Analysts comment on Airtel’s 1QFY23 results

“With our expectation of a tariff hike before end-CY22 and the additional benefit of lower SUC starting Sep ‘22, we forecast Bharti’s wireless segment to deliver 22%/39% FY22-24E revenue/Ebitda CAGR, by far the highest within our global telco coverage, and we expect this to translate in an improving free cash flow (FCF). Also, we estimate that every Rs 10 of incremental monthly ARPU implies $400 million in incremental annual EBITDA for Bharti Airtel (all else equal).” Goldman Sachs

Jefferies said “Airtel’s 1QFY23 PAT, up over 5.5x on-year on a low base, missed estimates due to higher forex losses and lower profit from associates. While homes and enterprises performed well, a 7-year high FCF of Rs 8,100 crore was the highlight from Airtel’s 1Q. This, is despite a 47% on-quarter rise in the telco’s cash CapEx to Rs 7400 crore, due to a healthy 25% on-quarter rise in CFO.

Bharti’s consolidated net debt (excluding lease liabilities) fell 3% QoQ to $15 billion though lease liabilities rose sharply due to renegotiation of rental contracts for longer tenures, overall net debt to Ebitda ratio remains comfortable at 2.5x. Airtel would require a fresh tariff hike to boost ARPU growth beyond the current levels.” Jefferies

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