Bharti Airtel’s consolidated revenue and Ebitda (earnings before interest, taxes, depreciation & amortisation) estimates for FY18 and FY19 have been cut on expectations that its India ARPU (average revenue per user) will see a higher-than-expected fall with Reliance Jio likely to be disruptive for at least the next 9 to 12 months, analysts and sector experts said.
Brokerage CLSA has lowered Airtel’s India ARPU estimate by 4% to Rs 146 (Rs 152) in FY18 and by 2% to Rs 154 (Rs 158) in FY19 on expectations that the number one mobile carrier’s retaliatory tariffs in response to Jio’s aggressive offers will continue and further hit operations. The foreign brokerage also estimates a near 12% year-on-year fall in Airtel’s Ebitda in FY18 alone to Rs 31,365 crore from Rs 35,450 crore in the earlier fiscal.
The brokerage has also lowered Airtel’s estimated consolidated revenue in FY18 and FY19 by 5% and 3% to Rs 90,219 crore (Rs 95,000 crore) and Rs 98,932 crore (Rs 1,02,200 crore), respectively. Likewise, it has cut the telco’s Ebitda estimates by 2% for FY18 and FY19 to Rs 31,400 crore (Rs 32,100) and Rs 35,300 crore (Rs 36,000 crore), respectively.
CLSA has also reduced Bharti Airtel’s consolidated revenue and Ebitda estimates by 2 to 5% over FY18-19, following “the recast of its international businesses and a sharper-than-expected drop in its India ARPU”.
HSBC also expects Airtel’s earnings to remain weak in the current fiscal and expects its wireless Ebitda to decline by as much as 15% in FY18. In fact, the global brokerage has cut the telco’s overall Ebitda estimates for FY18 and FY19 by 3.7% and 5.3%, respectively, attributing the adjustments to Jio’s recently announced ‘Dhan Dhana Dhan’ tariff plans.
“Jio’s recent ‘Dhan Dhana Dhan’ offer suggests market recovery may be 5 to 6 quarters away versus our earlier estimate of early FY19,” said HSBC analyst Rajiv Sharma in a note, adding that incumbent carriers might also be impacted if Jio also pursues an aggressive 4G feature phone strategy.
Morgan Stanley also expects Airtel’s India wireless revenue and Ebitda to remain under pressure for the next few quarters, building in 3% and 12% year-onyear declines on the two metrics, respectively. “Clearly, the price response from Airtel will depend on Jio’s price strategy,” the US brokerage said in a note.
Brokerage CLSA has lowered Airtel’s India ARPU estimate by 4% to Rs 146 (Rs 152) in FY18 and by 2% to Rs 154 (Rs 158) in FY19 on expectations that the number one mobile carrier’s retaliatory tariffs in response to Jio’s aggressive offers will continue and further hit operations. The foreign brokerage also estimates a near 12% year-on-year fall in Airtel’s Ebitda in FY18 alone to Rs 31,365 crore from Rs 35,450 crore in the earlier fiscal.
The brokerage has also lowered Airtel’s estimated consolidated revenue in FY18 and FY19 by 5% and 3% to Rs 90,219 crore (Rs 95,000 crore) and Rs 98,932 crore (Rs 1,02,200 crore), respectively. Likewise, it has cut the telco’s Ebitda estimates by 2% for FY18 and FY19 to Rs 31,400 crore (Rs 32,100) and Rs 35,300 crore (Rs 36,000 crore), respectively.
CLSA has also reduced Bharti Airtel’s consolidated revenue and Ebitda estimates by 2 to 5% over FY18-19, following “the recast of its international businesses and a sharper-than-expected drop in its India ARPU”.
HSBC also expects Airtel’s earnings to remain weak in the current fiscal and expects its wireless Ebitda to decline by as much as 15% in FY18. In fact, the global brokerage has cut the telco’s overall Ebitda estimates for FY18 and FY19 by 3.7% and 5.3%, respectively, attributing the adjustments to Jio’s recently announced ‘Dhan Dhana Dhan’ tariff plans.
“Jio’s recent ‘Dhan Dhana Dhan’ offer suggests market recovery may be 5 to 6 quarters away versus our earlier estimate of early FY19,” said HSBC analyst Rajiv Sharma in a note, adding that incumbent carriers might also be impacted if Jio also pursues an aggressive 4G feature phone strategy.
Morgan Stanley also expects Airtel’s India wireless revenue and Ebitda to remain under pressure for the next few quarters, building in 3% and 12% year-onyear declines on the two metrics, respectively. “Clearly, the price response from Airtel will depend on Jio’s price strategy,” the US brokerage said in a note.
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