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Bharti Airtel Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from Bharti Airtel Ltd (BHARTIARTL) Q2 FY24 Earnings Concall

  • Financial Performance
    • Consolidated revenues at INR37,000 crores, impacted by currency devaluation in Africa.
    • India revenue grew 2.3% sequentially to over INR27,000 crores.
    • EBITDA margins expanded to 53.7%.
    • Strong cash flows generated despite elevated capex.
    • Performance driven by steady growth in mobile, homes and digital services, some moderation in enterprise business.
  • 5G Strategy and Performance
    • The company has 55 million 5G customers across 5000 cities and 30,000 villages.
    • Believes throwing more capex for largest rollout is not the priority – focus is on where the market is and delivering best experience.
    • Airtel will switch to standalone 5G only when there are clear additional benefits, which is not the case currently.
  • Mobile Segment Performance
    • 4G net adds strong at 7.7 million, postpaid net adds close to 1 million.
    • ARPU increased to INR 203 from INR 200 in previous quarter.
    • Drivers of ARPU growth – upgrades, prepaid to postpaid, data monetization, international roaming.
  • Homes and Enterprise Strategy
    • Added highest ever 4.7 lakh home broadband customers.
    • 35% home additions now on converged Airtel Black plans.
    • Focus on improving sales productivity for continued momentum.
    • Enterprise growth moderated due to global players deferring spends.
    • Accelerating growth in domestic enterprise business with focus on managed services.
  • Subscriber Growth Momentum
    • Strong additions in high-end 4G, 5G and postpaid subscribers.
    • Drivers are family plans, small format store expansion, 5G brand aspiration.
    • Postpaid additions from prepaid base, competition, and own conversions.
    • 4G penetration now at 70%, further upgrade cycles expected in next 3-5 years.
  • ARPU Trends
    • Overall ARPU increased by INR 3 in 2Q.
    • Adjusting for extra day, underlying growth is INR 1.2, driven by prepaid to postpaid migration, data monetization, international roaming.
    • Entry level plan gap with smartphone plans has compressed, lowering upgrade impact.
    • Further upgrades from 2G to 4G will improve ARPU over next few years.
  • Capex and Rollouts
    • Capex lower this quarter due to seasonality and monsoons.
    • On track for peak capex this fiscal year.
    • 5G and 4G rollout capex to moderate next year.
    • On track to complete most rollouts by March 2024.
  • 5G Fixed Wireless Access
    • Initial response and testing completed.
    • CPE prices coming down, moving from indoor to outdoor CPE.
    • FWA addressable market about 60 million households.
    • Addressable market limited based on ARPU affordability.
    • FWA pricing similar to fiber at INR 500/month.
  • 5G Spectrum Capitalization and User Behavior
    • Intangible assets reduced by one-third over last year.
    • Indicates 5G spectrum capitalization charge to P&L.
    • Users oblivious to 5G vs 4G, just need good data experience.
    • Usage higher as 5G free currently, data corrupted.
    • Saw 5-8% usage increase earlier when paid, but very early stages.
  • Spectrum Auction Plans
    • Don’t foresee need for more spectrum now and have enough sub-1GHz for coverage.
    • May only need small renewals in some circles.
    • Little spectrum spending next 2 years likely.
  • Investments vs Revenue Growth
    • Large investment differential between players but revenue growth differential narrowing.
    • Seeing benefits of rural 4G expansion. Gaining share based on rural rollout metrics.
  • Tariff Hike Outlook
    • Tariffs very low currently, need hikes for viability.
    • Not having full control over timing, may independently make a decision at some point, but could revert it if not matched by competitors.
    • Another hike expected but no timeline.
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