Q4 Results Preview | Telecom cos to report moderate growth on ARPU upgrades; Bharti Airtel, Jio to lead the pack
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.
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.
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.
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.
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Published: 05 Apr 2024, 10:30 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.