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Kolkata: The first round of price hikes in over three years is set to immediately boost revenue, operating income and margins of Reliance Jio, Bharti Airtel and Vodafone Idea in the fiscal third quarter, said analysts.
They, however, expect full impact of the higher tariffs to be palpable only in the January-March period.
The higher tariffs, experts said, are unlikely to have triggered any sharp fall in consumption of voice and data services during the December quarter as many mobile users are on longer-term validity plans.
Analysts though added that minor dips on that score could have been the result of frequent internet shutdowns and mobile service disruptions last month amid countrywide protests over the Citizenship Amendment Act (CAA).
In early December, Bharti Airtel, Vodafone Idea and Jio increased their bundled prepaid tariffs by around 14-33 per cent.
Axis Capital estimates Mukesh Ambani-led Jio to report a near 60 per cent sequential jump in net profit at Rs 1,578.2 crore in the December quarter — its ninth successive quarterly profit — also, helped by strong customer growth.
It also expects the price rise and pass-through of interconnect usage charge (IUC) to users to help the telecom market leader arrest the fall in its average revenue per user (Arpu) — a key performance metric that had fallen for the past seven quarters — and report a 2.6 per cent sequential gain to Rs 123.
The brokerage also estimates Sunil Mittal-led Airtel and Vodafone Idea to narrow their December quarter losses to around Rs 1,490 crore and Rs 4,324 crore, respectively.
Airtel and Vodafone Idea, it estimates, will also report modest Arpu gains on-quarter to Rs 129 and Rs 107, respectively.
Airtel and Vodafone Idea had posted unprecedented losses of Rs 23,045 crore and Rs 50,922 crore, respectively in the July-September quarter, after provisioning for adjusted gross revenue (AGR)-based dues following a Supreme Court ruling last October.
Both telcos were hit hard by the apex court verdict that backed the government’s wider definition of AGR and face statutory dues upwards of Rs 53,000 crore and Rs 35,000 crore, respectively, which they need to clear by January 23.
Both have filed limited review pleas in the apex court, in the hope of softening the AGR blow.
But the top court is yet to consider their pleas.
“We expect revenue and Ebitda for wireless service providers to improve led by price hike in December 2019 though the full impact is expected only in Q4FY20.
Jio’s revenue Subscriber market share gain set to continue, though at a moderate rate versus past few quarters,” Axis Capital said in a note.
Jio is likely to report December quarter results around the third week of this month, while Airtel and Vodafone Idea are likely to do so by end-January.
“It would take around 60-90 days for the full user base of the Big 3 telcos to migrate to the new tariffs as many would still be on longer-validity packs (such as 84-day plans), and any dips in data consumption in the third quarter, if at all, may have been caused by frequent internet shutdowns following protests over the new citizenship law,” Rajiv Sharma, research head at SBICap Securities, told ET.
The price hikes by the Big 3 telcos though, he said, are likely to trigger sequential growth in their Q3 revenue, earnings before interest, tax, depreciation and amortisation (Ebitda) and Arpu, although the full beneficial impact of the hikes would be evident only in the March quarter.
Axis Capital estimates Jio’s quarterly revenue to grow 29.4 per cent on-year and 8.7 per cent on-quarter to Rs 13,431.3 crore.
For Airtel, consolidated revenue may grow 8 per cent on-year and 3.4 per cent on-quarter to Rs 21,859 crore, helped by price hikes, growth in India wireless revenue, three million-odd customer adds and resumption of mobile services in J-K.
Airtel’s India wireless revenue, it estimates, will grow 4.1 per cent on-quarter to Rs 11,437 crore, the firm said.
Vodafone Idea’s quarterly revenue, it estimates, will also rise 2 per cent on-quarter, but fall 6 per cent on-year to Rs 11,063.5 crore, also helped by more customers going 4G.
The brokerage though sees more low-Arpu Voda Idea customers exiting in the third quarter, but expects the company’s bottom line to improve sequentially, courtesy, revenue growth and synergy benefits.
