Bharti Airtel (Bharti)/Vodafone Idea (VIL) are estimated to report wireless revenue dip of 1-3% QoQ; though customer revenue for Bharti has stabilised, ICR revenue has been lower. The benefit of minimum recharge pack may be visible from Q4FY19, implying that the only positive takeaway for Q3 is improvement in mobile broadband subs addition. RJio revenue is estimated to grow a strong 11.8% QoQ, but margin dip would be a sour point. Bharti Infratel’s EBITDA is likely to dip 7.5% QoQ on full quarter impact of VIL’s tenancy exits. TCom to report flattish EBITDA.
* Bharti/VIL ARPU rise of 1-3% QoQ is arithmetical; RJio ARPU dip of 2.3% QoQ on higher mix of Jiophone subs. We factor subs dip of 15mn and 20mn for Bharti and VIL – these were mostly inactive subs thus arithmetically it improves reported ARPU. We are yet to see benefit of higher mobile broadband subs addition and introduction of minimum recharge packs on revenue/ARPU. RJio’s ARPU dip of 2.3% QoQ to Rs129 is largely due to higher Jiophone subs that offer just Rs90 ARPU.
* Bharti Airtel’s consolidated EBITDA likely to be flattish QoQ to Rs62bn (down 17.6% YoY). We estimate Bharti India revenues to dip 1.8% QoQ (4.5% YoY) to Rs147bn and EBITDA to fall 3.1% QoQ (28.6% YoY) to Rs41.2bn. We expect revenues to dip QoQ for all segments except DTH. Bharti Africa’s USD revenue and EBITDA to rise 3.2% YoY (1.3% QoQ) to US$819mn and 3.3% YoY (down 2.9% QoQ) to US$291mn, respectively. Bharti Airtel is expected to report net loss of Rs11bn. We expect net debt to reduce by Rs60bn QoQ on US$1.25bn proceeds received from Africa stake sale.
*VIL like-to-like EBITDA to grow only 1.2% QoQ (down 68%) to Rs10bn despite synergy benefits. Comparable revenues are estimated to dip 2.7% QoQ on higher subs decline, and benefit of network integration is yet to show. We expect synergy benefit of Rs4.5bn on account of lower number of towers, and some saving accruing from remaining costs. We expect VIL to report net loss of Rs40bn for Q3FY19.
* RJio revenues estimated to rise 11.8% QoQ to Rs103bn led by strong 30.7mn subs-add, but ARPU to dip 2.3% QoQ to Rs129. This could be the first quarter when RJio’s reported revenues are higher than Bharti. RJio’s costs are estimated to rise while access charges to benefit from higher on-net calls and off-net incoming minutes. EBITDA is likely to grow 9.3% QoQ to Rs39bn, EBITDA margin is likely to contract 90bps QoQ to 37.8%. Incremental EBITDA margins have shrunk to 31% from 46% in Q1FY19. We expect PAT at Rs7.5bn, up 10.3% QoQ (59% YoY).
* Bharti Infratel tenancy to increase by 1,220, but rental revenues to dip 6.5% QoQ (12.3% YoY) to Rs20bn due to full quarter hit of tenancies cancelled by VIL. EBITDA is likely to drop 7.5% QoQ (14% YoY) to Rs13.7bn. We expect consolidated net profit to drop 6.0% YoY and 8.3% QoQ to Rs5.5bn.
* Tata Communications (TCom) EBITDA likely to dip 2.8% YoY but remain flattish QoQ to Rs6bn. We estimate GVS revenues to drop 3.0% QoQ and EBITDA margin at 6%. GDS revenues are estimated to grow 3.0% QoQ and EBITDA margin to improve by 64bps QoQ to 17.2% on improvement in traditional data services margin, though off-set by wider losses for growth services. GDS EBITDA is likely to show 7.0% QoQ growth but 0.3% YoY dip to Rs5.4bn.