Airtel may see highest revenue growth, user addition in Q3: Analysts

Residual benefits from last July's tariff hike, Indus consolidation to help telco

Bharti Airtel is expected to see its highest revenue growth, and subscriber addition during the third quarter (October-December) of FY25 among telcos, said analysts.

 

The telco's top line in Q3 may see the fastest sequential growth at 5 per cent compared to 3 per cent for Reliance Jio and Vodafone Idea (Vi). Airtel's annual mobile revenue growth would rise to 16 per cent, IIFL Capital said in an analyst note.

 

“Airtel may witness the highest mobile revenue growth over Q1-Q4 FY25 (post tariff hikes). Jio’s overall revenue growth of 4 per cent is likely to be aided by brisk fixed wireless access (FWA) subscriber additions. Bharti’s home broadband segment should also do well, while enterprise, direct to home (DTH) and Africa would see steady performances,” it said.

 

Residual benefit of last July's broad-based telecom tariff hike is expected to help all telcos, it added. 

 

Other analysts echoed this view. “We expect Bharti/Hexacom’s top lines to see the fastest quarter-on-quarter (Q-o-Q) growth at 4-4.5 per cent, followed by Jio at 3 per cent. Vi’s growth will be much more muted at 1 per cent,” Axis Capital said in a note. Airtel saw 10.3 per cent Q-o-Q mobile revenue growth in Q2, the highest in the industry. 

Airtel's overall numbers will also be boosted by Q3 seeing 42 days of Indus Towers’ consolidation, Bank of America said in an analysts note. 

 

The Competition Commission of India (CCI), on October 22, cleared Airtel's proposal to increase stake in Indus Towers to 50.5 per cent, following a buyback of shares by the telecom infrastructure company.

 

“Q3 reported numbers are not comparable to historics as Q3 will have 42 days of Indus Towers’ consolidation. After consolidating Indus, we estimate Bharti’s revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) to be Rs 44,300 crore,” Bank of America said.

Higher telecom tariffs imposed in July 2024 had boosted net profits for Airtel and Jio in Q2. Airtel’s net profit (attributable to owners) for Q2 had risen 168 per cent year-on-year (Y-o-Y) to Rs 3,593 crore from Rs 1,340 crore in Q2FY24.

 

Jio Platforms Ltd (JPL), which runs India’s largest mobile network operator Reliance Jio, had reported a 23.4 per cent Y-o-Y rise in net profit to Rs 6,539 crore. 

 

Meanwhile, Vi saw its net loss shrink 17.8 per cent to Rs 7,175 crore in Q2. But its network expansion is expected to raise tower and tenancy additions for Indus Towers in Q3.

 

“This should lead to rental revenue growth of 7 per cent Y-o-Y.

 

Vi is also likely to continue repaying its overdues, helping reduce Indus’s provision for doubtful debt,” Axis Bank said.

 

After a brief impact of SIM consolidation, subscriber numbers of private telcos will likely start growing again from Q3.

 

Airtel and Jio are estimated to add a total of 5 million and 3 million subscribers, respectively, while VI’s subs may fall by 4 million, ICICI Securities had said in an analysts’ note last week.

 

The key metric of 4G/5G subscribers should remain stable for Airtel. It is expected to add up to 6 million subscribers in that category in Q3, while Vi may lose 1 million subscribers.

Since the tariff hike was implemented, all three private sector telcos have seen major hits to their subscription numbers.

 

Since July, Jio has lost the most subscribers at 16.48 million, while Airtel has managed a much smaller 3.6 million user loss.

 

Vi has seen 6.8 million users abandon its service.