Airtel may widen losses in June quarter due to Reliance Jio: Report
Analysts believe that Airtel will widen losses in June quarter due to aggressive pricing by Reliance Jio on both prepaid and postpaid platforms, the sharp decline in rupee against dollar and the cut in international termination rates.
Bharti Airtel is likely to post losses up to Rs 500 crore in the first quarter of the current fiscal, according to reports. Analysts believe the biggest telecom operator in India will see its losses widen in the first quarter of the ongoing fiscal on account of aggressive pricing by Reliance Jio on both prepaid and postpaid platforms, the sharp decline in rupee against dollar and the cut in international termination rates, said a report by the Economic Times.
The brokerage Nomura has estimated that Airtel will see net losses to the tune of Rs 500 crore in the June quarter, according to the report. Kotak Securities expect the telecom operator to report a loss of Rs 449 crore during this period. Goldman Sachs is the most optimistic of the lot, and has estimated losses to the tune of Rs 220 crore.
In the March quarter of FY18, Airtel posted its lowest ever consolidated profit of Rs 83 crore due to slashed international termination rates and tariff war triggered by Reliance Jio. In the same quarter, the company reported a loss of Rs 652 crore for India operations, its first in 15 years. As per the report, Airtel Chief Executive Officer Gopal Vittal has said that the company will see its losses in India widen in the June quarter even further as revenue remains under pressure and the costs continue to rise.
Credit Suisse has predicted that Airtel will see its losses mount due to tariff cuts by Jio in both its prepaid and postpaid plans during the June quarter. Airtel, along with other incumbents, has been refreshing its plans to stay relevant in the face of predatory pricing by Jio.
At the Annual General Meeting of Reliance Industries on Thursday, Mukesh Ambani announced the Jio GigaFiber broadband connection, which is likely to eat into the Airtel's broadband revenue. However, this impact will not be evident till the ongoing quarter ends.