Result Preview - Telecom - ICICI Securities

Both the reported subscriber base and ARPU are likely to be sequentially lower for telcos in Q1FY21 given the lockdown effect. For Airtel and Vodafone Idea (VIL), we expect subscriber (sub) loss of ~2 million (mn) and ~10 mn, respectively, on account of Covid-19 led disruption. We note that telcos had extended their prepaid validity for low cost users during lockdown. For Bharti, reported ARPU is likely to see ~2% QoQ decline at Rs. 151. Indian wireless revenues are expected to see 2.2% QoQ decline at Rs. 12,665 crore. For Vodafone Idea, with ARPU decline of ~5% QoQ at Rs. 115 due and subscriber churn, we expect overall revenues to decline 8% QoQ at Rs. 10,819 crore. Other notable Q1FY21 trends could be weak international roaming revenues, higher adoption of digital recharges, superior broadband traction and relatively slower 4G adoption impacted by low smartphone sales.

Both TCom, Sterlite to witness some Covid-19 impact

Sterlite Tech is expected to witness the impact of weak product demand as well as Covid-19 impact resulting in 40%, 49% decline in topline, EBITDA, respectively. PAT is expected to decline ~80% YoY given the incremental depreciation and interest of new capacity. Tata Communication (TCom) is likely to report a muted performance. Overall revenue is expected to decline 0.5% QoQ at Rs. 4376 crore with flattish QoQ (~9.5% YoY) data segment topline while voice business is expected to decline ~2% QoQ (down 11.4% YoY). Overall margins are expected at 19.6% (down 20 bps QoQ but flattish on adjusted basis as Q4 rental revenues had one-off benefits).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Telecom_Q1FY21.pdf

Source : Equity Bulls

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