Bharti Airtel Q4 preview: COVID-19 may have hit ARPU, subscriber addition

Recharge channels of telcos were hit in the immediate aftermath of the imposition of the lockdown, on 25 March, though operators took rapid steps to address the problem.

“While the company’s ARPU should benefit from higher data consumption during covid-19-related lockdown, the negative impact stemming from income hit to the migrant workforce is likely to weigh on the ARPU improvement trajectory. Accordingly, we are now building in gradual realisation of Dec- 2019 tariff hikes over the course of the FY21 compared earlier expectation of full realisation by June-2020,” noted a report by Credit Suisse last month.

Similarly, subscriber market share gain for Bharti Airtel will likely moderate during the lockdown period as major subscriber acquisition channels remained shut for telcos. The brokerage firm estimates net addition of 13.6 millon subscribers in FY21 compared with the earlier forecast of 18.0 million. Although, since the extension of the lockdown most analysts have estimated hits from free services extension during covid-19 to impact only in Q1 (April-June).

According to an average of estimates of 13 brokerages, Bharti Airtel is expected to report a consolidated revenue of Rs. 23,184.50 crore while net profit is seen at Rs. 5.3 crore (11 brokers). In Q3 (October-December), Airtel reported Rs. 1,035 crore loss while consolidated revenue from operations was at Rs. 21,947 crore.

Incorporating the full impact of the December price hike, Edelweiss Securities forecasts an 11 % sequential jump in realisation for Bharti Airtel, taking its overall ARPU to Rs. 150 from Rs. 135. “We do not see major impact from COVID-19 with some increase in recharges and broadband towards the end of March 2020,” Axis Capital said for Bharti Airtel in a note last month.

For Bharti Airtel, Axis Capital expects consolidated revenue and Ebitda (earnings before interest, taxes, depreciation, and amortization) to grow 3.8 % and 5.1% quarter-on-quarter (QoQ), with 55 basis points sequential improvement in Ebitda margin.

Arch Rival Jio was not able to show substantial gains from the December tariff hikes in Q4, saying that most of its users are on long-term plans and were hence not able to recharge during the quarter.

Reliance Industries’ tech subsidiary Jio Platforms has announced some major global investments in the past month leveraging its rapid data subscriber growth and therefore there will be some expectation in the market for a commentary on Bharti Airtel’s plans to forge partnerships to take their tech offerings to subscribers and build on data usage.

Data usage growth during the lockdown will also be closely watched.

—Livemint