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Partial tariff hike - seasonality = steady quarter

* We believe that, for Bharti and VIL, the seasonality in wireless revenues will be offset by the tariff increase in selected plans and the absence of free recharges provided to lowincome subscribers in Q1. Bharti and VIL initiated price hikes in corporate-postpaid and minimum recharge plans, effective from 1 Aug’21. This should support an ARPU increase of ~6%. However, the upward revision in entry-level plans could lead to higher monthly churn due to SIM consolidation. Considering that VIL has a relatively higher proportion of rural subscribers, we believe the company will see a greater impact, with a ~10mn contraction in its subscriber base. Bharti’s base should remain stable with underlying net adds offsetting the impact of SIM consolidation. For Jio, we anticipate it to outdo peers once again, with 15mn subscriber additions in the quarter.

* We expect to see healthy data subscriber additions across the board, with Bharti adding 11.8mn data subscribers, while VIL’s additions are expected at 6.1mn, after registering a contraction in the previous quarter. ARPU for both the companies should increase by ~6% on mix improvement and the flow-through of the tariff revision.

* Consolidated EBITDA for Bharti is likely to rise 6% sequentially, along with a minor expansion in margins as well. Among the non-wireless segments, the home broadband business should register healthy subscriber additions of 0.5mn. We believe that revised capex guidance for the India business will be key to watch out for. The performance of the African business should also be healthy, supported by a stable Nigerian Naira qoq and the resumption of new subscriber enrolments in Nigeria. Meanwhile, VIL’s EBITDA is projected to rise by 2% sequentially.

* Jio: We expect the subscriber addition momentum to continue, with 15mn subscriber additions in Q2. Consolidated revenues are estimated to rise 4% qoq. ARPU is likely to be stable at Rs139 vs. Rs138 in Q1. EBITDA is estimated to rise by 3.5% qoq.

* Indus Towers: Consolidated revenues are anticipated to go up by 4% qoq. Energy reimbursements are forecasted to rise by 6% sequentially, boosted by a jump in diesel prices. Rental revenues should see a 2% increase. EBITDA is likely to rise 1% qoq. Energy margins should continue to tread negatively though. Tower roll-outs should see an uptrend, with 2,000 additions after being delayed by the lockdown in the previous quarter. Tenancy additions should stand at ~2,980 vs. 2,917 in Q1, with the majority of this being driven by Bharti.

* Tata Communications: We estimate 3% sequential growth in data segment revenues, driven by the gradual recovery in revenues and smaller deal wins. However, the high base of Q2FY21 might restrict yoy growth. On the EBITDA front, we are projecting margins to be stable qoq. The debt position will be watched out for as the company witnessed a rise in the preceding quarter due to the bonus payout to employees and higher working capital.

* In the telecom space, we continue to be positive on TCOM, backed by the bounce-back in revenues, cash generation, and balance sheet deleveraging. We recently downgraded Bharti as there is now more visibility on the survival of VIL as a result of the relief package announced by the government recently and the sharp run-up in the stock price. That said, we are positive on Bharti from a longer-term perspective, as we believe that VIL’s financial viability will still have lot of variables after the moratorium ends in FY26-27E.

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