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In Q3FY24, we expect Bharti Airtel and Jio Mobile to register revenue growth of 2.5-3% QoQ. RJio will benefit from industry-leading subscriber addition in Q3 (10.5mn), aided by competitive pricing of its plans, while Airtel will benefit from the mix of subscriber addition and conversion of 2G subscribers (to 4G). Vi is likely to lose subscribers. Bharti’s focus on rural and 5G rollout is likely to aid Indus’s tower/tenancy addition. For Indus Towers, the trajectory of receivables/provisioning remains the key monitorable. Tata Communications (TCom) is likely to maintain revenue growth in data, while its margin may come under pressure post Kaleyra’s acquisition.

Bharti Airtel (ADD; TP: Rs1,125/share): Bharti Airtel’s ARPU is likely to grow 1.3% QoQ to Rs205, given a better mix with more users converting to 4G from 2G. Overall, subscriber addition QoQ is expected to be 3.5mn vs. 3.7mn in Q2, leading to its India mobile revenue growing 2.4% QoQ. We expect Africa revenue at USD1,228mn (- 1.4%QoQ) and EBITDA at USD604mn (49.1% margin; 64bps QoQ), on currency devaluation. Africa crossed the 150mn subscriber mark at the end of Dec-23, indicating the addition of ~2.3mn subscribers in Q3 vs. 4.6mn in Q2. On a consolidated basis, we expect revenue to increase by 1.1% QoQ and EBITDA to improve by 0.9% QoQ, with EBITDA margin expansion of 9bps.

RJio (RIL: ADD; TP: Rs2,730/share): We expect RJio to add the highest number of subscribers (+10.5mn QoQ in Q3 vs. +11mn QoQ in Q2). ARPU for the quarter would increase to Rs182.5 (Rs181.7 in Q2), amid higher data usage during the World Cup, although mitigated by JioBharat’s subscriber addition. Wireline subscriber addition momentum is likely to pick up with the addition of 0.7mn subscribers in Q3 vs. 0.58mn in Q2. We estimate revenue/EBITDA growth of 2.9%/3.2% QoQ, with EBITDA margin expanding by 16bps to 52.5%, as 5G-related costs are still being capitalized.

Vodafone Idea (Not Rated): We expect subscriber loss to pick up again for Vi in Q3 — loss of 3mn vs. 1.6mn loss (Q2FY24). In Q2, Vi participated in a government scheme that brought in a significant number of new subscribers, including 4G subscribers. ARPU is set to increase by 0.6% QoQ to Rs143, led by increased prices of entry-level plans. Overall, revenue is likely to decline marginally by 0.4% QoQ. Margin is likely to decline by 20bps QoQ owing to a drop in revenue and higher marketing expenses.

RJio and Airtel continue to gain market share from Vi, which is witnessing a sustained decline in subscribers and a delay in external funding. Vi’s weak financial condition is also impacting Indus Towers, despite the benefit from the 5G rollout by Bharti Airtel and Jio. We continue to prefer Bharti Airtel and RJio in the telecom space. We have rolled forward our estimates by a quarter and tweaked our estimates, leading to an increase in our TPs.

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