Vodafone Idea is bracing for muted financial performance in the third quarter (Q3), with analysts projecting up to a 1% year-on-year (YoY) revenue growth by the end of December 31. Despite the challenges of subscriber losses, analysts highlight a potential YoY increase in the telco’s average revenue per user (ARPU), primarily attributed to heightened prices for entry-level plans.
As the cash-strapped telco prepares to unveil its Q3 results, JM Financial anticipates a 2.5% quarter-on-quarter (QoQ) rise in ARPU to Rs 146 in 3Q FY24. This increase, coupled with an expected 1.4% QoQ revenue growth to Rs 109 billion, reflects improving subscriber dynamics. EBITDA is also likely to see a 2.4% QoQ uptick to Rs 44 billion, according to JM Financial’s analysis.
However, the trend of subscriber losses is expected to persist, with JM Financial estimating a net decline of approximately 2.5 million subscribers in Q3 FY24. This continues a trend seen in previous quarters, where the telco experienced a migration of subscribers to other competitors.
ICICI Securities projects a 0.1% QoQ rise in revenue to Rs 107 billion for Vodafone Idea, driven by subscriber losses. Despite this, ARPU is expected to grow due to the increasing penetration of unlimited plans in Q3 FY24. EBITDA is anticipated to improve by 0.6% QoQ on operating leverage, with a net loss projected at Rs 78 billion.
BoFA Securities predicts a substantial loss of 4.5 million users for Vodafone Idea in Q3. Implied ARPU is expected to improve by 1.5% QoQ, driven by low-end tariff adjustments, resulting in a 1% YoY revenue increase. EBITDA margins are forecasted to remain largely flat quarter-on-quarter at 39.9%.
Emkay points out that Vodafone Idea’s weak financial condition is affecting Indus Towers, despite the benefits of the 5G rollout by Bharti Airtel and Jio. For Indus Towers, steady net tenancy additions are expected, primarily driven by Bharti Airtel’s aggressive 5G rollout and rural expansion program. Revenue is likely to increase by 1.2% QoQ, with EBITDA rising by 3.5% QoQ to INR 36 billion in 3QFY24.
Despite the challenges faced by Vodafone Idea, analysts continue to observe dynamic shifts in the telecom sector, with market shares shifting towards competitors like Reliance Jio and Bharti Airtel. The outcome of Vodafone Idea’s financial struggles remains critical in this evolving landscape.