According to a report by ICICI Securities, Bharti Airtel and Vodafone Idea Limited (VIL) are likely to see a decline in subscriber base. The decline is expected to due to SIM consolidation from tariff hike and fall in users amid COVID-19.
ICICI Securities highlights in its reports that Airtel and VIL are set to see subscriber decline of 3 million and 15 million, respectively, in the fourth quarter (Q4) of financial year (FY) 2020. However, average revenue per user (ARPU) for Airtel and VIL will see strong increase of 11.6 per cent and 12 per cent on a quarter-on-quarter (QoQ) basis to Rs 150 and Rs 122, respectively.
The increase in ARPU is on the back of benefit from tariff hike and migration to 4G from 2G, which is ARPU accretive. Further, the firm expects 4G subscribers net addition of seven million and five million for Airtel and VIL, respectively.
Airtel’s consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to rise 10.9 per cent QoQ to Rs 103 billion, ICICI said. Meanwhile, its revenue is likely to grow 10.2 per cent QoQ, 13.5 per cent year on year (YoY) to Rs 175 billion mostly led by mobile segment and EBITDA growth of 16.5 per cent QoQ to Rs 76 billion. EBITDA margin is expected to increase by 235 basis points QoQ to 43.4 per cent.
As per the report, Airtel’s Africa and US revenue and EBITDA are likely to dip 1.5 per cent QoQ to $870 million and down 2.4 per cent QoQ to $385 million, on seasonality.
Meanwhile, the firm expects Bharti Infratel’s tenancies to rise by 1,640 and a dip in rental revenue to 1.4 per cent QoQ (up 6.8 per cent YoY) to Rs 22.5 billion, resulting from removal of equipment by tenants who have given exit notice. EBITDA is likely to drop 0.7 per cent QoQ to Rs 18.6 billion, ICICI added.