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Inline earnings; subs addition impacted by Covid

Result Highlights

Bharti Airtel‐Consolidated

* Revenue: Bharti’s consol. revenue at Rs 268.5 bn (+15% YoY; +4% QoQ), stood in‐line with estimates. The YoY growth was largely driven by 15% growth in India mobile customer base to 321mn and 6% increase in ARPU to Rs 146. However, on sequential basis the subscriber base declined by 135,000, as Covid second wave lead to consolidation at lower end of base. Even as mobility was tad weaker in 1Q, QoQ revenue growth was led by other businesses.   

* Operating Profits: EBITDA at Rs 129.8bn, stood higher by 31% YoY and 5.3% QoQ. A sequential as well as YoY improvement in ARPU, led by addition of 5mn 4G subscribers. The EBITDA margins stood at a strong 48%.   

* Profit/(Loss) After Tax: On after tax basis, Bharti Reported a Profit of Rs 9.4 bn vs. a loss of Rs 152 bn in 1QFY21 and profit of Rs 15.1bn in 4QFY21

* Exceptional Item: The company reported an exceptional gain of Rs 305mn during the quarter on account of sale of telecommunication assets in one of the group companies.

* Customer Base: The total customer base on consolidated basis stood at 474mn a net addition of 54mn customers on YoY basis and 3mn on QoQ basis. Of the above the India mobile subscriber was 321mn, with an addition of 41mn subs on a YoY basis, but flat QoQ.

* Debt: The Consolidated net debt (excluding lease obligations) stood at Rs 1,265.2bn as on June 30, 2021 compared to Rs 892.6 bn as on June 30, 2020. Consolidated net debt for the company including leases stood at Rs 1,596.2 bn. The Net Debt‐EBITDA ratio (annualized) for the quarter stood at 3.03 x (1QFY21: 3.02x ; 4QFY21: 2.95x).

India Mobile business  

* Revenue: India mobile revenue stood at Rs 143 bn (+ 11% YoY; +1.6% QoQ); The 0.04% sequential reduction in overall customer base was offset by a) 0.6% QoQ improvement in ARPU to Rs 146 and b) addition of 5mn, high value 4G subscribers   

* EBITDA:   stood at Rs 70.3bn (+35% YoY; +5% QoQ); primarily on higher ARPU; EBITDA margin expanded marginally to 49% (from 48% in 4QFY21)   

* Capex: Total India Capex stood 71% YoY and 11% QoQ higher at Rs 57 bn (of which mobile business capex stood at: Rs 44bn), on deployment of sub‐GHz spectrum on pan India basis.  

* Infrastructure: During the quarter the company added 2400 towers during the quarter, in addition of deployment of new radio in seven circles for deployment of sub‐GHz spectrum    Operating Cashflow: stood 7% QoQ and 9% YoY lower at Rs 36bn

* ARPU:  stood at Rs 146 vs Rs 138 last year same quarter and Rs 145 in previous quarter. BHARTI firmly believes that current ARPUs are inadequate for reasonable return on capital, and ARPUs need to improve to Rs 200 and then to Rs 300 eventually. Company has tweaked its certain pre‐paid and post‐paid offering, as step towards improvement in ARPU, where the impact would be apparent in coming quarters.  

 Subscriber base: The total India consumer base stood at 351mn, a net addition of 0.56mn subscribers QoQ; of which the mobile subscriber base stood at 321mn (flat QoQ)  

* Data subscriber base increased by 4.3mn QoQ to 193mn, on continued up‐trading by consumers and new additions; 4G subscriber base increased to 184.4mn (+5mn)

* Data traffic improved by 16% QoQ to 10.8 tnMB; as data usage per sub increased to 18.9 GB driven by higher adoption of work from home during lock down in aftermath of Covid ‐ 2nd wave.  

* Voice traffic was largely flat QoQ at 1002bn minutes; voice usage per customer declined marginally to 1044min (from 4Q: 1053 mins)  

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