More Stories

Informist, Tuesday, Mar. 11, 2025

 

By Noopur Bhandiwad

 

MUMBAI – The five telecommunication companies that are a part of the Nifty 200 exceeded analysts' expectations of net profit for the sector by a staggering margin in the December quarter, mainly on account of a write–back of provisions for bad debt by Indus Towers. These five companies posted a cumulative net profit, excluding exceptional items, of INR 52.47 billion against the INR 5.18 billion analysts had expected. The five telecom companies had reported a loss of INR 681 million in the September quarter and INR 31.86 billion in the year-ago quarter. Three out of these five companies also surpassed analysts' forecast on net profit.

 

The numbers for the sector are skewed by Vodafone Idea, which continues to make large losses, though it has slightly narrowed its loss to INR 66 billion from INR 77 billion in the year-ago quarter and INR 71 billion in the September quarter. Excluding Vodafone, the sector reported a net profit of INR 118.56 billion for the latest quarter, up 160% from INR 45.56 billion a year ago and up 67% from INR 71.08 billion in the September quarter. Excluding Vodafone, the remaining four telecom companies reported a net profit of INR 118.56 billion, exceeding the analysts' estimates by 53%.

 

The INR 30-billion write–back of provisions for bad debt by Indus Towers bumped up the aggregate net profit of the sector. Without this write-back, Indus Towers would have reported a net profit of just around INR 10 billion against the INR 40.03 billion it reported. Excluding the write-back, the net profit of the five telecom companies would have been only INR 22.23 billion. Excluding Vodafone and the write-back by Indus Tower, the profit of the remaining four companies was INR 88.32 billion, up 94% on year and 24% on quarter. Excluding Vodafone and the write-back by Indus Tower, the net profit of the remaining four companies for the latest quarter exceeded analysts' estimates by 14%.

 

NET PROFIT OUTPERFORMERS

Indus Towers reported the best performance on net profit. It reported an 80% sequential increase in net profit against a 2.3?ll expected by analysts for the company. The jump in net profit was largely due to a nearly three-fold increase in write-back of provisions for receivables to INR 30 billion from INR 10.77 billion in the previous quarter. This was due to an improvement in collections from Vodafone Idea, a major customer. On the cost side, Indus Towers managed to reduce its total expenses by almost 44% from the previous quarter. The company's other expenses for the quarter were negative to the tune of INR 28.53 billion, primarily due to the write-back of INR 30.24 billion for doubtful receivables. 

 

Bharti Airtel's net profit growth of nearly 63% was the second best among the five companies in the telecom sector. On a year-on-year basis, Bharti Airtel reported the highest adjusted net profit in the sector, up 181% and almost double the 95% growth expected by analysts for the company. Without Bharti Airtel, the sector would have reported a loss of nearly INR 20 billion. Including exceptional items, Bharti Airtel's net profit grew four times on quarter. The company's exceptional items included a net gain of INR 75.46 billion due to the consolidation of Indus Towers' financials with that of Bharti Airtel after the latter became a subsidiary.

 

Bharti Hexacom's net profit, excluding exceptional items, grew almost 45% on quarter and beat the analysts' estimate of 6% growth handsomely. On a year-on-year basis, its net profit climbed 72%. The company had incurred a one-time cost of INR 1.06 billion in the quarter, resulting from regulatory levies of INR 1.40 billion and a one-time gain of INR 346 million on account of the reversal of provisions created for input tax credit on passive infrastructure services. Had it not been for this one-time cost, the company would have beaten the Street's view for net profit, including exceptional items. The company, in which Bharti Airtel held a 70% stake as of Dec. 31, hiked tariffs in July along with its parent.

 

NET PROFIT UNDERPERFORMERS

Tata Communications was the only company in the sector that disappointed analysts – it reported a net profit slightly lower than expected. Excluding exceptional items, Tata Communications' bottom line rose nearly 36% on quarter. However, including the one-time exceptional cost of INR 149 million, its net profit grew only around 4% on quarter. Tata Communications achieved a stellar sequential profit growth despite reporting only a marginal on-quarter improvement in sales due to a 36?ll in tax expenses to INR 1.5 billion.

 

Vodafone Idea, which had made a net loss for 26 quarters in a row, reported a fall in its net loss for the quarter. This was on the back of a 10% on-quarter and 9% on-year fall in its finance costs to INR 59.40 billion. Its net loss narrowed also due to a slight uptick in its customer revenue to INR 111 billion, which forms almost all of the company's consolidated sales. The revenue rise was the result of the tariff hikes. Vodafone Idea's sharp 60?ll in adjusted net profit margin dragged down the margin of the entire sector to 7%, without which it would have registered a 19% growth.

 

REVENUE OUTPERFORMERS

On a sequential basis, the five telecom companies cumulatively met the 6% sales growth expected by the Street. Of the five companies in the sector, only two companies – Bharti Airtel and Bharti Hexacom – exceeded analysts' expectations for sequential revenue growth, whereas the remaining three – Tata Telecommunications, Indus Towers, and Vodafone Idea – underperformed significantly. Bharti Airtel led the on-quarter revenue growth for the sector with a near 9% increase. Excluding Bharti Airtel, the sales growth for the remaining four companies was just 2% on quarter and 6% on year. However, on an annual basis, Bharti Hexacom was the topper on sales growth at 25%. The residual pass-through of tariff hikes undertaken in July, along with upgrades and an improved subscriber mix, led to a 5.7% sequential growth in Bharti Hexacom's wireless business average revenue per user, JM Financial Institutional Securities said in a post-earnings research report.

 

Bharti Airtel's sales growth was driven by the consolidation of Indus Towers' financials. However, revenues from its key India mobile services segment slowed down in the December quarter compared to the previous quarter, as the effect of the tariff hike in July normalised. On a year-on-year basis, however, its revenues from this segment were up 21%, as the year-ago quarter did not have the tariff hike effect. Bharti Airtel and its subsidiary Bharti Hexacom had raised mobile tariffs across plans by 11-21% in July 2024 and Vodafone by 10-23%.

 

REVENUE UNDERPERFORMERS

Sales of both Indus Towers and Tata Communications grew a tad over 1% on quarter, the slowest among the five, while Vodafone Idea's sales grew almost 2% on quarter. Vodafone Idea failed to beat the sectoral on-quarter growth estimate of 3% and 5% on-year expected by analysts. Tata Communications' sales growth also disappointed the Street at the company level, with the company reporting a very low on-quarter sales growth of 1% against expectations of nearly 20%. The company reported on-year sales growth of only 4% as compared to the 23% growth expected by analysts.

 

The following table shows the performance of the five telecommunication companies vis-a-vis the consensus estimate for each company as well as against the consensus estimate for the telecommunications sector and for the Nifty 200 index companies:

 

Nifty 200 Q3 PAT growth 8.8%

Nifty 200 Q3 PAT growth consensus estimate 10%

Nifty 200 Q3 revenue growth 5.5%

Nifty 200 Q3 revenue growth consensus estimate 4%

 

Company	PAT beat analysts' estimate	Adjusted PAT growth %	Adjusted PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate		Revenue beat analysts' estimate	Revenue growth %	Revenue growth estimate %	Revenue beat sector estimate	Revenue beat Nifty 200 estimate
Telecommunications Sector		66.81	8.9	YES	YES			6.13	6.16	YES	YES
Bharti Airtel	YES	62.71	40.05	YES	YES		YES	8.82	5.79	YES	YES
Bharti Hexacom	YES	44.84	5.93	YES	YES		YES	7.3	4.59	YES	YES
Indus Towers	YES	80.04	-2.33	YES	YES		NO	1.1	2.98	NO	NO
Tata Communications	YES	36.11	17.82	YES	YES		NO	1.23	19.64	NO	NO
Vodafone Idea	N.A.	N.A.	N.A.	N.A.	N.A.		NO	1.69	2.88	NO	NO

 

The following table shows the profit margins of the five telecom sector companies that are a part of the Nifty 200:

 

	PAT Margin for Dec-24	PAT Margin for Dec-23	PAT Margin for Sept-24
Nifty 200	11.87%	11.51%	11.37%
Telecommunications Sector	17.64%	-4.35%	-1.30%
Company	PAT Margin for Dec-24	PAT Margin for Dec-23	PAT Margin for Sept-24
Bharti Airtel	32.75%	6.44%	8.66%
Bharti Hexacom	11.59%	11.81%	12.07%
Indus Towers	53.04%	21.40%	29.78%
Tata Communications	4.07%	0.80%	3.97%
Vodafone Idea	-59.45%	-65.45%	-65.64%

 

End

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.