Top telecom players are expected to report moderate an increase in sales and operating profit for the June 2010 quarter after a gloomy performance in the past two quarters. However, their net profits are likely to fall on account of higher forex losses.

Even though the pressure on tariff continues due to new players foraying into the market, the sustained momentum in user additions along with stabilising tariffs may support revenue. Also, growth in the minutes of usage (MOU) of the mobile networks could further lift performance.

Net sales of the top three telecom companies including Bharti Airtel, Reliance Communications (RCOM) and Idea Cellular are expected to improve as compared to the previous quarter. According to the average estimates of four brokerages and ETIG forecasts, the aggregate topline of the companies is likely to grow by 3.6% sequentially. This is a 250-basis points (bps) jump over the March quarter sales.

On a year-on-year basis, Bharti, Idea and RCOM’s topline had fallen by 2% in the previous quarter. The companies are expected to report a modest growth in lower single digits for the June quarter.

In contrast, the aggregate net profit of the three companies is expected to fall significantly by 15.5% sequentially against a 2% growth in the previous quarter. An anticipated 33% drop in RCOM’s bottomline will lead the sharp drop in aggregate profit. Falling average revenue per user (ARPU) and forex losses are expected to drag RCOM’s profit.

Subscriber additions remained robust during the first two months of the June quarter. The buoyancy is expected to continue in June as well. Analysts at Ambit Research anticipate an addition of 49 million subscribers in the quarter. They, however, think that the rate of net additions will decline over the quarters on account of lower net additions registered by the new entrants.