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Bharti Airtel Q1 preview: Marginal growth in ARPU, revenue seen

Investors should watch mobile broadband subscriber addition, sale of non-core assets, and other balance sheet deleveraging plans

Chirinjibi Thapa  |  New Delhi 

airtel, bharti airtel, airtel payments bank

will announce its June quarter results on Thursday and analysts expect a marginal gain in revenue and average revenue per user (ARPU) on a sequential basis. The ARPU increase is an outcome of subscriber losses and marginal benefit accruing from the mix change, analysts said.

According to Kotak Institutional Equities, may report a flattish sequential growth of 2 per cent in revenues to Rs 21,007.2 crore. In comparison, had posted revenue of Rs 20,602.2 crore in the last quarter and Rs 19,799.2 crore in the year-ago quarter.

The brokerage firm pegged Airtel's consolidated Q1 loss at Rs 1,154.3 crore against its Rs 107.3 crore profit in Q4FY19 when it had received a one-off benefit boost of Rs 2,022.1 crore. "ARPU is expected to jump 2 per cent QoQ to Rs 127 per month," the brokerage firm said.

Kotak Institutional Equities said while Airtel did manage to lift its revenue a tad by implementing the minimum recharge construct (MRC) aimed at forcing the non-paying incoming-only customers to pay up to stay on the respective networks, the brokerage does not see much gain for the company by deploying this strategy from here on.

"MRC is now in the base and offers no further (at least not material) QoQ revenue uplift. Bundled plan adoption and long-term evolution (LTE) net adds in the prepaid segment have failed to provide the much-anticipated mix-uplift to ARPU and revenues thus far and we have no reason to believe this would happen in 1QFY20E," they said.

Analysts at ICICI Securities also expect a similar 1.2 per cent QoQ growth in revenue to Rs 20,896.9 crore and loss at Rs 1,663.8 crore. They see Airtel's ARPU growing 1 per cent on a QoQ basis.

At the operating level, Bharti Airtel’s consolidated earnings before interest, tax, depreciation, and ammortisation (Ebitda) is likely to dip 2.8 per cent on a QoQ basis to Rs 6,491.7 crore (down 4.8 per cent YoY), said ICICI Securities.

Kotak Institutional Equities sees a 0.8 per cent QoQ degrowth in Airtel's Ebitda to Rs 6,687.9 crore while Ebitda margin for the quarter is pegged at 31.8 per cent as compared to 32.2 per cent in the past quarter.

SEGMENT-WISE PERFORMANCE

ICICI Securities expects Bharti’s India revenues to grow 1.1 per cent QoQ to Rs 15,600 crore and Ebitda to fall 4.7 per cent QoQ (9.8 per cent YoY) to Rs 4,430 crore. "We expect non-mobile segment to show improvement, particularly, enterprise and DTH," they said, adding that the wireless segment may see a revenue growth of 0.8 per cent on a QoQ basis.

Analysts at Kotak Institutional Equities expect a steadier quarter for Airtel's wireless segment and expects 1.6 per cent QoQ growth, "largely on the back of higher number of days in the June quarter versus March". Ebitda for the segment will likely be down 3 per cent QoQ on a reported basis to Rs 2,490 crore, they said.

KEY MONITORABLES

Investors should watch mobile broadband subscriber addition, sale of non-core assets, and other balance sheet deleveraging plans.

AIRTEL AFRICA

Bharti Airtel’s African arm, on July 26, posted a net profit of $132.2 million, down 12.2 per cent from the corresponding period last year. This was Airtel Africa’s first results announcement after the $750-million initial public offering in June. It had reported a net profit of $150.6 million in June 2018. Revenue increased to $795.9 million, up 6.9 per cent, with growth of 10.2 per cent in constant currency terms.

First Published: Wed, July 31 2019. 06:30 IST
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