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Bharti Airtel reported EBITDA/PAT of Rs198.1bn (+1.5%QoQ; PLe Rs198.9bn) and Rs24.4bn (+82%QoQ; PLe Rs15.4bn). India mobile revenues were up 3.3%QoQ and EBIDTA margin was stable at 55.1%. ARPU grew 2.5% QoQ to Rs208 (PLe Rs205) with 7.4mn growth in 4G subscribers (overall net addition was 3.3mn). Africa mobile Revenue/EBITDA remained flat QoQ, while Enterprise revenue grew 1.7% QoQ, while there was a muted growth in EBITDA with a 57bps fall in margins. Home services (fixed line + broadband) had an ARPU decline of 2% while DTH ARPU grew 2.5%. We maintain our positive stance on the sector, due to falling competitive intensity, given weak financial position of peers. Maintain ‘Accumulate’ rating at SOTP based TP of Rs1225 based on 11x FY26 EV/EBITDA for India mobile multiple, 6x FY26 EV/EBITDA for Airtel Africa, enterprise segment at 9x FY26 EV/EBITDA, 3x FY26 EV/EBITDA for DTH and 6x EV/EBITDA for home services.

4G subscriber addition of 7.4m sustains India mobile business:

India mobile Q3 Revenue/ EBITDA were Rs216.3bn (+3.3%QoQ) and Rs119.2bn (+3.7%QoQ). Q3 4G net customer addition continue to remain impressive at 7.4mn (20.8mn in 9MFY24). ARPU came in strong at Rs208 (+2.5% QoQ, 7.5%YoY). We expect moderate growth in ARPU in near term. We estimate FY24/25/26E net subscriber adds at 13/14/14 mn each along with ARPU of Rs215/225/236.

Poor Africa performance: Q3 Africa revenues and EBITDA were at $1.2bn (flat %QoQ) and USD608mn (-2%QoQ). While total subscribers grew by 3.5mn, ARPU grew by 2.7%QoQ to $2.6 maintaining EBITDA margins at 49.1%.

Steady improvement in enterprise and home services EBITDA:

In Q3, the enterprise segment grew marginally by 1.7% QoQ to Rs 51.9bn while EBITDA remained flat due to 57bps decline in margins to 39.7% at Rs20.6bn. Home services revenue grew steadily by 4.2% QoQ to Rs12.7bn and EBITDA was at Rs6.3bn (+5.1% QoQ) and margins came in at 50.2%. Although ARPU decreased by 2% QoQ to Rs583 (Q2: Rs 595), subscriber base was up 5.2% QoQ to 7.3mn. DTH EBITDA was up 1.7% QoQ to Rs 4.3bn, while ARPU grew 2.5% to Rs163. Subscriber base was also up 2.5% and totaled to 16.1mn.

Concall highlights: 1) Q3 performance was impacted by currency devaluation in Africa. 2) In Q3, net additions in postpaid stood at 0.9mn. 3)Capex incurred in India in Q3 stands at Rs77.5bn across 5G roll outs, rural expansion and data centres. 4) Growth in ARPU was on account of conversion of prepaid to postpaid and premiumisation of customers. 5)47% of net additions were for Airtel Black. 6) Capex is expected to be elevated in FY24 and will be moderated in FY25

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