According to ICICI Securities, Bharti Airtel’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) is likely to benefit by Rs 1 billion due to nil interconnection usage charge (IUC), while Vodafone Idea (Vi) would be hurt by Rs 0.8 million from the change.
Nil IUC came into effect from January 1, 2021, wherein interconnect charges were moved to nil from the earlier 6 ps/min.
Further, the report estimate the consequent average revenue per user (ARPU) impact at Rs 14 each for Airtel and Vi. Airtel was net IUC payer of Rs 1-1.2 billion, while Vi was net IUC receiver of Rs 0.8 billion. The brokerage said that the Q4FY21 had 90 days compared to 92 days in Q3, hence it expects a 2 per cent (quarter-on-quarter) QoQ impact from the lower number of days. Airtel is likely to continue its strong subscriber growth (8 million) while Vi would lose subscriber (1.5 million), but lower than in previous quarters. Both companies’ comparable ARPU may slightly rise QoQ on higher 4G subs addition, report added.
Further, it added that Vi EBITDA is expected to dip 2.4 percent QoQ to Rs 42 billion. It expect Vi’s revenues (L2L) to dip 0.6 per cent QoQ to Rs 97 billion. This would be due to continued loss of subscriber which should start stabilising soon. ARPU (L2L) is likely to be stable QoQ on rise in 4G subs. EBITDA is expected to dip 2.4 per cent QoQ to Rs 42 billion on negative impact from IUC. It estimate a net loss of Rs 63 billion for Vi due to nil tax rebate.
Further, ICICI added that Airtel’s consolidated EBITDA is expected to be up 1.8 percent QoQ to Rs 123 billion. Its India revenues are likely to grow (L2L) 2 per cent QoQ (11.9 per cent YoY) to Rs 182 billion, led by mobile segment (up 3.0 per cent QoQ / 18 per cent YoY) on the back of subs growth of 2.6 per cent QoQ. The brokerage also expects Indus Towers’ tenancies to rise by 3,500. However, rental per tenant may fall 4.5 per cent QoQ to Rs 42,819 as the base had the benefit of higher penalty collections.
