Telecom Services share price target

The notice inviting applications (NIA) for upcoming spectrum auction had a few incremental positives for telcos including: 1) duration of right-to-use spectrum unchanged at 20 years (vs 30 years announced earlier) which restricts total spectrum payouts; 2) payment option eased with the introduction of 20 equal annual instalments; 3) SUC reduced to nil for the upcoming spectrum auction which indirectly reduces the cost of acquiring spectrum; 4) spectrum surrender norms issued without penalties

The Telecom Regulatory Authority of India (TRAI) has released its monthly data on subscribers (subs) for Feb’22. Industry-active sub base grew 9.5mn MoM with Bharti Airtel’s (Bharti) net add at 1.2mn. The positive surprise was Reliance Jio (RJio).

We expect subscriber addition momentum to be impacted amid SIM consolidation due to tariff hike. Reliance Jio (Jio), with lowest percentage of VLR (active subscriber) on network is likely to see major impact of SIM consolidation with ~5 mn net loss during Q4. On the other hand, Vodafone Idea (VIL) is likely to stabilise somewhat with subscriber loss of ~2 mn. Bharti Airtel (Airtel) is likely to add ~2 mn subscribers and lead the industry. ARPU growth will be seen for all telcos, led by residual benefit of tariff hike. We expect Jio, Airtel, VIL to report ARPU to be up 8%, 12%, 12%...

For Tata Communications (TCom), we expect gradual growth recovery and YoY growth in revenues after three quarters of decline, despite seasonally weak quarter wherein usage based revenues are lower due to holidays. The data revenue is expected to grow 2% QoQ (up 2.5% YoY) at | 3203 crore. The voice revenues would continue to remain weak with 5% QoQ (14.7% YoY decline) decline at | 575 crore. The overall revenue is expected to grow 1% QoQ at | 4215 crore. Data segment margins are expected at 31% (down 240 bps QoQ as it had one-off benefits). Overall margins are...

PID: Broad-based growth but sharp RM headwinds a drag. CESC: Fairly priced but upside if distribution is delicensed. TECHM: Positive commentary instils confidence; 5G outlook optimistic

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Revenue/EBITDA grew by 1%/3%, led by the fifth quarter of healthy tenancies to 3.6k additions and lower OPEX. While net tenancies have improved, along with consistent lower exits over the last few quarters, reducing penalty receipts from VIL in FY23E, upcoming tenancy renewal in Mar'22, and weak liquidity position of VIL could pose an earnings risk. We estimate a consolidated FY21-23E...

We expect the subscriber addition trend to be mixed for the industry, Industry leader Reliance Jio (Jio) is likely to lead subscriber addition with ~15 million (mn) net adds in Q2. On the other hand, Vodafone Idea (VIL) is expected to continue experiencing churn, also impacted by last quarter's tariff hike for 2G customers, which, in our view, will drive consolidation. Thus, for VIL, we expect subscriber loss of ~6 mn. For Jio, reported ARPU is likely to be up 1% QoQ at ~| 140 while revenues are expected to see 4.1% QoQ growth at | 18,734 crore. For Vodafone Idea, with ARPU growth...