Telecom operators are expected to report a steady March quarter, with underlying growth trends remaining intact even as headline numbers appear muted due to the shorter quarter, analysts said. Brokerages expect revenue growth to stay in the low- to mid-single digits, led sequentially by Bharti Airtel Ltd.
Across the sector, average revenue per user (Arpu) is expected to remain broadly stable or see a marginal quarter-on-quarter dip, primarily due to two fewer days in the quarter. On an underlying basis, however, premiumisation driven by higher data consumption and continued migration to 4G and 5G plans remains supportive of annual Arpu expansion.
Data consumption is estimated to have increased by around 3–4% sequentially, while subscriber growth is expected to remain modest but positive, led by Reliance Jio and Airtel. Margins are likely to remain stable, supported by operating leverage and moderated network investments.
Continued traction in FWA
The quarter is also expected to see continued traction in fixed wireless access (FWA) and home broadband services for both Jio and Airtel, which are emerging as incremental growth drivers for the sector. Bharti Airtel is projected to report another stable quarter, with sequential revenue growth of 2–4%.
Subscriber additions are expected to remain healthy, with net additions in the range of 2.5–4 million, supported by gains in premium subscribers. Arpu is likely to remain flat sequentially, as the impact of the shorter quarter offsets the benefits of premiumisation.
“Ongoing premiumisation on the back of data consumption (up 3-4% QoQ) and shift towards post-paid should aid Arpu. We estimate flattish QoQ Arpu for Bharti (Airtel) despite two fewer days in the quarter, adjusted for which Arpu would have increased by ~2%,” analysts from Axis Capital said.
The company’s home broadband and enterprise segments are expected to outperform, driven by strong FWA-led additions. Analysts at Morgan Stanley expect Airtel to post 8.1% growth in the home segment, “led by strong FWA and wireline subscribers net adds”.
Home services are also likely to contribute meaningfully to Ebitda growth, which analysts estimate at 1.5–3% sequentially. Profit growth, however, could see sharper improvement, aided by lower below-the-line costs. Market leader Jio is also expected to deliver a steady performance. However, with its IPO approaching, brokerages have largely refrained from providing detailed estimates for the telco in their Q4 preview reports.
Vodafone Idea is expected to report a marginal decline in revenue in Q4, although subscriber losses are likely to moderate compared with the December quarter, indicating early signs of stabilisation in its user base. Brokerages remain divided on the telco’s Arpu trajectory. While JM Financial expects a 1.2% sequential decline due to the shorter quarter, ICICI Securities anticipates a marginal improvement driven by a better customer mix.
“The company has been able to improve customer engagement and drive better ARPU, helping outperform peers. We expect an increase of 1.1% QoQ in 4G subs, indicating the gradual benefit of network expansion,” analysts from ICICI Securities said.
Margins are expected to remain under pressure due to elevated network costs and ongoing investments in 5G rollout. While operational indicators point to early stabilisation, financial performance is likely to remain constrained, with continued net losses expected for the quarter.