Bharti Airtel hits record high as ARPU improves in December quarter

However, Airtel posted a net loss of Rs 1,035 crore for the quarter, as it provisioned for the interest accrued on account of AGR payment

Shares of Bharti Airtel hit an all-time high of Rs 529, up 2 per cent on the BSE on Wednesday after the telecom operator posted an  8.5 per cent year-on-year (YoY) increase in revenue for the quarter ended December 31, 2019 (Q3FY20), lifted by an improvement in average revenue per user (ARPU).  The stock surpassed its previous high of Rs 527.39, touched on October 10, 2007.

The company’s revenue increased by 8.5 per cent YoY to Rs 21,947 crore in Q3FY20, compared to Rs 20,231 crore in the year-ago period. On the operational front, the company posted an improvement in ARPU from Rs 128 to Rs 135, sequentially. 

However, Airtel posted a net loss of Rs 1,035 crore for the quarter, as it provisioned for the interest accrued on account of AGR (adjusted gross revenue) payment. Analysts had pegged a loss figure in the quarter at Rs 640 crore.

“While the tariff revisions undertaken in December 2019 were a welcome step towards repairing the financial health of the industry, we believe tariffs must go up further for enabling the industry to invest in emerging technologies,” said Gopal Vittal, MD and CEO, India & South Asia, Bharti Airtel.

In other segments, mobile revenues have witnessed YoY growth of 9.6 per cent on the back of focus on quality customers, up-trading and the recent tariff actions in some parts, the company stated. The full impact of the tariff actions is yet to be seen, it said.

"India wireless LTL EBITDA growth of 7 per cent on lower network cost despite aggressive SG&A remain a key positive for Airtel. Also, Network opex and capex is slowing down, which is driving healthy annualized FCF of Rs 100-120 billion. This should allow deleveraging," analysts at Motilal Oswal said in a result update. On the other hand, "weak revenue/EBITDA performance in Enterprise, Passive, and Home segments and the overhang of AGR liability remain the key headwinds going forward," they said.

According to a report by CNBC TV18, CLSA has maintained 'Buy' on the stock with the price target hiked to Rs 630 from the earlier Rs 565.

"India Mobile 4-G ramp-up as well as Ebitda remained ahead of estimates. Further, $3 billion fundraising has assuaged concern about funding of AGR payment," the brokerage house said, adding that has lifted its estimates by 1-7 per cent and sees a consolidated Ebitda growth of 26 per cent over FY20-22.

At 10:01 AM, the stock was trading 0.06 per cent higher at Rs 519.20 levels as compared to 0.4 per cent gain in the benchmark S&P BSE Sensex. Around 86 lakh shares have changed hands on the NSE and BSE combined so far.