Bharti Airtel Q4FY18 preview: No surprises ahead, analysts see another muted quarter

The share price of telecom giant Bharti Airtel tumbled on Tuesday, ahead of the company's release of fourth quarter ended March 2017 financial performance. Bharti Airtel has dropped by nearly 2% on stock exchanges. The earnings of Airtel have been hampered since the time Mukesh Ambani's Reliance Jio entered the market with it's heavy data, unlimited calls and many free offers. After touching intraday low of 396.60 per share, Bharti Airtel was trading at Rs 400.15 per share down by Rs 4 or 0.87% on BSE. Investors are trading cautiously in Airtel, as the hope for better than expected performance in Q4FY18 is very low from analysts end. 

Analysts at Phillip Capital said, "Bharti will report muted numbers with possibility of loss for the quarter." According to them, Airtel's ARPU dilution will continue because of downtrading, lower international roaming revenues. Also Network opex will increase; bad debts on account of Aircel bankruptcy. Meantime. EBIDTA margins for mobility business will trend down and earnings will be marginal or the company could even report loss."

In IDFC Securities views, "Bharti Airtel is expected to report consolidated Rev/EBITDA/PAT of Rs195bn/Rs71bn/Rs0.3bn. Drag on the India wireless business is likely to continue due to international termination cut and price erosion."

It added, "Despite strong subscriber addition for Bharti Airtel, we estimate India wireless revenues to drop by 5%QoQ to Rs 146 billion. Expect India wireless ARPUs to come in at Rs 115. India wireless EBITDA to come in at Rs 30.8 billion, margin of 30.5% (3QFY18 :32.6%).The Africa business is expected to report stable quarter."

Pradeep Kumar Kesavan and Pankaj Chhaochharia Research Analysts at Elara Capital said, " We expect further ARPU decline due to 1) further downtrading among the incumbents’ subscriber base and 2) lower termination charges for ILD termination starting February 1st 2018."

The duo added, "We expect Bharti Airtel to report ARPU of INR115.7 – down 7.6% QoQ and 27.8% YoY. However, we expect India wireless revenue decline to be lower than ARPU decline due to new subscriber addition and expect Bharti’s India wireless revenue to be down only 4.8% QoQ as subscriber base reaches 299.8 million."

During third quarter of FY18 (Q3FY18), Airtel's consolidated net profit dropped 39.3% to Rs 306 crore compared to Rs 504 crore posted during the corresponding period in 2016-17.