Bharti Airtel is expected to outperform Reliance Communications (RCom) due to a stronger revenue and a better growth in profit. A KRC analyst expects Bharti's revenue to grow by over 50 per cent, while analysts at Edelweiss and MOSL expect it to grow by 28-29 per cent.
The Sunil Mittal-led firm is expected to benefit from lower forex losses due to a sharp depreciation in the yen's value during the quarter as half of Bharti's loans are denominated in the Japanese currency.
RCom, despite having witnessed a strong q-o-q subscriber growth of 10-14 per cent, is expected to post a revenue growth of around 14-17 per cent only. Also, the company is expected to see a drop of 4-6 per cent in revenue per minute (RPM) despite a strong growth in traffic. This weakness in RPM along with launch expenses and other associated costs is also likely to push down y-o-y margin by 390 bps. This may result either in a single-digit growth or even a decline in y-o-y net profit.
MOSL expects Bharti's revenue to grow 28.1 per cent y-o-y and 4 per cent q-o-q due to a 10 per cent increase in q-o-q mobile services. Mobility revenues are expected to grow 3.3 per cent q-o-q, implying an ARPU (average revenue per user) of Rs 305. The margin is expected to decline by 80 bps y-o-y and 20 bps q-o-q to 40.7 per cent. But Edelweiss estimates Bharti's mobility ARPU to decline by 2.6 per cent q-o-q on lower usage.
MOSL expects RCom's revenue to grow 13 per cent y-o-y and 2.6 per cent q-o-q due to strong subscriber momentum. The ARPUs are expected to go down by 5-10 per cent on lower quality of incremental subscribers and free promotional minutes in GSM. The margin is expected to decline by 420 bps y-o-y due to an aggressive network expansion. The net profit is expected to fall by 10 per cent y-o-y and 5 per cent q-o-q.Edelweiss estimates mobility ARPU of RCom to decline by 9.5 per cent q-o-q owing to aggressive promotional schemes offered at the launch of its GSM services. Uncertainty in derivative income is a risk and, hence, Edelweiss expects a 9 per cent decline in RCom's net profit.
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