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We expect revenue growth

for telecom companies to be moderate at 0-4% QoQ in 4QFY23; growth is likely to be aided by increase in data usage and MBB upgrades-led growth in ARPU. The industry continues to see outsized churn in the lower ARPU segments given the sharp hike in entry level prepaid tariff in last 18-24 months. Hence, subscriber (subs) addition is likely to remain muted. However, upgrades to high ARPU MBB (3G/4G) plans are expected to remain healthy for the industry aided by customers upgrading to smartphones. EBITDA growth is also likely to be in the moderate range of 1-3% QoQ across companies in 4QFY23. We expect Jio’s net subs to grow by ~5mn in 4QFY23 and its ARPU to rise 0.5% QoQ to INR 179, driving 1.8% QoQ growth in Jio revenue and 2.7% QoQ growth in Jio EBITDA. For Bharti, we expect MBB subs addition at ~5mn, resulting in 2% QoQ rise in ARPU to INR 197, driving 3% QoQ growth in India wireless revenue and 4.3% QoQ growth in EBITDA. We expect VIL’s subs losses to continue; however, its ARPU is likely to rise 2.5% QoQ to INR 138 led by MBB upgrades and improving subs mix. We expect net tenancy additions for Indus Towers to remain healthy; however, EBITDA is expected to continue to be impacted on account of probable provision for doubtful debt in 4QFY23.

* Bharti remains our top pick (unchanged TP of INR 940) as we expect a structural uptrend in industry ARPU driven by future investment needs – the industry requires an ARPU of INR 256- 285 in the next 3-5 years for a pre-tax RoCE of 12-15% to justify capex. We expect Bharti’s India wireless ARPU to grow at a CAGR of ~10% to INR 285 in FY28 (vs. INR 193 in 3QFY23); hence, we estimate consolidated EBITDA CAGR of ~15% over FY22-28. We maintain HOLD on Indus Towers (revised TP of INR 160) due to duopoly risks and a SELL on VIL (revised TP of INR 6) due to concerns around survivability.

* Jio’s EBITDA to rise 2.7% QoQ led by 0.5% QoQ rise in ARPU to INR 179 and 5mn rise in net subs: We expect Jio to report a net addition of 5mn subscribers in 4QFY23 (TRAI’s Jan’23 subscriber data showed 1.7mn net subscriber addition for Jio in Jan’23) – this will be the fourth quarter of net addition of subscribers (net addition of 5mn/8mn/10mn in 3QFY23/2QFY23/1QFY23), 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 modestly by 0.5% QoQ to INR179 in 4QFY23 (vs. INR 178 in 3QFY23) driven by new subscriber upgradation to smartphones and towards higher tariff plans. Further, strong traction in FTTH additions is likely to continue with addition of ~0.6mn. Hence, we expect 1.8% QoQ growth in Jio standalone revenue to INR 235bn, with EBITDA likely to grow 2.7% QoQ to INR 124bn.

* Bharti India wireless EBITDA to grow 4.4% QoQ led by 2% QoQ rise in ARPU to INR 197 and ~5mn addition to MBB subs: Bharti is expected to add only 2mn subscribers in 4QFY23 due to continued churn in the low-ARPU segment. However, MBB subscriber addition is likely to continue to be healthy at ~5mn, like that witnessed in the last couple of quarters (TRAI’s Jan'23 subscriber data showed ~2.8mn addition in MBB subscribers). ARPU is expected to increase 2% QoQ to INR 197 (vs. INR 193 in 3QFY23). We build in 3% QoQ growth in the India wireless business to INR 199bn and EBITDA growth of 4.4% QoQ to INR 109bn; the enterprise business is also expected to post healthy EBITDA growth of 3.3% QoQ, while we expect steady additions in FTTH (353k subscriber addition QoQ).

* VIL’s subs losses likely to continue; however, ARPU to rise 2.5% QoQ to INR 138: We expect VIL’s subscriber loss trend to continue, with net subscribers declining by ~4mn in 4QFY23 (had witnessed decline of 6mn/6mn/3mn/3mn/6mn/2mn/12mn in 3QFY23/2QFY23/1QFY23/ 4QFY22/3QFY22/2QFY22/1QFY22) due to migration of subscribers to other telcos. However, we expect ~1.5mn addition to MBB subscriber base (TRAI’s Jan'23 subscriber data showed ~1.1mn addition in MBB subscribers); hence, ARPU is expected to rise 2.5% QoQ to INR 138 in 4QFY23 (vs. INR 135 in 3QFY23). We expect

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