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Airtel, Idea, RCOM may report data woes in Q1

Bharti Airtel, Idea Cellular and Reliance Communications are likely to report continued pressure on their data business in the quarter to June, though voice realizations may improve. “Deceleration in data volume growth in the past couple of quarters is likely to continue, and reversing the trend could need decisive pricing action by incumbents ahead of Reliance Jio Infocomm’s 4G launch,” brokerage Kotak Securities said in a note.

The brokerage expects a combination of slower data volumes growth and a dip in realisations to drive a further slowing in the telcos’ data revenue growth in the fiscal first quarter ended June 30.

Credit Suisse though expects voice revenue per minute (RPM) to show some improvement but is concerned about sustainability.”We worry about sustainability as it appears Bharti has only partially followed Idea’s attempts at raising tariffs in the March `16 qu arter, and we’ve picked up some reversals of earlier tariff increases across operators.”

Some brokerages also expect the listed telcos to be partly impacted by the migration to the Ind-AS reporting format for Indian companies, starting the June quarter.This is since under the new system, foreign exchange (forex) losses on new debt will be accounted for in the income statement.

Bharti Airtel is slated to report a year-on-year fall in its consolidated net profit in the fiscal first quarter from `1,554 crore last year, weighed down by adverse Africa forex pressures and higher interest costs that are likely to blight the strong performance of its India wireless business.

Analysts, however, are split on the potential degree of Airtel’s profit fall, with some predicting a modest 4.4% slip, while others expect the profit fall to be much steeper at nearly 50%.

Credit Suisse expects India’s No 1 mobile carrier’s consolidated revenue to grow 8.6% year-on-year to nearly `25,715 crore, although its average revenue per user (ARPU) is likely to remain flattish year-on-year at `198.

Kotak expects Airtel to report sub-40% year-on-year data revenue growth in the first quarter, driven by nearly 50% volume growth, but tempered by a 2 paise dip in realisations.

“Africa remains tough for Airtel, and the Naira devaluation and stringent KYC (know your customer) norms across a few markets are likely to lead to a weak quarter for Airtel Africa, with (Africa) top-line and Ebitda likely to see a sequential decline of 4% and 6% in INR terms respectively ,” brokerage Citi Research said.

India’s No 3 carrier, Idea Cellular, is expected report a year-onyear 37% to 62% fall in its first quarter consolidated net profit from `930.8 crore last year, amid sustained pressures on data vo lumes growth along with mounting depreciation and amortisation (D&A) and interests costs linked to spectrum payouts.

Brokerage Kotak expects Idea to report an 8.7% year-on-year growth in its consolidated revenue to `9,563.6 crore.

It pegs Idea’s data revenue growth to be around a modest 25%, driven by sub-40% data volumes growth and lower realisations. Credit Suisse, however, expects Idea’s monthly ARPU to inch up to `184 from `182 last year.

Analysts also expect Idea’s Ebitda margins to contract 120 basis points (bps) quarter-on-quarter, led by higher network opex costs and increased selling and marketing spends.India’s fourth-largest mobile carrier is slated to report a year-onyear 13% to 29% fall in consolidated net profit in the fiscal first quarter from `177 crore last year, hit by modest call volumes growth and reduced data revenue momentum.

Year-on-year consolidated revenue growth at the Anil Ambaniowned company in the first quarter is likely be flattish at `5,579 crore, said Credit Suisse.

The Swiss brokerage expects RCom’s monthly average revenue per user to decline by nearly 4% sequentially to `151.

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