Bharti Airtel (Bharti) and Reliance Communications (RCom) are likely to report strong PAT growth, thanks to 6% INR appreciation against US$ in Q1, while Idea is likely to report a drop in adjusted PAT. Our 1QFY10 EBITDA estimates are 1-3% below consensus.
Bharti: We estimate Q1consolidated Revenue/EBITDA growth of 2.2%/3.0% q-o-q vs. 2%/1.4% in 4QFY09, driven by muted wireless revenue growth (~2% q-o-q); wireless growth would have been ~6% q-o-q without MTR cut.
We model ARPU/ARPM to drop by 6.8% q-o-q, but expect minutes growth of 9.3% q-o-q (5.7% in 4Q), thanks to likely stable MOU/sub (485). MTR cut hurts absolute EBITDA, but optically boosts the EBITDA margin.
Idea: We estimate consolidated Revenue/EBITDA growth of 2.2%/3.8%, down from 9.2%/6.8% (excl. Spice/Indus) in Q4. PAT will likely decline q-o-q, because of higher depreciation/interest costs.
RCom: While consolidated revenue growth is likely to be muted (+1% q-o-q), due to MTR cut and weaker Global segment growth, we model the EBITDA to grow by ~5% q-o-q (vs. 1.3% in 4Q), led by reduction in CDMA handset subsidies and lower interconnect costs (MTR cut +ve for GSM).
Nonetheless, our anticipated recovery in EBITDA growth is already priced in, and any disappointment could lead to share price correction.
Excluding FX related gains, we estimate normalized 1Q EPS of Rs4.2, which is 21.4% of our full year (FY10) forecast of Rs19.64.