Ahead of their Q2 FY27 earnings reports, India's leading telecom operators, Bharti Airtel Ltd and Vodafone Idea Ltd (VIL), are expected to demonstrate consistent performance. Market analysts project stable subscriber growth and continued premiumisation efforts to be key drivers for the September quarter results.
Subscriber Growth and ARPU Expectations
ICICI Securities forecasts significant subscriber additions for both companies. Bharti Airtel is anticipated to add approximately 2.5 million subscribers sequentially, with a net addition of 4 million 4G and 5G users. Vodafone Idea is expected to see a rise of about 1 million subscribers quarter-on-quarter, including 100,000 new 4G users.
Average Revenue Per User (ARPU) is also a critical metric. Bharti Airtel's ARPU could increase by 5.9 percent year-on-year (2.6 percent QoQ), while Vodafone Idea's ARPU might potentially outperform with a 7.6 percent year-on-year increase, according to brokerages.
Analyst Ratings and Share Price Targets
Brokerage firms have issued varied ratings and price targets:
- UBS: Maintains a 'Neutral' rating on Vodafone Idea with a target price of Rs 14.50 per share. For Bharti Airtel, UBS suggests a 'Sell' rating with a target of Rs 1,785.
- Centrum Broking: Recommends a 'Buy' rating for Bharti Airtel, setting a target of Rs 2,594. It maintains a 'Neutral' stance on Vodafone Idea with a target of Rs 13.
- JM Financial: Reiterates a 'Buy' rating on Bharti Airtel, with a target of Rs 2,400. The firm also holds an 'ADD' rating for Vodafone Idea, with its target unchanged at Rs 14.7.
Key Focus Areas: Debt, Capex, and Tariffs
For Vodafone Idea, a primary focus remains on the finalisation of its significant debt raise and the execution of its three-year capital expenditure plan worth Rs 45,000 crore. UBS expects VIL's total subscriber base to remain stable at 195 million QoQ, with ARPU growing 1.5 percent QoQ, leading to revenue and EBITDA growth of 2 percent and 1.5 percent QoQ, respectively.
Bharti Airtel's consolidated and India mobile revenues are projected to grow by 2.9 percent and 2.5 percent QoQ, respectively, benefiting partially from recent price interventions. UBS anticipates consolidated EBITDA to grow 16 percent YoY and 3 percent QoQ, with a net income of approximately Rs 9,000 crore for Q2 FY27.
Industry-Wide Tariff Hikes and 5G Monetization
Analysts are closely monitoring the potential for further tariff hikes and interventions across the industry. JM Financial believes that the wireless ARPU is likely to expand at a 12 percent CAGR over FY26–29, driven by regular tariff hikes and premiumisation strategies. There's a high likelihood of a 15 percent tariff hike within the next six to nine months, supported by the government's intent to maintain a '3+1' player market structure.
The industry's need to improve Return on Capital Employed (RoCE) amid significant 5G capital expenditure, coupled with the potential repair of the tariff structure towards a 'pay as you use' model, is also expected to boost long-term ARPU growth. Furthermore, 5G monetization and Fixed Wireless Access (FWA) rollouts are seen as significant upside potentials.
Q2 Earnings Estimates
- Vodafone Idea: JM Financial expects revenue to rise 1 percent QoQ to Rs 11,800 crore, but reported EBITDA may see a slight decline of 0.5 percent QoQ to Rs 5,010 crore, primarily due to higher marketing and seasonal employee costs.
- Bharti Airtel: JM Financial projects a 2.9 percent QoQ growth in India's wireless business revenue to Rs 30,800 crore, with EBITDA increasing by 3.5 percent QoQ to Rs 18,800 crore.