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Continue to remain positive on Airtel post Q4 results: SBICap Securities

‘Sharp QoQ increase in 4G subscribers is encouraging’

ET Now|
Last Updated: May 19, 2020, 10.55 AM IST
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ETMarkets.com
Rajiv Sharma, SBICAP Sec-1200
We believe that this is a structural story and telecoms overall is a structural story globally.
Tariff hike helped Airtel improve ARPU numbers and the capex has only declined marginally, says Rajiv Sharma, head of research.

What are your key takeaways from the Airtel quarterly numbers?
If you look at the Airtel numbers, one thing is very clear here. The tariff has really played out well and we have seen a sharp jump in the average revenue per user (ARPU) numbers for the India mobile business, which has come at 14% quarter on quarter and it is the highest possibly in 30 quarters. And that led to a 16% increase in the revenues and it is driving the consolidated EBITDA up 10% as well. So tariff hike has played out well. We were expecting Rs 147 ARPU to be precise this quarter. However, the surprise is quite meaningful. They have come at Rs 154.

The other positive we do see is the strong additions on the 4G side. There was a sharp increase quarter on quarter on the 4G subscribers and that is encouraging. And the capex investment has continued this quarter. Also, if you look at the year-on-year figures, the total capex is down only 12%. So this was the first year where Bharti was not giving any guidance on their capex and there were expectations that it may drop significantly but the decline is marginal, which tells you that the company has been investing in its 4G capabilities and the sharp increase in data which we are seeing because of work from home tells you that the company should be able to do well when this surge is happening because they have invested in this last quarter and over the year as well.

You have seen the mobile data traffic grow quite substantially by about 74%. What is the view then on the stock right now given the kind of run up that it has seen already? Is it a resounding buy or an overweight rating on Bharti Airtel?
Yes, we are positive on this name. We believe that this is a structural story and telecoms overall is a structural story globally. Pre-Covid, the online adaption was a gradual adoption across sectors but post-Covid, this is changing dramatically and data adaption will only increase. My guess is, this whole 4G shift will accelerate now and we continue to remain positive on Bharti.

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