IGI Logo

We expect Jio and Bharti’s EBITDA to grow by a modest 2-3% QoQ driven by MBB upgradesled growth of 1-2% in ARPU; ARPU growth will also be aided by one more day during the quarter. We expect Jio’s net subs to grow by ~7mn in 1QFY24 and ARPU to rise 0.8% QoQ to INR 180, driving 2.3% QoQ growth in revenue and 2.5% QoQ growth in EBITDA. For Bharti, we expect MBB subs addition at ~6mn, resulting in 1.8% QoQ rise in ARPU to INR 196, driving 2.4% QoQ growth in India wireless revenue and 2.3% QoQ growth in EBITDA. We expect VIL’s subs losses to continue; however, its ARPU is likely to rise 1.7% QoQ to INR 137. We expect net tenancy additions for Indus Towers to remain healthy; hence, EBITDA is likely to rise 3% QoQ in 1QFY24. Bharti remains our top pick (revised TP of INR 975) as we expect a structural uptrend in industry ARPU (9-10% CAGR over FY24-28) driven by future investment needs – the industry requires an ARPU of INR 267-296 in the next 3-4 years for a pre-tax RoCE of 12-15% to justify capex. We maintain HOLD on Indus Towers (revised TP of INR 160) due to duopoly risks and a SELL on VIL (unchanged TP of INR 6) due to concerns around survivability

* Jio’s 1QFY24 EBITDA to rise 2.5% QoQ led by 0.8% QoQ rise in ARPU to INR 180 and 7mn rise in net subs: We expect Jio to report a net addition of 7mn subscribers in 1QFY24 (TRAI’s Apr’23 subscriber data showed net subscriber addition of 3mn for Jio in Apr’23) – this will be the fifth quarter of net addition of subscribers (net addition of 6mn/5mn/8mn/10mn in 4QFY23/3QFY23/2QFY23/1QFY23) for the company after having reported net decline of 11mn/9mn/11mn subscribers in 4QFY22/3QFY22/2QFY22 due to repurposing of customer retention efforts for low-ARPU subscribers. ARPU is likely to rise by a modest 0.8% QoQ to INR180 in 1QFY24 (vs. INR 179 in 4QFY23) driven by one more day during the quarter and new subscriber upgradation to smartphones. Further, strong traction in FTTH additions is likely to continue with addition of ~0.7mn. Hence, we expect 2.3% QoQ growth in Jio’s standalone revenue to INR 240bn, with EBITDA likely to grow 2.5% QoQ to INR 126bn.

* Bharti India wireless EBITDA to grow 2.4% QoQ led by 1.8% QoQ rise in ARPU to INR 196 and ~6mn addition to MBB subs: Bharti is expected to report healthy mobile broadband (MBB) subscriber addition at ~6mn in 1QFY24, like that witnessed in the last couple of quarters (TRAI’s Apr'23 subscriber data showed ~2.3mn addition in MBB subscribers); however, overall subscriber addition might continue be muted at 2mn subscribers due to continued churn in the low-ARPU segment. ARPU is expected to increase 1.8% QoQ to INR 196 (vs. INR 193 in 4QFY23) driven by one more day during the quarter and MBB upgrades. We build in 2.4% QoQ growth in India wireless business revenue to INR 200bn, and 2.3% QoQ rise in EBITDA to INR 108bn; the enterprise business is also expected to post healthy EBITDA growth of 3.8% QoQ, while we expect steady additions in FTTH (357k subscriber addition QoQ). Hence, we expect consolidated EBITDA to grow 2.2% QoQ at INR 194bn.

* VIL’s subs losses likely to continue; however, ARPU to rise 1.7% QoQ to INR 137: We expect VIL’s subscriber loss trend to continue, with net subscribers declining by ~5mn in 1QFY24 (had been witnessing decline of 3-6mn per quarter since the last few quarters) due to migration of subscribers to other telcos. However, we expect ~1mn addition to MBB subscriber base (TRAI’s Apr'23 subscriber data showed ~1.3mn decline in MBB subscribers). We expect ARPU to rise 1.7% QoQ to INR 137 in 1QFY24 (vs. INR 135 in 4QFY23) driven by one more day during the quarter and improving subscriber mix. Hence, we expect revenue to decline ~2.3% QoQ at INR 103bn; EBITDA is likely to decline ~2.8% QoQ to INR 41bn.

* Net tenancy additions for Indus Towers expected to remain healthy: We build in ~2.8k net tenancy additions in 1QFY24 for Indus Towers vs. ~3.4k in 4QFY23; we expect tower additions at ~2.4k. Further, we assume rentals to rise 1.6% QoQ. Hence, revenue is likely to improve 2.5% QoQ; EBITDA is expected to rise 3% QoQ in 1QFY24.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.jmfl.com/disclaimer

SEBI Registration Number is INM000010361

Above views are of the author and not of the website kindly read disclaimer