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Telecom firms set for festive season lift in third quarter

Tuesday, 7 January 2014 - 11:56am IST | Place: Mumbai | Agency: DNA

Telecom companies are expected to report better financials for October-December quarter on account of festive season contributing to increased voice and data usage.

Coming after a sluggish September quarter, tariff hikes, value-added services (VAS) uptick and increase in revenue market share due to consolidation would also push strong volume growth in Q3.

In their results preview, Rumit Dugar and Udit Garg, analysts with Religare Capital,
said, “We expect Indian telcos to see a healthy 4-5% quarter-on-quarter (qoq) growth in wireless revenues and strong net profit performance due to favourable seasonality. Operating-profit margins for Bharti /Idea would remain stable qoq as benefits from traffic growth are likely to be offseted by network investments.”

Rohit Chordia and Shyam M, analysts with Kotak Institutional Equities, expect voice volumes to witness modest (3-4.5%) growth in the third quarter.

“The quarter will likely see further consolidation of tariff hikes implemented in the previous quarters, which will translate into voice revenue per minute increase of 0.4-1% for Idea and Bharti.

Bharti and Idea are also likely to report volume-led 14-15% qoq data revenue growth this quarter.”

They see Bharti reporting 3.6% qoq and 14% year-on-year (yoy) growth in consolidated revenues to Rs22,100 crore, with broad-based revenue growth across divisions.

For Idea Cellular, the duo predicts consolidated revenues of Rs6,670 crore (+5.4% qoq, +19.5% yoy). For Reliace Communications, the analysts expect consolidated revenues of Rs5,520 crore, a yoy growth of 4%.

For Bharti Infratel, the Kotak analysts expect a tenancy-led modest 2% qoq growth in revenues at  Rs2,740 crore.

“Since April 2013, the benefits of quasi-consolidation in the Indian telecom industry have been increasingly visible. The top 3 companies — Bharti, Idea and Vodafone — together clocked a 69.1% gross revenue market share in the quarter ended June 2013, notably their highest ever as a composite. This represents a qoq market share gain of 50 bps and a yoy market share gain of 146 bps,” said Ankita Somani, analyst with Angel Broking.

However, Hitesh Shah of IDFC is not so upbeat.

He said, “Indian telecom operators typically witness a seasonal rebound in traffic growth in third quarter, but our interaction with stakeholders suggests that the bounceback in minutes this time may not be as sharp.”


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