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    Airtel, Vodafone Idea mobile revenue, operating income likely to dip


    But both of India’s older telcos are likely to gain on the margins front.

    Emkay Global added that VIL and Airtel’s India wireless revenue fall would also be due the SIM consolidation and absence of international roaming revenues.

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    Kolkata: In the first post-Covid19 estimates, Bharti Airtel and Vodafone Idea (VIL) are likely to report sequential falls in mobile revenue and operating income in the April-June period as many of their feature phone users could not recharge during the pandemic-induced lockdowns, analysts said.

    Market leader Reliance Jio though, they said, would stave off Covid19 blues and report higher revenue, operating income as well as strong profit growth in the three-month period, helped by the delayed impact of tariff hikes taken last December, decent customer adds and aggressive debt restructuring.

    But both of India’s older telcos are likely to gain on the margins front, courtesy lower sales & marketing costs and lower payouts towards commissions during the pandemic. VIL though is set to suffer heavy customer losses again in the June quarter.

    “Airtel and VIL’s revenues will be impacted by the Covid19-led lockdown as many of their feature phone users could not recharge in the June quarter, and latter’s revenues will further suffer due to continued subscriber losses,” Axis Capital said in a note seen by ET.

    Emkay Global added that VIL and Airtel’s India wireless revenue fall would also be due the SIM consolidation and absence of international roaming revenues.

    Axis estimates Jio to report an almost 13% sequential rise in net profit in the June quarter at Rs 2,593.4 crore -- – its 11th successive quarterly profit. Revenue is estimated to grow 6% on-quarter and 27% on-year, to Rs 15,724.40 crore.

    Emkay estimates Jio’s profit after tax to grow 11% on-quarter, aided by “lower interest charges, post-fund raise” (by Jio’s parent, Jio Platforms) and debt-restructuring” in the March quarter, FY20.

    In the last two months, Reliance has raised a whopping Rs 1,17,588.45 crore by offloading upto 25.09% holdings in its digital and telecom business arm, JPL, which counts Jio as its major component.

    Last December, the three private telcos had hiked bundled prepaid tariffs by around 14-33%, which analysts expect to primarily benefit Jio as more of its users recharged to new higher value plans in the June quarter. By contrast, in Airtel and VIL’s case, any impact of these tariff hikes, they said, are likely to be more than offset by revenue dips caused by inability of their feature phone users to recharge during lockdowns. Analysts estimate around 40% of Airtel and VIL’s customers are feature phone users.

    Axis estimates Jio to have added 5.8 million users on-quarter, while its expects Airtel to hold on to its 284 million-strong user base, and sees VIL losing another 15 million users, further shrinking its user base to 276.1 million.

    It estimates Airtel and VIL to also report 3.2% and 1.9% sequential falls in their average revenue per user (ARPU) – a key performance metric – to Rs 149 and Rs 119 respectively, while it sees Jio’s growing 2.8% on-quarter to Rs 134.

    Brokerages though see Airtel and VIL narrowing their June quarter losses, partly helped by the last tariff hike and margin gains from lower commissions due to digital recharges during the pandemic, lower marketing expenses and sales & distribution costs. Airtel’s June quarter losses are estimated in the Rs 319-to-624.5 crore range while VIL’s is likely to hover in the Rs 4,972-6,172 crore range.

    Airtel and Vodafone Idea had posted heavy losses of Rs 5,237 crore and Rs 11,643.5 crore respectively in the March quarter. Both have stung by the Supreme Court verdict on adjusted gross revenue (AGR) and face total statutory dues of Rs 43,980 crore and Rs 58,254 crore respectively. They have sought 20 years to clear them. The nation’s top court will hear the case in the third week of July, by when the telcos and the government have been directed to firm up a roadmap for clearing their balance licence fee and spectrum usage charge (SUC) dues, which might include an upfront payment clause.

    Axis Capital estimates Airtel’s consolidated revenue to fall 1.8% on-quarter, but grow 12.3% on-year to Rs 23,296.4 crore in the April-June period, partly helped by stable performance of its enterprise and DTH businesses as bulk of corporate staff worked from home during lockdowns. It estimates VIL’s June quarter revenue, in turn, to fall 3.7% sequentially, and stay flattish on-year at Rs 11,314.7 crore.
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    9 Comments on this Story

    Pranesh Ek36 days ago
    First you bomb them with AGR then push the case as far as you can so that they never come out of AGR, On the other hand investor will move to Jio then brand Airtel and VIL as loss making company. How will any company survive these kind of pressure tactics?
    samynarayana38 days ago
    One of the worst affected sector, often NOT SEEN in public is CONTRACTORS ENGAGED BY AIRTEL, VODAFONE. Many tower operations, line laying, home installations , tele-soliciting are all contracted out. The dues to tower maintebnannce companies alone and that too by AIrtel alone runs to a few thousand crores. Results in poor quality, line drop, signal drops. HIGH TIME GOVT RECOGNISES THIS SECTOR AND REINS IN AIRTEL / VODA / IDEA. I have no clues about jio. but i know of Airtel because i was associated with 3 such contractors and lost money myself.
    Shri 39 days ago
    Time to double prices in India for all users and improve quality. Pay and Use. Good Way To Improve.
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