Motilal Oswal’s earning estimates for the telecom segment in the December quarter

Motilal Oswal has published its December quarterly earning estimates for the telecom sector.

According to the firm, the domestic business PAT growth of 21 per cent quarter-on-quarter (QoQ) for Bharti Airtel and 9 per cent for Idea Cellular would largely be driven by approximately 8 per cent QoQ EBITDA growth.

The research firm expects Bharti Airtel’s losses in Africa to reduce from Rs 4.2 billion in the second quarter of financial year 2012 to Rs 2.9 billion in the third quarter of financial year 2012.

For Reliance Communications, the firm expects the performance PAT to decline by 67 per cent QoQ to Rs 1.1 billion.

Wireless traffic is expected to grow by 3 per cent-5 per cent QoQ while RPM is expected to increase by 1 per cent-2 per cent QoQ. This growth is expected to be driven by subscriber migration to revised higher tariffs, and the seasonal increase in NLD, ILD, roaming and VAS services usage.

Moreover, EBITDA margins are expected to expand 70 bp QoQ for Bharti and 20 bp QoQ for Idea.

The report stated, ?We expect the consolidated EBITDA margin for Bharti Airtel to increase 70bp QoQ to 34.4 per cent. We expect its margins to expand higher for its India and South Asia business at 110bp QoQ driven by tighter cost control, post recent restructuring and lower SG&A.?

?We expect Idea to report lower QoQ EBITDA margin increase of approximately 20bp to 25.9 per cent, primarily due to likely higher investments in 3G and new circles.

RCom’s EBITDA margin is likely to be down 40bp QoQ, given continued cost pressures.?

The number of subscribers added every month has declined by approximately 85 per cent year-on-year to approximately 4 million in November 2011, largely due to the negative net additions of 4.5 million reported by Tata Teleservices.

?We believe that the decline in net additions is driven by market saturation in urban areas and lower aggression and high churn rate for challengers, which implies better competitive environment for incumbents. We believe lower net additions are unlikely to impact wireless revenues and could also drive cost savings.?