Reliance Jio will most likely surpass Bharti Airtel’s India mobile revenue for the first time, in the quarter ended December 2018, while boasting yet another profit growth which has been possible by strong addition in subscribers, said analysts
Compared to Jio, India’s new leading telecom Vodafone Idea and second largest Bharti Airtel are expected to report considerable losses on higher costs, although as an effect of their minimum recharge plans there has been an expected turn around in average revenue per user (ARPU), resulting in a slower decline in revenue, add analysts.
For Vodafone Idea, brokerage ICICI securities estimated a net loss of ₹4001.7 crore in the fiscal third quarter, which is narrower than ₹4974 crore net loss in the July-September period. This reduction in the net loss has been possible because of the Vodafone merger with Idea which resulted in a greater synergy. The newly born telecom will now present unified earnings the second time.
VIL’s revenue for the December quarter is expected to be ₹11,414-11,703 crore which compares to ₹12,000 crore revenue in the July-September period. The estimation has been made by brokerages Credit Suisse and ICICI Securities.
Brokerages estimate a net loss in the range of ₹649-1,491 crore loss from Sunil Mittal led Bharti Airtel–a first in nearly 16 years. The comapny received a surprise ₹119 crore profit on a consolidated basis in the September quarter, helped by a one -time exceptional gain, although its India losses had worsened.
Bharti Airtel revenue is estimated to be in ₹20,428-20,447 crore for the December quarter.
Jio, on the other hand, is estimated to report its fifth successive quarter in the black, with the ICICI Securities estimating a 49% on year jump in the company’s net profit of ₹751 crore. Jio has gained an estimate of 30.7 million subscribers add. The brokerage predicts nearly 12% grow in Jio’s December quarter revenue to ₹10,327 crore, which would be higher than Airtel’s India mobile revenue for the first time.
Brokerages Credit Suisse and Kotak Institutional Equities have estimated Bharti Airtel’s India mobile revenue to be ₹997-10,148 crore in the fiscal third quarter. “Wireless revenue (for Bharti Airtel and Vodafone Idea) will continue to decline in Q3 albeit at a slower rate in wake of steps taken by companies to improve their ARPU by improving ARPU from low-end customers,” said brokerage Axis Capital.
India’s two older telecom’s October launch of minimum recharge plans, which is aimed at finding customers in non-revenue generating low-end users and improving ARPU, will help with the revenue a little although the full effect will be visible in January-March quarter, said analysts.
ICICI Securities estimate Airtel’s and VIL’s monthly ARPU to rise by 3.3 percent and 1 percent on quarter to ₹103 and ₹89 crores, respectively. While Jio’s ARPU will rise to 2.3 percent on quarter to ₹129 crore, due to a higher mix of 4G feature phone users.
Axis Capital expects Airtel to have lost around 10 million subscribers in the fiscal third quarter, while Vodafone lost nearly 14 million customers in October and November of 2018, according to latest data collected by the telecom regulator and Cellular Operations Association of India (COAI).
“Stagnant industry revenue, market share gains by Jio coupled with increase in network expansion costs should hurt mobile Ebitda for Bharti, although this will be largely offset by strong Africa numbers,” Credit Suisse said.
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