Airtel, Idea, RCom voice revenue likely to dip in Q4

KOLKATA: Bharti Airtel, Idea Cellular and Reliance Communications are likely to report a sequential dip in voice revenue per minute (RPM) in the January-March period after remaining relatively little changed over the past few quarters.
Voice traffic and data revenue are expected to see steady growth, analysts said. The expected slide in voice RPM is primarily due to last month's 30% cut in interconnect charges (to 14 paise a minute) by the sector regulator, a move slated to hurt incumbents who account for a bulk of the industry's revenue market share and have most calls terminating on their networks.
Credit Suisse, however, expects "strong traffic volumes and high data growth to drive between 4% and 6% (sequential) revenue growth in the mobile business" in the fiscal fourth quarter. Kotak Institutional Equities expects Idea and Bharti's "India wireless revenues to grow ahead of the market".
But it predicts No. 3 Idea may accelerate faster than market leader Bharti Airtel. The brokerage expects Idea to report a 20% year-on-year jump in wireless revenue to Bharti's 13%. Kotak also expects Idea to score over Bharti on the data revenue growth metric, predicting the Aditya Birla group company will report a 105% year-on year jump against Bharti's 78%.
Overall, the brokerage expects a steady quarter, driven by "healthy year-on-year revenue and Ebitda (earnings before interest, taxes, depreciation and amortization) growth momentum, sustaining India's wireless incumbents," despite the month-long impact of interconnect rate cuts.
Credit Suisse, however, believes incumbents won't be able to easily pass on the burden of higher spectrum costs on to the consumer by raising call rates since "pricing power in India remains elusive and smaller operators remain untouched" by India's costliest airwaves auction that concluded last month.
Bharti Airtel (reporting on April 28)
Bharti Airtel is slated to report a year-on-year jump in fourth-quarter net profit between 55% and 100% from Rs 962 crore, fuelled by rising contribution of data services and improved margins induced by the beneficial impact of lower diesel prices.
Barclays Capital expects the telco's average revenue per user (ARPU) to grow year-on-year to Rs 207 from Rs 196 but predicts a drop in average minutes of use to 421 from 437 in the year-ago period. "At a consolidated level, we expect Bharti to report year-on-year revenue, Ebitda, Ebit, and recurring PAT (profit after tax) growth of 5%, 7%, 15% and 25%, respectively," Kotak said.
But all brokerages believe "Africa challenges" will continue to haunt India's leading mobile carrier and make its consolidated numbers look modest. Credit Suisse expects Bharti Africa's revenues to decline 6.1% sequentially. "Bharti Africa numbers will be impacted by decline in currencies and we expect a 6% decline in top line in rupee terms and flat margins," said the Swiss brokerage.
Idea Cellular (reporting on April 28)
Idea Cellular's quarterly net profit is expected to record a year-on-year jump of between 38% and 60% from Rs 589.8 crore, propelled by strong data revenue and voice traffic growth. "Idea continues to outpace industry peers in terms of subscriber additions with a 3.8% quarter-on-quarter growth expected in the January-March period," Barclays said in a note.
The UK brokerage expects the telco's ARPU to grow year-on-year to Rs 181 from Rs 173 but predicts a marginal dip in average minutes of use (MoU) to 392 from 397 in the year-ago period. Voice traffic is expected to record a near 15% year-on-year jump, it said. Brokerage Motilal Oswal expects Idea's "Ebitda margin to improve 80 bps sequentially to 35.1%".
RCom (reporting date not announced)
RCom is slated to report a near 67% year-on-year jump in fourth-quarter net profit from Rs 156 crore, but record modest sequential growth. "We expect RCom to report modest sequential revenue growth of 3.2% as subscriber additions remain weaker than peers," Barclays said. The brokerage expects India's fourth-largest telco to report a 3.7% year-on-year slump in subscriber additions in the fourth quarter.
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