Jefferies, Telecom News, ET Telecom

Calcutta: Bharti Airtel Operating Profit Expected to Grow 18% P / Y in FY 22-24 Thanks to Growing 4G Penetration and Strong Revenue Growth Prospects Amid Shifting Shares market and potential price hikes, analysts say.

They added that Airtel had also “regained its outperformance over Jio”, with the phone company run by Sunil Mittal adding 2.7 million subscribers (net; including domestic broadband) and revenue (mobile and domestic broadband in India) increasing 6.3% sequentially in the September quarter. , compared to Jio’s 11.1 million net subscriber losses and a 4.1% decline in QoQ own-source revenue growth over the same period.

“In FY 22-24, we expect Airtel to provide a 15% CAGR in revenue and an 18% CAGR in Ebitda, assuming 7% rate increases in 4QFY22 and 4QFY23,” Jefferies said in a note.

The analysts’ opinions came a day after Airtel reported higher consolidated net profit of Rs 1,134 crore in the September quarter, helped by a one-time gain from a transfer of spectrum rights to Reliance Jio, a reduction in financial costs and a solid operational performance of its mobile activity in India. . Its consolidated revenue, in turn, increased 13% year-on-year and 5.5% sequentially to Rs 28,326 crore.

Analysts said Airtel’s strong mobile revenue growth in India was driven by tariff increases taken in July in its prepaid and postpaid voice business user base segments, which propelled 5% sequential growth in average revenue per user (ARPU) at Rs 153. They added that the telecommunications company’s 6.9% qoq increase in depreciation charges was offset by a 4% qoq drop in depreciation charges. net financial charges.

Airtel shares initially jumped around 3% on Wednesday morning on BSE and were finally trading down 0.6% to Rs 709 by mid-morning.

The phone company’s consolidated net profit – its fourth consecutive quarter in the dark after six consecutive losses – compared to a loss of Rs 763.2 crore a year ago and a profit of Rs 284 crore in the period April June.

Nomura Research said that the combination of “Airtel’s Rs 21,000 crore rights issue, an estimated Rs 480 billion cash relief from the moratorium on government contributions, as well as more than Rs 200 billion of Rs free cash flow generation over FY21-25F, not only alleviates the debt problems of telecom operators, but also ensures that Bharti would be well positioned to compete with Jio in upcoming 5G deployments ”. The next spectrum sale is likely next year, although the government has yet to set a date. Credit Suisse said Airtel reported its “highest ever subscriber net additions of around 0.5 million in fixed home broadband (space)” as it expanded its reach to 136 cities during 2QFY22, bringing its total geography of operations to 523 cities.

“Airtel has increased the geographic reach of its broadband business by 3.5 times over the past five quarters using its LCO partner model for accelerated expansion,” said the Swiss brokerage.

He added that this was in line with expectations of accelerated growth in fixed broadband penetration in India led by Jio and Airtel. Strong net subscriber additions helped Airtel home broadband revenue grow 9.1% in QoQ (+ 21.3% year-on-year) despite a 3% squeeze in QoQ ARPU.

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