India’s second largest telecom company Bharti Airtel is likely to report strong earnings for the September quarter later today.
The company will likely report a 75 to 110 percent year-on-year (YoY) growth in net profit for the quarter, while its revenue growth is expected around 20 percent. The company's operating profit margin is likely to expand over the last year but contract sequentially.
“Indian wireless revenues are expected to see 2.5 percent quarter-on-quarter (QoQ) growth at Rs 18,621 crore. India non-wireless revenues traction are expected to remain robust, especially broadband and enterprise,” ICICIdirect said. “We expect India EBITDA margins at 51.9 percent, up 80 bps QoQ, aided by partial benefit of lower spectrum usage charge.”
The brokerage house expects a reported average revenue per user (ARPU), an important metric to gauge efficiency of telecom business, to rise 2 percent on-quarter at Rs 187 with benefits of subscriber mix and higher number of days during the quarter.
Last week, Airtel Africa reported a 17.2 percent decline in net profit to $133 million in the quarter ended September 2022 on an annual basis. The latest hit was due to higher foreign exchange rates and derivative losses, the company said.
Emkay Global expects Airtel’s APRU to grow 1 percent on-quarter, which is similar to what Reliance Jio reported earlier in the month. Jio reported an ARPU of Rs 177.2, growing 0.8 percent sequentially.
ARPU growth for telecom companies have slowed down as all impact of tariff hike taken in the previous year has been reflected in the numbers. Analysts and market participants are waiting for the next round of tariff hikes now.
Reliance Jio Q2 Result | Net profit rises 28% YoY, ARPU grows 23.5% to Rs 177.2
The India mobility segment for Airtel is likely to grow at 1 percent QoQ, Emkay said, adding that on the non-mobility front, the homes and enterprise segments are likely to report a steady growth of 5 percent and 3 percent, respectively, while DTH would decline by another 0.4 percent QoQ.
Analysts across the spectrum expect a modest addition of 2 million subscribers during the quarter. In comparison, Reliance Jio has been adding subscribers at a relatively faster rate. In Q2, for the connectivity business, the net subscriber addition was at 7.7 million for Jiio. Gross additions were at 32.7 million.
Yes Securities also said that Airtel’s earnings are likely to stand higher YoY and QoQ primarily on improvement in ARPU and due to continued addition in the 4G subscriber base.
Analysts said management commentary on the ARPU trajectory and non-wireless business will be key things to watch out for.
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