Reliance Jio May Hurt Bharti Airtel In Q4

Bharti Airtel Ltd., the country's largest telecom operator, is not expected to have a great start to 2017, with its newest rival Reliance Jio Infocomm Ltd. launching its ‘Happy New Year' offer in the last quarter of financial year 2016-17.

Reliance Jio added another 3 crore subscribers in the three months ended March, as users looked to make the most of the free services it offered. This is expected to dent Bharti Airtel's results in the January-March quarter.

Revenue is expected to fall 10 percent to Rs 22,572 crore, according to a consensus estimate of 12 analysts tracked by Bloomberg. The profit is expected to dip nearly 60 percent to Rs 543 crore – its highest year-on-year drop in more than four years.

The telecom provider's earning before interest, tax and depreciation and amortisation (EBITDA) is seen at Rs 7,904 crore versus Rs 9,136 crore a year ago.

Reliance Jio's free services for six months till March is also expected to dent Bharti Airtel's blended average revenue per user, which is can drop by Rs 15 from the third quarter.

Reliance Jio may have started charging from April, but its aggressive pricing strategy is expected to continue to weigh on other telecom operators.

Of the 35 analysts tracked by Bloomberg, 57 percent have a ‘buy' rating on the Bharti Airtel with a return potential of 9 percent over a 12-month period.