Q3 results of telecom companies to see impact of MTC cut: Reports

New Delhi Jan 2 (IANS) Indian telecom companies are still not out of the woods in terms of revenue recovery led by the onslaught from Jios free and aggressive tariffs; also the cut in mobile termination charges (MTC) would have impacted third quarter balance sheets Bank of America Merrill Lynch said in a report.

"We expect the 3Q (third quarter) numbers for Bharti/Idea to be impacted by interconnect (IUC) rate cut and continued down-trending by consumers to low priced plans. Unlike last quarters we do not expect any major surprises in cost-control initiatives as the IUC rate cut largely masks it " the report said.

Similar concern was also echoed by a report of Kotak Institutional Equities. It said: "3QFY18 is likely to be another weak quarter for the Indian wireless names. 57 per cent cut in mobile termination rate effective October 1 2017 is likely to impact Bharti s and Idea s India wireless EBITDA (earnings before interest taxes depreciation and amortization) by around 8 per cent and 11 per cent (on 2QFY18 base) respectively."

"Our math suggests that mobile termination contributed to as much as 14-15 per cent to Bharti s India wireless revenues and a similar proportion to the segment s EBITDA in 2QFY18. A 57 per cent cut in MTR (mobile termination rate) ceteris paribus should result in around 8 per cent sequential dip in India wireless revenues for Bharti.

"For Idea the contribution to revenues and EBITDA in 2QFY18 was 14-15 per cent and 20-21 per cent respectively per our math " it added.

Bank of America Merrill Lynch report further added: "We expect continued tariff hikes by Jio to help Indian telco stocks as the negative operational leverage would turn into positive operational leverage."

--IANS
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