Vodafone Idea, Bharti Airtel: Q2 results preview, share price targets

Listed telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd (VIL) are expected to report steady September quarter earnings, driven by stable subscriber growth and premiumisation.

ICICI Securities said subscriber addition for Bharti Airtel could be 25 lakh sequentially, while VIL’s subscribers may rise 10 lakh quarter-on-quarter (QoQ). This brokerage expects a net addition of 40 lakh 4G and 5G subscribers for Bharti Airtel and 1 lakh 4G subscribers for VIL.

Bharti Airtel’s ARPU may increase 5.9 per cent YoY (2.6 per cent QoQ) while VIL’s ARPU may potentially outperform with an increase of 7.6 per cent YoY, the brokerage said.

Ahead of Q2 results, UBS suggested a 'Neutral' on Vodafone Idea with a target of Rs 14.50 apiece. It gave a target of Rs 1,785 on Bharti Airtel Ltd, with a 'Sell' rating.

For the quarter, the focus is on debt raise and capex plans, said UBS as it expects total subscriber base for VIL to be stable QoQ at 19.5 crore. VIL's ARPU is estimated to grow 1.5 per cent QoQ, resulting in revenue and Ebitda growth of 2 per cent and 1.5 per cent QoQ respectively.

"With recent newsflow that fund raise discussions are close to finalisation, we will monitor management commentary on execution of the three-year capex plan of Rs 45,000 crore. Our PT is down marginally to Rs 14.50 and Neutral rating is maintained," it said.

UBS expects Bharti Airtel's consolidated and India mobile revenues to grow 2.9 per cent and 2.5 per cent QoQ, respectively, given partial benefits of the price interventions during Q2. It expects consolidated Ebitda to grow 16 per cent YoY and 3 per cent QoQ with net income at Rs 9000 crore for Q2FY27.

"We will monitor management commentary on: 1) potential for further tariff hikes / interventions; 2) capex outlook as data center investments pick up; and 3) impact of recent 5G slicing plans on postpaid take up," UBS said.

JM Financial reiterated 'Buy' on Bharti Airtel with a target of Rs 2,400, as it believes the industry’s wireless ARPU is likely to expand 12 per cent CAGR over FY26–29 driven by regular tariff hikes and multiple premiumisation strategies. It said there is a high likelihood of a tariff hike of 15 per cent over the next six–nine months, coupled with the government’s intent to ensure a ‘3+1’ player market, and the industry’s requirement to improve RoCE amid its ‘inability’ to monetise the significant 5G capex incurred.

"Potential repair of the industry tariff structure to ‘pay as you use’ model is also likely to aid ARPU growth in the long term. Moreover, the potential 5G monetisation and FWA rollout imply significant upside potential over long term. VIL remains an ADD (TP unchanged at Rs 14.7)," it said.

As far as Q2 earnings is concerned, JM expects VIL's revenue to rise 1 per cent QoQ to Rs 11,800 crore, but reported Ebitda may fall 0.5 per cent QoQ to Rs 5,010 crore. Cash Ebitda is seen down 1.1 per cent QoQ at Rs 2,450 crore  owing to a QoQ rise in opex led by higher marketing expenses incurred during Q2FY27 and seasonal rise in employee costs.

In the case of Bharti Airtel, JM Financial built in 2.9 per cent QoQ growth in India wireless business revenue to Rs 30m800 crore and a 3.5 per cent QoQ rise in Ebitda to Rs  18,800 crore.

Centrum Broking said  VIL is in active discussion with banks to close its Rs 25,000 crore debt fund raise which it needs as part of Rs 45,000 crore capex program for FY27E-29E. Reliance Jio and Airtel are also seeing strong traction in terms of 5G FWA and fixed broadband addition as penetration in the segment remains low. It has a 'Buy' rating on Bharti Airtel with a target of Rs 2,594. VIL is rated 'Neutral' with a target of Rs 13.