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Airtel reports steady performance with India margin expansion

ICICIdirect Research 10 Aug 2022 DISCLAIMER

What's Buzzing

Bharti Airtel saw residual benefits of tariff hikes during the quarter, which aided India margins expansion. Consolidated topline came in at Rs 32,805 crore, up 4.1% QoQ and 22.2% YoY with India wireless revenues up 3.4% QoQ (up 27.4% YoY) at Rs 18220 crore, led by residual pass through of tariff hike driving ARPU, which came in at Rs 183, up 2.8% QoQ. Overall margins were at 50.4%, down 53 bps QoQ mainly owing to lower Africa margins which was at 48.8%, down 110 bps QoQ. India wireless margins was at 51.2% (up 55 bps QoQ). Overall Indian margin was up 13 bps QoQ at 51%. Reported net debt (excluding lease liability) was at ~Rs 1.195 lakh crore (down by ~Rs 4035 crore QoQ) aided by healthy FCF. 

Context

Overall sub base saw an addition of 1.3 mn QoQ at 327.3 mn (our expectation was addition of 2 million). It witnessed 4G net adds of ~4.5 mn during the quarter, with 4G data sub base at 205.3 mn (overall data customers base of 213.3 mn). The post-paid subscriber base was up by ~249,000 at 18.1 mn. Data usage per sub was up 3.6% QoQ to 19.5 GB. Voice usage per customer was up 2% QoQ to 1104 minutes.

Our Perspective

Bharti Airtel continues to report resilient numbers, especially on the Indian wireless business front. The continued margin expansion remains a key positive. The non-wireless business momentum along with Africa performance, continues to be robust. Favourable industry structure of three players (two being strong), government relief, tariff hike and fund raise puts Airtel in sweet spot to maintain its relative strength among peers with a formidable digital ecosystem offering. We remain constructive on Airtel.

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