Bharti Airtel Ltd Q3 FY24 earnings conference call insights

Key highlights from Bharti Airtel Ltd (BHARTIARTL) Q3 FY24 Earnings Concall.

Financial Performance

• Revenue impacted by currency devaluations in Africa.
• India revenue grew steadily at 3% sequentially to over INR 27,800 crores.
• EBITDA margin remained healthy at 53.9%.
• Generated operating cash flows of INR 7,250 crores in India.

Segment Performance

• Strong mobile subscriber additions of 7.4 million 4G customers.
• ARPU increased by INR 5 to INR 208 on upgrades and share of wallet.
• Moderation in home broadband net adds due to discontinued entry level plans.
• DTH saw highest net adds in 12 quarters at 388,000.

Strategy Update

• Portfolio diversification with 27% Africa, 57% India mobility revenue.
• Consistent customer wins through focus on high value B2C and B2B users.
• Leveraging digital capabilities for sales, marketing and understanding customers.
• Investments in fiber, systems integration and emerging segments.
• Massive rollout of 30,000 sites performed well on key metrics.
• Gaps remain in 5 key circles representing 18% subscriber share.
• Will increase coverage in these circles to build customer tailwind.

Digital Capability Monetization

• Can extend digital experience platforms to other telcos globally.
• Portfolio of digital services like Airtel IQ and Airtel Finance.
• Capturing IoT opportunity across connectivity, cloud, analytics.

Capital Allocation

• Delivered consistent quarter with strong cash generation.
• Prudent capital allocation improving ROCE without tariff hikes.
• Investing to build future-ready capabilities across focus areas.
• Strong cash conversion driven by operating leverage improvements.
• Priority use of cash flow remains debt reduction for now.

CapEx and Cash Flow Outlook

• Elevated CapEx of INR25,000 crores in FY2025 with 5G and rural rollout.
• Expects CapEx to moderate in FY2026.
• Long-term target is 15-20% CapEx to revenue ratio.
• Continued deleveraging expected with operating leverage benefits.
• Headroom for growth in broadband, B2B and mobility.
• Margin expansion to drive improved net debt to EBITDA over time.
• First priority is debt reduction for both India and Africa.
• Targeting sub-2x net debt/EBITDA for India.

Network Expansion Plans

• Currently over 300,000 sites nationwide.
• Looking to add 25,000 more sites in 5 key underpenetrated circles.
• Expects to bridge gap prudently based on cluster level profitability.

2G/5G Network Outlook

• 2G now contributes 17% of overall business revenue.
• Contribution higher in rural states but reducing steadily.
• Expects substantial disappearance of 2G over next few years.
• Currently 65 million 5G subscribers, about 15-16% of total.
• Expect 25% 5G share of smartphones by March 2025.
• 60-80% of new devices shipping are 5G capable.

5G Migration Approach

• To shift progressively from NSA to SA architecture over time.
• As more traffic shifts to 5G, will refarm 4G spectrum to 5G.
• Following customer traffic patterns to drive migration path.

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