The telecom sector was an outlier as most sectors remained non-operational for most of the June quarter due to pandemic-induced lockdown.
Even as the lockdown increased data consumption, given the structure of the price plans, little incremental revenue was reported, Motilal Oswal said in a note, adding that the telcos also offered nearly one month of extended validity to low average revenue per user (ARPU) feature phone subscribers during the initial period of lockdown.
Also, lower recharges were witnessed among low-income-group customers, along with SIM card consolidation from 4G subscribers, due to financial and availability constraints in the last two months, the brokerage said.
Kotak Institutional Equities expects Bharti Airtel to report a 66.5 per cent decline in its net loss in the June quarter while revenues may jump 15.3 per cent from a year ago.
The brokerage expects a modest quarter-on-quarter (QoQ) decline in Bharti’s India wireless revenues, even as it may rise 18 per cent on a year-on-year (YoY) basis, and a similar modest decline in EBITDA, while it may rise 30 per cent YoY.
Kotak said the first quarter wireless print would reflect lower recharge activity at the low end of the base mitigated partly by some up-trading in the LTE subs base.
“Even as we expect strong sequential surge in voice as well as data traffic for Bharti, the ‘unlimited voice and large data allowance’ nature of the bundled plans would prevent translation of the same into revenue growth.
Credit Suisse expects Bharti Airtel to report a 50.7 per cent decline in its net loss in the quarter, while revenues may rise 15.1 per cent from a year ago.
The brokerage expects the telecom major to report a consolidated revenue growth of 0.6 per cent QoQ and a largely flat EBITDA, on account of weakness in India mobile business.
It expects 2.3 per cent QoQ decline in India mobile revenues due to the COVID-19 impact, which is likely to have resulted in lower recharge activity as physical channel remained shut in the initial period of lockdown and free talktime and balance given to economically weaker section of customers during the 69 days lock down.
“We would look for management commentary on: (1) ARPU trajectory beyond near-term Covid-19 impact, given its focus on up-trading (recently Bharti announced priority network access for the higher-ARPU postpaid customers); (2) strategy to build digital content through partnership route; and (3) indications on the next round of tariff hikes in light of Covid-19,” Credit Suisse analysts said in a note on July 13.
Last week, Bharti Airtel’s Africa operations reported a 57 per cent on-year drop in net profit to $57 million for the first quarter this fiscal, hurt by the pandemic-led disruptions, making it the third straight quarter of declining bottomline.
“The outlook remains uncertain, particularly regarding the so-called potential second wave of infections and the actions governments will decide to take in that event,” said Raghunath Mandava, CEO, Airtel Africa in a statement on the quarterly results released on July 24.