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Bharti’s 2QFY24 consolidated EBITDA was ~1% below JMFe/consensus at INR 198.4bn (down 0.5% QoQ) due to the impact of the Nigerian Naira’s devaluation on Airtel Africa EBITDA. However, India wireless EBITDA was marginally above JMFe at INR 115bn (+3% QoQ and +16.5% YoY) due to moderation of SG&A expenses; EBITDA margin improved 15 bps QoQ to 54.9%. ARPU improved by INR 3 QoQ to INR 203, aided by one more day in the quarter and improved subs mix on back of robust 4G net additions (7.7mn) and post-paid net additions (1.0mn). Traction in FTTH business remained strong; however, enterprise business growth moderated due to slowdown in global business. Cons. capex moderated QoQ to INR 92bn in 2QFY24 (vs. INR 105bn in 1QFY24) led by moderation in India capex; Net debt (excluding lease liability) declined by INR14bn to INR 1,475bn. We maintain BUY on Bharti (unchanged TP of INR 1,125) as we believe India wireless business tariff hikes are likely to be more frequent, going forward, given the consolidated industry structure and higher ARPU requirement for Jio also to justify significant 5G capex. ARPU growth aided by likely moderation in capex will drive Bharti’s FCF from FY25, enabling it to get to net cash by FY29; this will also aid in accretion in equity value.

* Consolidated EBITDA ~1% below JMFe/consensus at INR 198.4bn (down 0.5% QoQ) due to impact of Nigerian Naira’s devaluation on Airtel Africa EBITDA: Bharti’s 2QFY24 consolidated revenue was INR 374bn (down 1.1% QoQ but +7.6% YoY), 1-2% below JMFe and consensus due to the impact of the Nigerian Naira’s devaluation on Airtel Africa EBITDA. Hence, consolidated EBITDA at INR 198.4bn (down 0.5% QoQ but +11.5% YoY) was also ~1% below JMFe/consensus. Network cost was up 0.3% only QoQ at INR 74.2bn (+4.1% YoY) due to the company’s ‘war on waste’ programme; however, other cost (down 4.7% QoQ but up 4.2% YoY) was 3.5% below JMFe due to lower SG&A and other expense.

* India wireless EBITDA marginally above JMFe; 4G net adds strong at 7.7mn though ARPU a tad lower at INR 203: India wireless revenue was in line with JMFe at INR 210bn (+2.7% QoQ and +11% YoY). However, India wireless EBITDA was marginally above JMFe at INR 115bn (+3.0% QoQ and +16.5% YoY) due to moderation in SG&A cost (down 13.2% QoQ); hence, EBITDA margin improved by another 15 bps QoQ to 54.9%. In the core India wireless business, net subscribers rose by 3.7mn to 342mn (a tad lower than JMFe of ~4mn net additions) with reported churn rising slightly to 2.9% in 2QFY24 (vs. 2.8% in 1QFY24) possibly due to outsized churn in lower ARPU segments given the sharp hike entry level prepaid tariffs. Further, 4G net additions were stronger than expected at 7.7mn in 2QFY24 (vs. 5.6mn addition in 1QFY24); 4G subscribers constitute 69% of total subscribers. Post-paid subscriber addition was at a record high of 1.0mn in 2QFY24 (vs. 0.8mn in 1QFY24. In addition, usage metrics was up 2.8% QoQ at 21.7GB/user/month in 2QFY24. Hence, India wireless ARPU improved by INR 3 QoQ to INR 203, aided by one more day in the quarter and improved subs mix on back of robust 4G and post-paid subs. This compares to Jio’s reported ARPU (including FTTH) growth of INR 1.2 in 2QFY24 at

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