Airtel’s costlier recharge plan to be revenue accretive, Morgan Stanley

Bharti Airtel Ltd.’s plans to roll out a higher minimum recharge plan across India, aiding its revenue, according to Morgan Stanley.

The telecom giant had piloted a significantly higher minimum recharge plan in select circles—Haryana and Odisha—back in November 2022, Morgan Stanley said in a note. The new minimum plan is being extended to seven more circles—Andhra Pradesh, Bihar, Himachal Pradesh, Karnataka, Haryana, Orissa, Rajasthan, and the North East.

Bharti Airtel has 38% of the subscriber market share in these circles, according to Morgan Stanley.

The cheapest plan provides 1 gigabyte of data and 300 messages at Rs 155 for 28 days. The operator has discontinued its minimum top-up of Rs 99 in Andhra Pradesh, Bihar and Karnataka, according to the note.

As of September 2022, Bharti Airtel’s India mobile business had a total of 328 million subscribers, of which 109 million did not use data. Of this bucket, Morgan Stanley estimates roughly “33 to 40 million could be sitting on the minimum recharge plans, with a potential average revenue per user of Rs 95”.

The new higher minimum recharge plan could be 1.3–1.5% accretive to revenues of Bharti’s India mobile business, the brokerage said in its Jan. 24 note.

Morgan Stanley is ‘overweight’ on the stock with a target price of Rs 860, implying an upside of 11%.

Of the 34 analysts tracking the company, 27 maintain a ‘buy’ rating, three suggest ‘hold,’ and four recommend ‘sell’, according to Bloomberg data The 12-month consensus price target implies an upside of 20.2%.

Shares of the company eased 0.17% to Rs 771.35 apiece as of 2:20 p.m., compared with a 0.03% decline in the benchmark Nifty 50. Bloomberg