Bharti Airtel: Ringing loud

Bharti Airtel: Ringing loud

Shares of Bharti Airtel surged more than 4% to Rs 453.50 apiece on NSE, Wednesday, as the telecom operator’s superior execution capability led to robust earnings performance during the fiscal second quarter to September 30.
Bharti’s India mobile print shows marked improvement in many areas such as growth in total subscriptions without ARPU dilution which shows quality of customer addition; lower churn rate increasing lifetime value of customers and continued delivery of 4G net add, which has now likely matched the market leader.
Bharti Airtel’s consolidated revenue rose 7.7% QoQ (better than estimates), with strong performance in the Indian wireless business. Consolidated EBITDA was 8% ahead of estimate as margins expanded 150 bps QoQ.
Airtel reported ARPU of Rs 162 (+3.2% QoQ and better than Rs 160 estimate), which was higher thanks to increase in the 4G subscriber base and upgrades in plans by existing customers (both 2G and 4G). Indian wireless revenue of Rs 138.3 bn (+26% yoy / +7.4% QoQ) was better than estimated and EBITDA margin of 42.6% (+204 bps QOQ) improved thanks to better revenue.
Overall subscribers of 293.7 mn (+5% QoQ) increased. Subscribers who had not recharged in the June quarter (3.8 mn) because of Covid-19 may have come back and the balance was subscribers who migrated from other networks. On the data front, the company’s 4G data subscriber base increased 14.4 mn, taking the total to 153 mn.
Consolidated capex was Rs 68 bn vs. Rs 40 bn in the previous quarter. FCF generation was U.S. $450 mn during the quarter, which improved sequentially.
Bharti’s subscriber additions across segments indicate strong market share gains in Q2. This validates the thesis that if tariff hikes don’t happen, Bharti Airtel will likely witness acceleration in subscriber growth due to market share gains.

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