Bharti Airtel, Vodafone Idea: Key things to watch in telcos' Q1 results

Analysts expect telecom companies – Bharti Airtel and Vodafone Idea – to report 1-3 per cent sequential topline growth for the April-June (Q1FY23) quarter aided by limited mobile broadband upgrades, and residual impact of around 20 per cent tariff hike done in November 2021.
 

Moreover, the tariff hike may also lead to muted subscriber addition for Bharti Airtel, and churn for Vodafone Idea, they said. 
 

"We forecast telecom operators to report Q1FY23 revenue growth of 1–5 per cent quarter-on-quarter (QoQ), largely led by average revenue per user (ARPU) improvement. We also anticipate the subscriber shift from weak to strong operators to continue. For Ebitda (earnings before interest, tax, depreciation, and amortization) margins, we are building in contraction of 45–145 basis points on account of inflationary pressure," noted Edelweiss Securities.
 

The brokerage said details on spectrum investments, commentary on 5G capex, rollout timing, and 4G subscriber addition will be the key monitorables.
 

Vodafone Idea is slated to report its Q1FY23 earnings on August 3, whereas Bharti Airtel would report its results on August 8.
 

Here's what key brokerages expect:
 

Bharti Airtel

Analysts expect Bharti Airtel to report revenue growth of 21-22 per cent year-on-year (YoY) to Rs 33,130.8 crore. Sequentially, this could mean around 5 per cent improvement. 
 

Ebitda, on the other hand, is projected to grow anywhere between 21-29 per cent YoY, and up to 5 per cent sequentially. In absolute terms, Ebitda is pegged in the range of Rs 15,897.5 crore to Rs 16,795.5 crore.
 

"We expect 3 per cent QoQ growth in India wireless business revenues, and 4 per cent growth in Ebitda underpinned by 3 million QoQ increase in EoP subscriber base to 329 million, and modest increase in ARPUs to Rs 185/month," said Kotak Institutional Equities.
 

ICICI Securities expects Airtel India’s Ebitda margins to come at 50 per cent, down 80 bps QoQ, with higher network opex. Overall consolidated margins are expected at 49.9 per cent, down 100 bps QoQ.
 

That said, net profit estimate range widely between Rs 1,729.5 crore (JPMorgan) and 2,881.3 crore (JM Financial). Reported PAT was Rs 283.5 crore in Q1FY22, and Rs 2,007.8 crore in Q4FY22.
 

Vodafone Idea

Debt-laden Vi could continue to reel under pressure, said analysts, as they expect the telco’s net loss up to Rs 6,797 crore. This compares with last year’s net loss of Rs 7,319.1 crore, and previous quarter’s (Q4FY22) loss of Rs 7,001.1 crore.
 

Revenue growth, meanwhile, is seen between 1-3 per cent QoQ, up to Rs 10,552 crore. Edelweiss Securities bakes in around 2 per cent ARPU increase and 2.5 million subscriber decline, while Edelweiss Securities factors in 3.1 per cent QoQ improvement in ARPU on the back of 2 million subscriber churn.
 

Ebitda margins, therefore, are likely to contract up to 220bps QoQ to 43 per cent. Adjusted for the one off benefit last quarter, Ebitda margin to expand 147bp QoQ. 
 

Key things to watch out would be update on fund raise, plan to increase network capacity, and arrest subscriber decline. 
 

"We expect overall revenues to grow 0.8% per cent QoQ at Rs 10,319 crore. Ebitda is seen at Rs 4,461 crore, and may decline 4 per cent QoQ. Reported margins are expected at 43.2 per cent, down 220 bps QoQ, as base quarter had some one-off benefits. The company is expected to post a net loss of Rs 6,496 crore. Key monitorables will be ARPU trajectory and capex commentary ahead," said ICICI Securities.