Mobile operators' revenues to improve in Q2 on more recharges, reverse migration

Revenues for mobile operators are expected to improve sequentially in September quarter, as factors like increased recharges, reverse migration, and easing of lockdown curbs helped overcome what is otherwise a seasonally weak quarter, say sector analysts.

In its note on earnings preview, Axis Capital said revenue for wireless service providers is expected to improve in the second quarter on increased recharges as lockdown restrictions eased.

"Subscriber addition expected for RJio/Bharti Airtel (though at muted levels), while Vodafone Idea to continue losing subscribers," it said adding that margin improvement from revenue increase is likely to be partially offset by higher commissions, and sales and marketing cost.

The Axis report said Jio will benefit from higher subscriber addition than competitors, as well as per user realisation improvement from addition of higher ARPU Jio Fiber customers.

"Bharti Airtel's and Vodafone Idea's revenue also to improve quarter on quarter in seasonally weak Q2, as recharges improve on easing of lockdown restrictions," it said but added that margin expansion will be "muted" in Q2.

For infrastructure providers, it expected a gradual sequential recovery.

"Bharti Infratel to post flat ex-penalty rental revenue though tenancy addition is expected to pick up QoQ," Axis said.

In its September quarter preview, Emkay talks of a "stable quarter despite seasonality".

It said, in a seasonally weak quarter, wireless revenue will inch up sequentially driven by the reverse migration, better gross additions and data subscriber additions.

"We expect the rise in wireless revenue to be more pronounced for Bharti (2.7 per cent quarter on quarter) than Vodafone Idea (1.4 per cent) as we estimate VIL to continue to report subscriber loss, albeit at a slower pace," Emkay said.

It further noted that Bharti's home broadband segment would continue to see an uptick due to the lockdown, work- from-home and its tie-up with local cable operators.