Bharti Airtel, a leading telecom operator in India, is likely going to see the highest QoQ (quarter-on-quarter) revenue growth in Q3 FY23. Airtel had increased tariffs for consumers in two select circles, possibly to test a tariff hike. According to ICICI Securities, Airtel will likely see a 1.8% jump in QoQ revenues. This is more than what has been estimated for its rivals Reliance Jio (1.5%) and Vodafone Idea (0.1%). The analyst also said that the EBITDA (earnings before interest tax depreciation and amortisation) is likely to expand because of the negligible SUC (spectrum usage charge). Earlier, telcos had to pay 3 to 3.5% of their adjusted gross revenue (AGR) as SUC. However, since the previous 5G spectrum auction in 2022, the SUC charges are negligible, which relieves the telcos of a bit of cash flow stress. ICICI Securities said that the full benefit of low SUC is going to reflect in Q3 FY23E.
What Could Offset the Positive Impact of Negligible SUC?
The Indian telecom operators started rolling out 5G in early Q3 FY23. According to the analyst, higher network operating costs on the rollout of the 5G network could offset the positive impact of negligible SUC. ICICI Securities expects that revenues for Bharti India will grow 0.6% QoQ to Rs 247 billion, led by mobile revenues (up 1.8% QoQ/20% YoY). The high YoY growth is due to the tariff hike that was implemented around December 2021. The report said that Airtel’s net profit is seen at Rs 32 billion, benefitting from the lower forex losses partially offset by 5G spectrum cost. Vodafone Idea’s revenues are likely to remain flat QoQ at Rs 106 billion, despite subscriber loss. This is because even when the telco was losing its mobile subscribers, it was growing its non-mobile service revenues. According to ICICI Securities, the net loss for Vodafone Idea Limited (VIL) is seen at Rs 73 billion.
