Bharti Airtel Records Mobile Revenue Growth Despite No Hike in Tariff
In its earnings release on Monday, Airtel highlighted that its mobile services revenue in India were up 19.1% YoY on a comparable basis driven by “strong” user additions. The second-largest wireless operator in India highlighted that its wireless user base in India is now around 35 crores with 4G user base now at 17.93 crores. Airtel said that its 4G user base was up by 1.37 crores quarter-on-quarter (QoQ) and 4.3 crores YoY. Motilal Oswal Financial Services, an Indian diversified financial services firm said that the operator’s “superior execution quality is reflected in its strong performance” in its past four quarters. The firm said that the operator in the past four quarters recorded market share gains with Airtel recording 13% overall user growth including 32% growth in 4G user base while its ARPU grew 7% “without a tariff hike.” “While the street has been concerned about the timeline of a potential tariff hike, we believe strong earnings growth can be achieved even without a tariff hike,” Motilal Oswal Financial Services said in its report. Similarly, Dolat Capital on Tuesday said in a report that Airtel is “well-poised to capitalize on the potential upside from the weakness” of Vodafone Idea along with the events such as tariff hikes. “While tariff increase is a welcome potential trigger and inevitable for a three-player market structure, Bharti is well-poised to gain market share and grow even in absence of the same,” Dolat Capital said in its report. Crucially, Gopal Vittal, chief executive officer at Bharti Airtel for India and South Asia said that the ARPU of Airtel on an equated basis increased from Rs 146 to Rs 148. Further, the CEO in the fourth quarter earnings call on Tuesday said that the recorded ARPU despite being the “highest in the country” also “shows the massive headroom” for improvement. “I say this for two reasons, one is the very low level of tariffs in India which we all know about,” Vittal said. “Second is the fact that we have 140 million (14 crore) users on our network who are not on 4G and whose ARPU is less than half that of the average of the businesses.”
Home Broadband Emerge As Growth Driver for Bharti Airtel
In its earnings release, Airtel also highlighted that its home business which covers the Xstream Fiber broadband recorded 274,000 additions in its fourth quarter, its “highest ever” user additions. Airtel said that its Xstream Fiber broadband services now has over three million users with the operator providing its service in 291 cities across India including the local cable operators (LCO) cities. Airtel in its quarterly report said that it has “accelerated LCO partnerships in non-wired cities” with the LCO model live in 203 cities across the country. However, the operator in its quarterly report highlighted that the ARPU under its home services reduced from Rs 705 in the third quarter to Rs 684 in the fourth quarter. Badal Bagri, chief financial officer at Bharti Airtel for India and South Asia, said that the “sequential drop” in ARPU was due to the “pricing intervention” that the operator took in the third quarter. The CFO also said that the operator is not witnessing “any further ARPU dilution from these levels” despite the operator having Xstream Fiber plans from Rs 499. ICICI Securities, a subsidiary of ICICI Bank on Tuesday said that the user growth under home services will “translate into revenue” for Airtel from the current financial year. The firm also highlighted that the enterprise along with the Payments Bank, digital services and Airtel Money in Africa have also recorded growth in the fourth quarter. “Bharti has expanded its market share across businesses with many businesses under-appreciated,” ICICI Securities said in its report.
