Key highlights from Bharti Airtel Ltd (BHARTIARTL) Q3 FY24 Earnings Concall
- Financial Performance
- Revenue impacted by currency devaluations in Africa.
- India revenue grew steadily at 3% sequentially to over INR 27,800 crores.
- EBITDA margin remained healthy at 53.9%.
- Generated operating cash flows of INR 7,250 crores in India.
- Segment Performance
- Strong mobile subscriber additions of 7.4 million 4G customers.
- ARPU increased by INR 5 to INR 208 on upgrades and share of wallet.
- Moderation in home broadband net adds due to discontinued entry level plans.
- DTH saw highest net adds in 12 quarters at 388,000.
- Strategy Update
- Portfolio diversification with 27% Africa, 57% India mobility revenue.
- Consistent customer wins through focus on high value B2C and B2B users.
- Leveraging digital capabilities for sales, marketing and understanding customers.
- Investments in fiber, systems integration and emerging segments.
- Massive rollout of 30,000 sites performed well on key metrics.
- Gaps remain in 5 key circles representing 18% subscriber share.
- Will increase coverage in these circles to build customer tailwind.
- Digital Capability Monetization
- Can extend digital experience platforms to other telcos globally.
- Portfolio of digital services like Airtel IQ and Airtel Finance.
- Capturing IoT opportunity across connectivity, cloud, analytics.
- Capital Allocation
- Delivered consistent quarter with strong cash generation.
- Prudent capital allocation improving ROCE without tariff hikes.
- Investing to build future-ready capabilities across focus areas.
- Strong cash conversion driven by operating leverage improvements.
- Priority use of cash flow remains debt reduction for now.
- Capex and Cash Flow Outlook
- Elevated capex of INR25,000 crores in FY2025 with 5G and rural rollout.
- Expects capex to moderate in FY2026.
- Long-term target is 15-20% capex to revenue ratio.
- Continued deleveraging expected with operating leverage benefits.
- Headroom for growth in broadband, B2B and mobility.
- Margin expansion to drive improved net debt to EBITDA over time.
- First priority is debt reduction for both India and Africa.
- Targeting sub-2x net debt/EBITDA for India.
- Network Expansion Plans
- Currently over 300,000 sites nationwide.
- Looking to add 25,000 more sites in 5 key underpenetrated circles.
- Expects to bridge gap prudently based on cluster level profitability.
- 2G/5G Network Outlook
- 2G now contributes 17% of overall business revenue.
- Contribution higher in rural states but reducing steadily.
- Expects substantial disappearance of 2G over next few years.
- Currently 65 million 5G subscribers, about 15-16% of total.
- Expect 25% 5G share of smartphones by March 2025.
- 60-80% of new devices shipping are 5G capable.
- 5G Migration Approach
- To shift progressively from NSA to SA architecture over time.
- As more traffic shifts to 5G, will refarm 4G spectrum to 5G.
- Following customer traffic patterns to drive migration path.