Telecom Q3 Results Preview - Revenue Growth To Decelerate; Costs To Rise On 5G Rollout: ICICI Securities

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ICICI Securities Report

Our Q3 FY23 estimates suggest a deceleration in mobile revenue growth across telcos due to SIM consolidation, lower benefit of premiumisation from slowdown in 4G net add, and absence of tariff hikes.

Subscriber base for Bharti Airtel Ltd. and Vodafone Idea Ltd. is likely to shrink while Reliance Jio’s net sub add (up 5 million) may moderate.

Revenue growth QoQ for Airtel (mobile), Vodafone Idea and RJio is likely at 1.8%, 0.1% and 1.5% respectively. We expect Ebitda margin expansion for the operators due to negligible spectrum usage charges.

SUC earlier was 3-3.5% of adjusted gross revenue, but is now negligible on the purchase of spectrum in July 2022 auctions. Full benefit of low SUC is likely to be reflected in Q3 FY23E. This could be offset by higher network operating costs on rollout of 5G network.

However, impact of 5G spectrum purchase on amortisation and interest cost will be negligible.

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