We expect Reliance Jio to lead sub addition with ~7 mn net sub additions during Q2. Bharti Airtel is likely to add ~2 mn subscribers. On the other hand, churn at Vodafone Idea is likely with subscriber loss of ~4 mn. ARPU growth is expected to be seen for all telcos, with benefits of an extra day during the quarter and some subscriber mix benefits. We expect Jio, Airtel, VIL’s reported ARPU to be up 3%, 2%, 2% QoQ at ~| 181, | 187, |131, respectively. For Jio, revenues are expected at | 22992 crore, up 5.1% QoQ. Airtel’s India wireless revenue is expected be up 2.5% QoQ at | 18,671 crore. For Vodafone Idea, we expect overall revenues to grow 1.2% QoQ at | 10,538 crore.
Margins to improve for Jio, Airtel
Telcos are expected to witness partial benefits of lower SUC emanating from their recent spectrum purchase. Airtel India EBITDA margins is expected at 51.9%, up 80 bps QoQ, aided by partial benefit of lower SUC Overall consolidated margins are anticipated at 50.9%, up 50 bps QoQ. We expect PAT at | 2358 crore for Airtel. For Jio, we expect EBITDA margins at 50.4%, up 30 bps QoQ and net profit of | 4598 crore, up 6.1% QoQ. For Vodafone Idea, we expect margins at 41.4%, down 20 bps QoQ. The company is expected to post a net loss of | 7409 crore.
Muted performance likely from Indus Towers
Indus Tower is likely to report muted number during the quarter. We bake in tower and net tenancy addition of 1100 and 1000, respectively, in Q1FY23, with average sharing factor likely to remain stable at 1.81x. We expect rental revenues at | 4228 crore, muted at 0.1% QoQ, with new tenancy renewal agreement discounts to restrict near term rental growth. Overall margins are expected at 51.6%, up 90 QoQ, on adjusted basis. We highlight that Q1FY23 EBITDA on reported basis was impacted by provision for doubtful debts of | 1233 crore against dues from Vodafone Idea.
Tata Communication to witness gradual recovery
For Tata Communications, we expect the gradual revenue growth recovery to continue, albeit normalising of costs will restrict EBITDA growth. The data revenue is expected to grow 2.1% QoQ (up ~8.6% YoY) at | 3409 crore. Overall revenue is expected to grow 2.1% QoQ (~5.5% YoY) at | 4402 crore. Data segment margins are expected at 29% (flattish QoQ). Overall margins are expected at 24.8%, broadly flattish QoQ.