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.