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Consistent Indian operations aided in ARPU and customer base expansion

Decent revenue growth: Bharti Airtel performance was largely in line with our expectations as its revenue came in at Rs 37,044 Cr with a growth of 7.3% YoY, primarily driven by Indian operations. Amongst key divisions, Mobile services India grew by 11% YoY to Rs 20,952 Cr on the back of healthy customer addition followed by healthy growth in Home Services and Airtel business. On the flipside, Mobile services Africa declined by 1.6% YoY to Rs 10,277 Cr, due to devaluation of Nigeria Naira and other currencies.

Indian operations aided in margin expansion: EBITDA for the quarter came in at Rs 19,514 Cr, up by 10.9% YoY and consequently EBITDA margin improved by 172bps YoY to 52.7%. It was 6th consecutive quarter of margin improvement for the company, benefiting from improved realizations from quality users and its focus on cost optimization through its war on waste programs resulting in better operating efficiency.

Healthy addition of data usage customer aid in ARPU expansion: During the quarter it added ~11 Mn customers of which ~3.7 Mn were added in its Indian Mobile service business. Furthermore, the participation of data consumers improved by ~140bps QoQ/500bps YoY to ~71.8%. All these factors coupled with a high active user base aided the company to expand its ARPUs by 1.5% QoQ/6.8% YoY to Rs 203.

Robust outlook in the postpaid business: The net addition of postpaid customers during the quarter was ~1 Mn, increasing its mobile services postpaid user base to ~21.5 Mn. The company has indicated that it will continue to focus on increasing its postpaid customer base as a part of its strategy which shall further support addition of quality customers and APRUs expansion.

Consistent performance from non-core segments: Its Homes business revenue grew by 23.3% YoY to Rs 1,221 Cr and EBITDA was at Rs 607 Cr up by 21.9% YoY, benefiting from healthy net customer addition of ~471k. Airtel business revenue came in at Rs 5,110 Cr with a growth of 10% YoY and EBITDA of Rs 2,058 Cr, up by 13% YoY. Its non-core segments continue to post steady performance aiding in overall growth of the company.

Outlook & Valuations: Bharti Airtel maintains industry leading performance with ARPUs of Rs 203 along with high active user base and a market share of ~32.5%. Going ahead, it will focus on developing its 5G infrastructure across India while also targeting nearly 60k high potential villages and postpaid additions which will prove to be the next growth leg for the company. Furthermore, its other segments like Airtel Business, Home Services and Digital services all have been delivering consistent growth. Factoring this, we estimate its revenue/EBITDA/PAT to grow at 18%/20.9%/20% CAGR over FY23-25E and have maintained Buy rating and revised target price upwards to Rs 1,049.

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