Q4 Results Preview | Telecom cos to report moderate growth on ARPU upgrades; Bharti Airtel, Jio to lead the pack

  • Q4 Results Preview: Reliance Jio and Bharti Airtel are likely to report a rise in revenues and EBITDA growth sequentially led by ARPU upgrades

Nikita Prasad
Published5 Apr 2024, 10:30 PM IST
Mobile tower at BBD Bag area in Kolkata. Photo By Indranil Bhoumik/ Mint
Mobile tower at BBD Bag area in Kolkata. Photo By Indranil Bhoumik/ Mint(telecom, mobile towers)

The telecom industry in India is unfolding at a swift pace, with key trends marked by the emphasis on state-of-the-art technology and network expansion. The rollout of the fifth generation (5G) communication technology is gaining ground, characterized by faster and more robust connectivity. The major telecom companies have committed substantial funds to upgrade their infrastructure to address the increasing. need for high-speed data services.

Among the major Indian telecom companies, industry leaders Reliance Jio Infocomm and Bharti Airtel are expected to lead the pack in the upcoming fourth quarter results of fiscal 2023-24 (Q4FY24). According to domestic brokerage firm JM Financials, Bharti Airtel is the top pick as it is biggest beneficiary of structural uptrend in industry average revenue per user or ARPU.

Also Read: Airtel preparing for tariff hike post elections, Jio to focus on greater data usage: Report

Bharti Airtel wireless EBITDA to grow 2.4% QoQ in Q4FY24

Bharti’s Airtel's wireless business is expected to report strong mobile broadband (MBB) subscriber addition at 7.2 million in 4QFY24 after adding 2.4 million MBB subs in January’24 as per TRAI’s data). The overall subscriber addition is also expected to be healthy at 3.5 million subscribers. 

ARPU is expected to improve 1.4 per cent sequentially to 211 (compared to 208 in 3QFY24) driven by robust 7.2 million MBB subscriber addition and improving postpaid subscriber penetration. ‘’Bharti remains our top pick as we expect a structural uptrend in industry ARPU driven by future investment needs – the industry requires an ARPU of 275-305 in the next 3-4 years,'' said JM Financials.

Also Read: Jefferies sees 15% upside for Bharti Airtel stock; lists three key takeaways for Bharti Hexacom IPO

Bharti is the biggest beneficiary of higher tariffs given the sticky and premium quality of its subs, ensuring that tariff hikes flow through to ARPU. ‘’We build in 2.5 per cent sequential growth in India wireless business revenue to 222 billion, and 2.4 per cent rise in EBITDA to 122 billion,'' said the brokerage.

Global brokerage Jefferies has maintained a 'buy' rating on Bharti Airtel with a target of 1,300 per share and foresees robust revenue growth. It says the analysis of TRAI data suggests that Bharti Hexacom is favourably placed.

Jio Q4 EBITDA to grow 2.8% QoQ led by robust subscriber addition 

Reliance Jio’s strong subscriber addition trend is likely to continue in Q4FY24 driven by aggressive push of its Jio Bharat phone. The telecom giant is expected to report 10.5 million net subscriber addition in the January-March quarter. TRAI’s data showed 4.2 million subscriber addition for Jio in January 2024.

This will be the eighth consecutive quarter of net subs addition, ranging between 5-11 million per quarter since 1QFY23. Further, ARPU is likely to improve by 0.4 per cent sequentially to 182.5 in 4QFY24 (compared to 181.7 in 3QFY24). ‘’Hence, we expect 2.5 per cent QoQ growth in Jio’s standalone revenue to 262 billion, with EBITDA likely to grow 2.8 per cent QoQ to 138 billion,'' said JM Financials.

Vodafone Idea's subscriber losses to continue, Indus Towers' to see robust net tenancy additions

Vodafone Idea Ltd (VIL's) subscriber loss trend is likely to continue, with net subscriber base declining by around 4 million in 4QFY24, due to churn in lower ARPU segment given the sharp hike in entry level prepaid tariffs. However, JM Financials expects nearly 1 million addition to MBB subscriber base. VIL's ARPU may improve 2.3 per cent QoQ to 148 in 4QFY24 aided by improving subscriber mix. 

Also Read: Vodafone Idea's 20,000-crore FPO likely next week

On Indus Towers, the brokerage said, ‘’We build in ~6.9k net tenancy additions in 4QFY24 for Indus Towers vs. ~7.2k in 3QFY24; we expect strong tower additions at ~6.4k, primarily driven by Bharti’s continued aggressive 5G rollout and rural expansion programme during 4QFY24.'' The revenue is likely to grow 0.3 per cent QoQ to 72 billion while EBITDA is expected to rise 3.6 per cent QoQ to 38 billion in 4QFY24.

 

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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First Published:5 Apr 2024, 10:30 PM IST
HomeCompaniesCompany ResultsQ4 Results Preview | Telecom cos to report moderate growth on ARPU upgrades; Bharti Airtel, Jio to lead the pack

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