Bharti Airtel Q4 Results Review: Shares Rise On Profit Beat As Subscriber Base Grows
Here’s a look at what analysts made of Bharti Airtel’s Q4 results.
Shares of Bharti Airtel Ltd. rose after its fourth-quarter profit beat analysts' estimates due to strong growth in its subscriber base.
The net profit of India's second-largest telecom operator rose 61.68% over the previous three months to Rs 4,226 crore in the quarter ended March 31, according to an exchange filing on Tuesday. That came on the back of revenue that increased 0.47% sequentially to Rs 36,009 crore. Analysts tracked by Bloomberg had pegged the bottom line at Rs 36,743.82 crore and the top line at Rs 2,881.46 crore.
Bharti Airtel Q4 Results: Key Highlights (QoQ)
Revenue up 0.47% at Rs 36,009 crore (Bloomberg estimate: Rs 36,743.82 crore).
Ebitda up 1.42% at Rs 18,982 crore (Bloomberg estimate: Rs 18,887.35 crore).
Ebitda margin at 52.17% vs. 47.74% (Bloomberg estimate: 51.4%)
Net profit is up 61.68% at Rs 4,226 crore (Bloomberg estimate: Rs 2,881.46 crore).
Dividend of Rs. 4 per share declared.
The telecom operator clocked an average revenue per user, or ARPU, of Rs 193—the same as in the October-December quarter. A year ago, that figure stood at Rs 178.
"An improving mix of prepaid and postpaid users and an increase in voice tariffs helped ARPU performance year-on-year," Akshat Agarwal, research analyst at Jefferies, said in a note. At 3.2 million, net additions were the highest in eight quarters due to lower churn.
As of March 31, Bharti Airtel had 335.4 million customers who spoke over the phone for a total of 1,124 billion minutes, pinging a total of 275,069 network towers. The 4G subscriber base stood at 224.1 million, with a total data traffic of 14,248 billion megabytes.
The average mobile data usage per customer rose 8.0% year-on-year to 20.3 GB per month. Mobile revenue for the quarter stood at Rs 195.49 crore, up 11.5% year-on-year.
Morgan Stanley, however, warned of flat average revenue per user on a sequential basis.
"Reported ARPU of Rs 193 was flat QoQ despite the partial benefit of minimum recharge plans rolled out pan-India during the quarter," Gaurav Rateria and Sulabh Govilla, equity analysts at Morgan Stanley, said in a post-earnings note.
Shares of Bharti Airtel rose as much as 1.3% on Wednesday, with trading volume at 54% of the three-month, full-day average, Bloomberg data shows. Of the 32 analysts tracking the stock, 28 maintain a 'buy,' one recommends 'hold,' and three suggest a 'sell.'
Here’s a look at what analysts made of Bharti Airtel’s Q4 results:
Jefferies
Strong 4G and postpaid subscriber additions, along with healthy free cash flow generation, were the key highlights. Growth in homes and enterprise businesses remains strong.
Revenues at Rs 36,000 crore and Ebitda at Rs 18,700 crore were in line with estimates as a higher than expected performance in India was offset by slower growth in Africa.
ARPUs at Rs 193 were expectedly flat QoQ due to an improving subscriber mix and partly due to the increase in voice tariffs in Q4. The rise in ARPUs was the key driver for the 12% YoY growth in India's mobile revenues.
While subscriber growth in the home segment was healthy, ARPUs continued a downward trajectory. With Bharti introducing lower ARPU plans recently, home broadband ARPUs are likely to fall further.
Rating: Buy | Target Price: Rs 900
Morgan Stanley
4G net subscriber additions of 7.4 million QoQ were the strongest in the last six quarters. The company added 663,000 postpaid users, even as the churn rate in wireless improved to 2.8% in Q4 versus 3% in Q3.
Despite flat ARPU, incremental Ebitda margins in the India wireless business were strong at 56.1%. Ebitda margins in most of the other businesses were better than our expectations.
The reported ARPU was flat despite the partial benefit of minimum recharge plans rolled out pan-India during the quarter and fewer days in the January-March quarter.
Consolidated capex came in higher at Rs 11,390 crore, driven by wireless operations and enterprise business. Net debt stood at $561 million, driven by higher lease obligations and lower-than-expected free cash flow.
Rating: Overweight | Target Price: Rs 860
Motilal Oswal
Revenue growth has continued to decelerate for the last five quarters. Consolidated revenue inched up 1% QoQ, with 1% growth in India revenue and a 1% decline in Africa revenue.
Consolidated Ebitda grew by a mere 1% QoQ, with 1% growth in India and flat Africa Ebitda. Home and enterprise businesses saw 7% and 3% QoQ growth, respectively.
4G subscriber additions remained moderate at 7.4 million. Total 4G subscribers stood at 233 million, or 69% of the total user base.
Bharti Airtel added 3 million subscribers in Q4 as compared to Reliance Jio's 6 million additions. Jio's revenue grew 1.7% QoQ.
Rating: Buy | Target Price: Rs 786