New Delhi: Bharti Airtel and Reliance Jio will continue to gain market share at the cost of Vodafone Idea's "worsened" financial health that may deteriorate further in the wake of the AGR judgment, Axis Capital said in a note on Friday.
Axis Capital said it has trimmed its revenue estimates for wireless telcos. This is because muted subscriber additions as well as hit in 2G/3G conversions to 4G SIMs on account of the lockdown and a possible extension of certain curbs, could partially impact revenue growth that was expected in coming months from the tariff hike in December 2019.
"We cut FY21/22E (estimates) revenue of wireless providers by 1-6 per cent and EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) margin by 20-100 bps (basis points," Axis Capital said in the telecom sector report.
It said that while the tariff hikes undertaken by companies in December 2019 is likely to play out in nine months of calender year 2020 as subscribers come for recharge, the floor pricing may be delayed due to the lockdown.
As per the Supreme Court judgment, incumbent telcos have to make full payment of Adjusted Gross Revenue (AGR) dues including interest, penalty and interest on penalty, it said noting that Bharti Airtel appeared better placed to make the payment, given the recent fund raise.
Introduction of floor pricing and cut in levies to ensure that market continues to have four players, can further benefit the industry including Airtel, Reliance Jio, it said.
Axis Capital said Airtel and RJio will continue to gain market share at the cost of Vodafone Idea due to latter's worsened financial health which may deteriorate further after the AGR judgment.
"COAI expects subscriber addition of less than 1 million in March 2020 versus average of 3 million per month. Subscriber addition to be hit for most of Q1FY21 due to 21-day lockdown and possibility of restrictions/ partial restrictions getting extended," Axis Capital said.