Subscriber additions to drive Jio's Q2 show; tariff hikes to aid Bharti & VIL, say analysts

New Delhi: The second quarter of the fiscal is likely to be a "healthy quarter" for telecom companies, where Jio's performance will be driven by subscriber additions, and Bharti and Vodafone Idea will benefit from tariff hikes and some recovery post-severe wave of COVID-19, according to some analysts.

The urgency around tariff hikes has come down with Vodafone Idea Ltd's (VIL) near-term cash outflow significantly reduced, IIFL Securities said.

"Second quarter is likely to be a healthy quarter for telcos, though the drivers would be different for Jio and other players," IIFL Securities said in a recent note. It expects Bharti to "marginally outperform" Jio on sequential India mobile revenue growth.

"Jio's revenue growth is likely to be entirely driven by subscriber adds, while Bharti and Vi would benefit from partial impact from tariff hikes (both pre-paid and post-paid) taken in July and some bounce-back post the pandemic related headwinds in 1Q (first quarter)," it said.

The report forecast five per cent and four per cent quarter-on-quarter Ebitda (earnings before interest, taxes, depreciation and amortisation) growth for Jio and Bharti consolidated and anticipated that VIL and Indus could see flat Ebitda.

"With the relief package reducing the urgency around tariff hikes, we now build-in significant price increases only in 2H 2022 versus early 2022 previously," it said.

As per Jefferies' report, telcos Reliance Jio and Bharti may post a 5-7 per cent sequential rise in revenue alongside a steady margin for the second quarter of FY22.

Bharti's growth will be led by segmented tariff hikes taken in the second quarter ended September, while Jio's growth will be driven by continued subscriber growth, it further said.