Motilal Oswal expects the telecom companies in its coverage universe to report losses for the 13th straight quarter, but sees such losses narrowing to Rs 4,640 crore from Rs 6,280 crore a year ago.
“We expect some earnings improvement in 2QFY21 quarter as migrant workers’ have started returning to work with the opening up of the economy, which should increase recharges from low ARPU subscribers,” Motilal Oswal analysts said in a note.
The brokerage also pointed out that with the nationwide unlocking, business conditions are improving and some SIM consolidation, which was witnessed in the quarter ended June could have seen a reversal in the September quarter.
Kotak Institutional Equities expects Bharti Airtel to report a net profit of Rs 75.7 crore, compared with a loss of Rs 23,044.9 crore a year ago, while it expects Vodafone Idea to log a net loss of Rs 927 crore, compared with a loss of Rs 50,921.9 crore earlier.
“We expect Indian telcos to report a stable 2Q, with all telcos showing positive QoQ (quarter-on-quarter) growth. 2Q every year typically shows seasonal weakness led by monsoon, but every year the magnitude is declining,” BofA Securities said in a note on October 8.
BofA analysts noted that while subscriber additions have picked up from the June quarter as lockdown pressures have eased, they are not yet at pre-Covid levels for the industry. Fixed broadband net additions have picked up for both Bharti Airtel and Jio in the September quarter.
ARPU is expected to see improvement for all telcos on a QoQ and year-on-year basis, due to improvement in customer mix and reversal of SIM consolidation of 4G subscribers, which should partially get offset by return of low ARPU feature phone subscribers.
“While Q1FY21 was weak owing to erosion in the subscriber base, we expect Q2FY21 to be much better operationally with an arrest in the decline thereof,” Edelweiss Securities said in a note.
The brokerage expects ARPUs to increase slightly for all industry players, as the lockdown has significantly raised the importance of telecom services over the past few months, and the trend is likely to continue.
Axis Capital expects Reliance Jio to benefit from higher subscriber additions than competitors as well as ARPU improvement from addition of higher ARPU Jio Fiber customers. It sees Bharti Airtel and Vodafone Idea’s revenue improving QoQ, as recharges improve on easing of lockdown restrictions.
It expects the rise in wireless revenue to be more pronounced for Bharti Airtel at 2.7 per cent QoQ, than Vodafone Idea – at 1.4 per cent QoQ as the latter is seen continuing to report subscriber loss, albeit at a slower pace.
According to Emkay Global, after seeing improvement in the last two quarters, ARPU is likely to rise by only 1 per cent for Bharti Airtel, while Vodafone Idea may record a 4 per cent rise in ARPU, led by a low base and a 4 million increase in data subscribers after a 6 per cent dip in ARPU in the previous quarter.
Emkay Global pointed that since a meaningful proportion of Vodafone Idea subscribers is in the rural areas, and relatively the impact of seasonality would be high for the telecom operator.
The brokerage expects Vodafone Idea to shed 3 million subscribers in the quarter, while Bharti Airtel’s subscriber base may rise by 3 million.