Telecom: Mixed performance likely, ICICI Securities

We expect the subscriber addition trend to be mixed for the industry, Industry leader – Reliance Jio (Jio) is likely to lead subscriber addition with ~15 million (mn) net adds in Q2. On the other hand, Vodafone Idea (VIL) is expected to continue experiencing churn, also impacted by last quarter’s tariff hike for 2G customers, which, in our view, will drive consolidation. Thus, for VIL, we expect subscriber loss of ~6 mn. For Jio, reported ARPU is likely to be up 1% QoQ at ~| 140 while revenues are expected to see 4.1% QoQ growth at | 18,734 crore. For Vodafone Idea, with ARPU growth of ~6% QoQ at | 110, we expect overall revenues to grow 2.1% QoQ at | 9347 crore.

Flattish margins for Jio; slight margin expansion for VIL
For Jio, we expect EBITDA margins at 47.8%, flattish QoQ. For Jio, we expect a net profit of | 3470 crore, down 1% QoQ, as EBITDA growth will be offset by higher depreciation/interest. For Vodafone Idea, we expect margins at 41.1%, up 60 bps QoQ, aided by higher ARPU. The company is expected to post a net loss of | 7439 crore.

Indus Towers to report stable numbers
Indus Towers is likely to report stable number during the quarter. We bake in tower, net tenancy addition of 1810, 3000, respectively, in Q2FY22. We expect rental revenues at | 4274 crore, up 1.5% QoQ. Energy revenues are expected to be up 6% QoQ at | 2742 crore, driven by higher diesel prices. Overall margins are expected at 50.7%, down 100 bps QoQ given the higher share of energy revenues, which currently have negative spread.

TCom to witness gradual sequential growth
For Tata Communications (TCom), given the gradual reopening of the economy and its key markets in the European region, we expect data revenue growth of 3.1% QoQ at | 3200 crore. Voice revenues are expected to continue to remain weak with 1.2% QoQ decline at | 582 crore. Overall revenue is expected to grow 2.4% QoQ at | 4202 crore. Data segment margins are expected at 30% (flattish QoQ). Overall margins are expected at 24.3% (up 30 bps QoQ).
CT Bureau