The three telcos are expected to report a steady Q2FY23, with stable ARPUs, higher margins, lower SUC, albeit slowing net adds. Updates on 5G roll-out, capex and cues on tariff hikes will be in focus for sector analysts.
Jefferies. While subscriber additions for Airtel should remain soft at 2.5 million, Jio should continue to witness healthy subscriber additions. We expect a 60-110 bps expansion in margins for Bharti/Jio because of lower spectrum usage charges (SUC) due to the 5G spectrum acquired in August. Focus will be on 5G rollouts/ capex and monetisation plans. Key focus areas will be commentary around 5G CapEx and monetisation, margin benefits due to lower SUC and timing of next tariff hikes.
BNP Paribas. Airtel’s India mobile revenue to rise around 3 per cent q-o-q benefiting from the increase in 4G subscribers and higher ARPU of ₹187 versus ₹183 in the first quarter, due to the extra day in the quarter. Airtel’s India non-mobile business, including broadband and enterprise, will continue its strong growth trajectory, with the telco gaining revenue market share across divisions.
A marginal increase in ARPU to ₹177 (+1 per cent q-o-q), can be expected for RJio while data volume growth q-o-q should continue to moderate.
ICICI Securities. SUC was 3-3.5 per cent of AGR, which has reduced to negligible on the purchase of spectrum in July 2022 auction; full benefit of low SUC will likely reflect in Q3FY23E. ARPU is likely to show growth of 1.5-3 per cent on quarter and will be aided by one additional day and premiumisation. Vi’s revenue is expected to rise 1.5 per cent q-o-q to ₹10,600 crore, benefitting from premiumisation. It’s net loss is seen at ₹7,200 crore. Spectrum purchase in July auction is yet to be deployed, and interest cost related to spectrum and 5G rollout cost will be capitalised for all the three telcos. However, EBITDA is expected to benefit from lower SUC.
BofA Securities. We expect Indian telcos to report a steady Q2 with stable ARPUs and slowing net adds. Margins would be higher q-o-q as we get 45-50 days benefits of lower SUC.
The results were expected to be announced by RJio today and on October 31 by Bharti Airtel.