In Short:
Bharti Airtel is expected to show stronger revenue growth in the September quarter, outperforming rivals Reliance Jio and Vodafone Idea due to recent price hikes and increased mobile broadband users. While all three companies raised tariffs, Airtel is anticipated to lose fewer customers. Analysts project Airtel’s average revenue per user to rise significantly, with Jio expected to report the highest data usage growth.
Bharti Airtel’s Revenue Growth Outlook
Kolkata – Analysts expect Bharti Airtel to report a stronger sequential revenue growth for the fiscal second quarter ending September, particularly in comparison to its competitors, Reliance Jio and Vodafone Idea. This anticipated growth is attributed to recent tariff hikes and robust mobile broadband user additions.
Impact of Tariff Hikes
The tariff increases implemented in July are projected to significantly boost the average revenue per user (ARPU) for all three private telecom operators, with Airtel potentially experiencing the most substantial gains. However, these higher prices may lead to some subscriber losses, giving an edge to the state-run Bharat Sanchar Nigam Limited (BSNL), analysts cautioned.
According to experts, Airtel is likely to experience the least overall subscriber attrition due to a smaller base of price-sensitive customers. Revenue growth for Jio may be more gradual, as a considerable number of its users are subscribed to long-term plans.
“The estimated revenue growth for Q2FY25 varies, largely due to subscriber mix and SIM consolidation effects. Jio is anticipated to see a net loss of approximately 12 million subscribers, followed by Vi with a loss of six million (including one million 4G subscribers). Airtel’s subscriber dip is predicted to be lower at around 3.5 million,” noted ICICI Securities in a research report reviewed by ET.
Q2FY25 Predictions
Analysts believe that the full effects of the July tariff adjustments will only manifest in the December quarter. All three private operators have raised their rates by about 11-25%, marking the first comprehensive price hikes in the telecom sector since November 2021.
Airtel’s ARPU is projected to rise by 9.2% sequentially to reach Rs 230 in the second quarter, whereas both Jio and Vi are expected to show a 6% increase in this key metric, achieving Rs 193 and Rs 155, respectively. Airtel is aided by effective 2G-to-4G/5G conversions, resulting in a net addition of five million 4G/5G users, alongside increased adoption of postpaid plans.
JM Financial anticipates that Jio will require a higher ARPU to justify its significant investments in 5G infrastructure, particularly in light of Jio’s potential initial public offering.
Revenue Growth Estimates
ICICI Securities estimates that Airtel’s revenues for the September quarter will grow by 7.2% sequentially, while Jio and Vi are expected to grow by 5.6% and 3.8%, respectively.
“Unlike Bharti and Vi, where we expect substantial upfront benefits from tariff hikes, for Jio, we predict these benefits will be distributed over the next three to four quarters due to many users having one-year packs or recently topped-up recharges,” commented BofA Securities.
Data Usage Levels
Analysts anticipate that Jio will report the highest growth in data usage among private carriers in the September quarter, driven by increasing demand for its 5G-based fixed wireless access (FWA) service, Jio AirFiber. JM Financial estimates that Jio’s average monthly data usage per subscriber will rise by 3.4% sequentially to 31.3 GB in Q2FY25. In contrast, Airtel and Vi are projected to see increases of 0.5% and 1.4% in their respective average monthly data usage per subscriber, reaching 23.8 GB and 15.8 GB.
Profit Projections
ICICI Securities foresees Airtel’s consolidated net profit for Q2 to rise by 3.6% sequentially, reaching Rs 4,311.4 crore, benefiting from revenue and operational growth in its African segment. “Bharti Africa’s dollar revenue is anticipated to increase by 4% quarter-on-quarter to $1.1 billion, with EBITDA also rising by 4.4% to $542 million,” the report stated.
On the other hand, Jio’s net profit for the second fiscal quarter is expected to grow by 7.6% sequentially to Rs 5,858.2 crore. Meanwhile, analysts predict that Vi will experience a widening net loss of approximately Rs 6,616 crore during the September quarter due to continuing subscriber losses.
