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Airtel reports healthy performance with tariff hike flow through driving margins expansion

ICICI Securities 18 May 2022

What's Buzzing

Bharti Airtel's Q4FY22 topline performance was marked by tariff hike benefits flowing in the wireless business revenues and driving the margins expansion. Consolidated topline came in at Rs 31,500 crore, up 5.5% QoQ (tad below estimates of 7% QoQ growth). Indian wireless revenues were up 9.5% QoQ at Rs 16,617 crore, led by pass through of tariff hike driving ARPU, which came in at Rs 178, up 9.7% QoQ in line with RJio’s ~10% growth). On the other segment of India business, homes services (broadband) revenues were up 10% QoQ at Rs 876 crore and Airtel business (enterprise) revenues were up 1.8% QoQ at Rs 4180 crore. Overall margins were at 50.9%, up 169 bps QoQ with India wireless margins at 50.6% (up 128 bps QoQ). Overall Indian margin was up 106 bps QoQ at 50.8%. The margins expansion was driven by tariff hike led pass through. Africa margins were at 49.6%, up 30 bps QoQ. The company reported PAT of Rs 2007.8 crore, up 142% QoQ.

Context

Overall subscriber base saw an addition of 3.1 mn QoQ at 326.0 mn. This was the best metric among peers who lost subscribers due to impact of Sim consolidation amid tariff hike. It witnessed 4G Net adds of ~5.2 mn during the quarter, with 4G data sub base at 200.8 mn (overall data customers base of 208.4 mn). The post-paid subscriber base was up by ~210,000 at 17.8 million. Data usage per sub was down 2.7% QoQ to 18.8 GB. Voice Usage per customer was up 2.1% QoQ to 1083 minutes.

Our Perspective

Airtel continues to report a healthy performance on the Indian wireless business front with better KPIs in terms of subscribers’ stickiness and margins. Favourable industry structure of three players (two being strong), government relief, tariff hike and fund raise puts Airtel in a sweet spot to maintain its relative strength among peers with a formidable digital ecosystem offering. Management commentary on overall growth drivers would be key monitorable ahead.

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