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Bharti Airtel – Q4FY21 first cut

Bharti Airtel reported a mixed bag performance with lower than anticipated like to like APRU growth which was offset by higher subscriber addition, thereby resulting in in-line EBITDA.

Q4FY21 earnings summary
Consolidated topline came in at Rs. 26,518 crore, up 2% QoQ on a like to like basis and down 2.9% on reported basis (tad below estimates of 1% QoQ decline). Indian wireless revenues were down 4.7% QoQ (up 4.2% QoQ on like to like basis) at Rs. 14,080 crore (vs. expectations of Rs. 14,326 crore), driven by strong subscriber addition. The reported ARPU, however, at Rs. 145 was down 12.6% QoQ (down 0.8% QOQ vs. our expectations of 2.5% QoQ like to like growth). The reported decline in ARPU and wireless revenues was owing to IUC rate going zero (~Rs. 19 impact on ARPU vs.). The like to like decline in revenues is mainly due to lower number of days in quarter and possibly lower quality of gross addition. On the other segment of India business, Homes Services (broadband) revenues were up 5.6% QoQ at Rs. 601 crore , Airtel business (enterprise) revenues were up 2.2% QoQ at Rs. 3702 crore and DTH reported revenues witnessed a decline of 2.8% QoQ at Rs. 767 crore. Africa revenues were down 0.6% QoQ at Rs. 7601 crore, tad lower than our estimate of Rs. 7712 crore

– India Wireless business KPI: Overall sub base saw addition of strong 13.4 mn QoQ at 321.4 mn (our expectation was addition of 9 million),which is a reflection strong subscriber market capture, as Vodafone Idea continues to struggle. It witnessed a strong 4G Net adds of ~13.7 mn during the quarter, with 4G data sub base at 179.3 mn (overall data customers base of 188.6 mn). Data usage per sub was up 0.4% QoQ to 16.45 GB. Voice Usage per customer was up 2.5% QoQ to 1053 minutes

– Consolidated EBITDA came in at Rs. 12,332 crore, up 2.3% QoQ on (in line with our estimate of Rs. 12,326 crore) with margin of 47.9% (up 244 bps QoQ). Overall Indian margin was up 373 bps QoQ at 48.9% largely driven by Indian wireless margins, which at 47.5%, was up 380 bps QoQ. We note that optical increase in margins is due to IUC going zero and resultant reduction of the same from revenues and costs. Africa margins at 47.7%, up 80 bps QoQ, were also robust

– The company reported PAT of Rs. 759.2 crore. There was an overall net exceptional gain of oRs. 440 crore on account of reversal of impairment of intangible assets of Rs. 643 crore; charge on account of re-assessment of the useful life of certain categories of network assets due to technological advancements of Rs. 116 crore and net charge on account of re-assessment of contractual / regulatory levies and taxes of Rs. 87 crore. Adjusted profit stood at Rs. 179.1 crore vs. our estimates of Rs. 169 crore

– Total capex spend for the quarter of Rs. 6846 crore vs. Rs. 6864 crore in Q3. Reported Net debt (excluding lease liability) was at ~Rs. 1.15 lakh crore (flattish QOQ)

Airtel continues to report resilient numbers especially on Indian wireless business front. The major positive read through is continued strong subscriber addition, albeit trajectory of ARPU will hold key. Management commentary on tariff hike would be key monitorable ahead. We will soon come out with an update post the conference call tomorrow.

Shares of BHARTI AIRTEL LTD. was last trading in BSE at Rs.536.3 as compared to the previous close of Rs. 549.55. The total number of shares traded during the day was 1194210 in over 19461 trades.

The stock hit an intraday high of Rs. 552.85 and intraday low of 534.65. The net turnover during the day was Rs. 646224553. Equity Bulls

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