In contrast, experts said,
Sequential revenue growth of 3.3% during the quarter is insufficient to drive cash flow required to meet the telecom operator’s rising interest and financing costs, which rose 4.2% quarter-on-quarter to Rs 5,300 crore. He said a fall in the cash-starved airline’s quarterly capital expenditure could weaken its network strength and further reduce its competitiveness against Reliance Jio and Bharti Airtel.
Nitin Soni, Senior Director (Corporate) at global rating agency Fitch said, “Jio has reported higher quarterly Ebitda (earnings before interest, tax, depreciation and amortization) growth as compared to revenue, fully driven by profitability. Focused on capturing growth and high-ARPU customers.” Told ET. “In contrast, Vi’s continuing declining capital spending trend, heavy customer losses and weak cash generation, and its modest sequential revenue growth are insufficient to meet its rising interest and financing costs.”
Analysts said Jio reported 5.8% sequential growth in quarterly operating income (Ebitda) at Rs 9,510 crore, which is lower than expected network operating cost (Rs 6,240 crore). This, in turn, boosted the profits of the Mukesh Ambani-led telco in the October-December period.
However, the global brokerage said, “Jio’s incremental margins in 3Q, at 86%, appeared very high and indicate certain cost reversals that may not be sustainable”. It has cut telco’s 2021-22-to 2023-24 revenue estimates by 1-4% and Ebitda estimates by up to 2%. “In FY22-24, we expect Jio to deliver 17%/21% CAGR in EBITDA/profits, but we cut its valuation by 1% to $87 billion on the back of the projected cut.”
New Street Research said the decline in Jio’s subscriber base to 8.5 million in the December quarter reflects a churn of low-value customers, suggesting that the JioPhone Next – Jio’s affordable 4G smartphone developed with Google – was launched last Diwali. has not helped the telco to increase its customers. ,
Jio’s net profit jumped 2.6% sequentially to Rs 3,617 crore, while its quarterly revenue from operations grew more than 3% to Rs 19,347 crore. In contrast, Vi’s December quarter net loss widened to Rs 7,234.1 crore, impacted by higher operating and interest costs. Vi’s ARPU rose sequentially to Rs 115 (compared to Rs 109 in the previous quarter), partly helped by prepaid tariff hike in November, which took heavy losses to customers. Vi’s capital expenditure also declined to Rs 1,050 crore from Rs 1,300 crore in the September quarter.
ICICI Securities said, “Vi’s Cash Ebitda stood at Rs 1.26 billion in the December quarter, which was higher than expected due to out-performance in revenue despite loss of clients. While the big gains of the recent tariff hike will be visible in Q4FY, the telco’s slowdown in 4G sub-ed and sub-engagement (falling minutes and data usage) in Q3FY22 provides little comfort on the durability of the revenue outperformance trend beyond two quarters. ,
Vi’s data usage per user fell 5.4% quarter-on-quarter to 14GB, while voice usage per user declined from 620 minutes to 620 minutes in Q2FY22. ICICI Securities said Vi continued to lag behind its competitors in 4G network investments and delays in fundraising restricted it from aggressive capex.
Fitch’s Soni said “Vi needs to close its long-pending fundraise immediately”, failing which capex will continue its downward trend and leave it vulnerable, causing huge losses to clients in the coming quarters. Maybe.
Last month, Vi’s leadership said the equity funding – which includes promoters Vodafone Plc and Aditya Birla Group – is likely by March. The telco is hoping that the government’s recent relief package, which has allowed it to defer statutory dues by four years, and the recent price hike will make it more attractive to investors.