Bharti Airtel Q2 Results

Bharti Airtel Q2 Results Preview: Strong September Quarter Driven by Tariff Hikes, ARPU Up 10%

Bharti Airtel is set to report its Q2 FY25 results on October 28, with a strong quarter anticipated, primarily due to the recent tariff hikes. Here’s a detailed breakdown of the expected financial metrics and key drivers:

• Expected Revenue: Analysts project Bharti Airtel’s consolidated revenue to rise by 6% sequentially, reaching approximately ₹40,835 crore compared to ₹38,506 crore in Q1 FY25. This increase is driven mainly by the July tariff hike, marking a 10-21% price rise, the first increase since December 2021.
• Average Revenue Per User (ARPU): The ARPU is projected to jump by ₹21, reaching ₹232 in Q2, a 10% increase from the previous quarter’s ₹211. Airtel aims to maintain an ARPU above ₹300 for a sustainable business model in India. Here’s how Airtel’s ARPU has trended over the last few quarters:

• Subscriber Base: Despite the ARPU increase, subscriber growth is expected to remain flat or show a slight decline due to churn, suggesting some sensitivity to price changes among Airtel’s customer base.
• EBITDA and Margins: Analysts anticipate Bharti Airtel’s EBITDA to grow to ₹21,594 crore from ₹19,944.2 crore in Q1 FY25. The EBITDA margin is projected to increase marginally to 53% from 51.8% in the previous quarter, largely driven by improved margins in the India segment.
• Segment-Specific Highlights:
  • India Wireless Business: This segment, which makes up around 60% of Bharti Airtel’s revenue, is expected to benefit significantly from the tariff hike, with a projected 10% increase in India wireless revenue.
  • Airtel Africa: Bharti Airtel’s African segment reported 5% revenue growth quarter-on-quarter in USD terms, with an 8% increase in EBITDA.

Comparative Analysis with Reliance Jio

In the same quarter, Reliance Jio posted a 7% increase in revenue and an EBITDA margin of 53.1%. Jio’s ARPU rose by 7.4% to ₹195.1, although it experienced a subscriber decline of 10.9 million. Airtel’s higher ARPU reflects its premium positioning, while Jio’s subscriber drop suggests price sensitivity across the industry.

Expected Advantages of Bharti Airtel’s Performance

1. Higher ARPU Boost: The 10% increase in ARPU signifies Airtel’s ability to generate more revenue per user, enhancing profitability.
2. Increased Revenue from Tariff Hike: The recent tariff hikes are expected to drive a notable rise in revenue, especially in the core India wireless segment.
3. Improved Margins: The slight rise in EBITDA margins reflects cost efficiencies and higher profitability from tariff hikes.
4. Strong Performance in Airtel Africa: The African business continues to grow steadily, with quarterly revenue and EBITDA increases that support consolidated revenue.

Potential Disadvantages and Challenges

1. Flat or Declining Subscriber Growth: While ARPU is up, the flat or slightly declining subscriber base may indicate resistance to higher tariffs among users.
2. Competition with Jio: With Jio also increasing its ARPU, Airtel faces continuous competitive pressure, and any further churn could impact revenue growth.
3. Price Sensitivity: Airtel’s pricing strategy, aimed at pushing ARPU above ₹300, might lead to increased churn if subscribers continue to show price sensitivity.

Conclusion

Bharti Airtel’s Q2 FY25 results are set to benefit from its proactive tariff hikes, leading to a notable increase in ARPU and revenue. While subscriber growth may remain subdued, Airtel’s improved margins and steady African performance suggest a strong financial position. The competitive telecom landscape will require Airtel to balance ARPU growth with subscriber retention, especially as Jio follows suit with similar pricing strategies. Airtel’s focus on achieving a sustainable ARPU of ₹300 underscores its commitment to long-term profitability.

FAQs

1. Why is Bharti Airtel’s revenue expected to grow in Q2 FY25?
   • Revenue growth is primarily due to recent tariff hikes, which increased average revenue per user.
2. What is the projected ARPU for Q2 FY25?
   • ARPU is expected to reach ₹232, up 10% from the previous quarter.
3. How did Airtel’s Africa business perform this quarter?
   • Airtel Africa reported a 5% growth in revenue and an 8% increase in EBITDA in USD terms.
4. How does Bharti Airtel’s performance compare to Jio’s?
   • Airtel’s ARPU is higher than Jio’s ₹195.1, but Jio achieved a similar EBITDA margin of 53.1%. Both companies experienced challenges with subscriber churn.
5. What challenges does Airtel face despite the expected revenue growth?
   • Airtel faces potential subscriber churn and competitive pressures from Jio, which may impact future growth if users are sensitive to tariff increases.

Bharti Airtel Q2 Results

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