is expected to incur a net loss of Rs 63 billion during Q4 FY21.
The only positive from Vi this quarter would be lesser subscriber loss than the company saw in previous quarters. For Airtel, it was a booming quarter as the telco added millions of new subscribers and is expected to end up with net profits in the books.