Telecom major Bharti Airtel reported a 466% surge in its consolidated net profit at ₹ 1,607 crores for the June quarter of 2022, boosted by subscriber additions. It had reported a net profit of ₹ 284 crores in the corresponding quarter last year.
Airtel’s consolidated revenue from operations rose 21% to ₹ 32,805 crores in Q1FY23 as compared to ₹ 27,064 crores in Q1FY22. Further, its mobile services in India grew 27% year-on-year to ₹ 18,220 crores for the first quarter from ₹ 14305.60 crores.
The company’s average revenue per user (ARPU) increased to ₹ 183 in the latest quarter, as compared to ₹ 146 in Q1FY22. In comparison, the ARPU of rivals Reliance Jio and Vodafone Idea for the same period was ₹ 175.7 and ₹ 128, respectively. Earlier, the company said that the ARPU needs to be at ₹ 200 and ultimately at ₹ 300 for a financially healthy business model.
“As India gets ready to launch 5G, we are well positioned to raise the bar on innovation. We are also confident of meeting the emerging needs of discerning customers looking for speed, coverage and latency. Our astute spectrum strategy over the last few years as we bolstered mid-band spectrum is designed to deliver the best experience at the lowest total cost of ownership,” said Gopal Vittal, MD and CEO, of Bharti Airtel.
The company will start rolling out 5G services in August, and it is expected to cover all key towns and rural areas of the country by March 2024.
Airtel in a stock exchange filing said, “Airtel to lead India’s 5G revolution with acquisition of ideal spectrum bank at least cost for best 5g experience and 100x capacity enhancement; procured 19,867.8 MHz spectrum for Rs 43,040 crore in the recently concluded 5G spectrum.”
Airtel has been raising money to fund its digital ambitions, including developing home broadband, data centres, and cloud adoption as it prepares to launch its next-generation 5G services in the country.
Targets
Motilal Oswal expects a better valuation multiple for the stock given: a) a consistent 20% growth opportunity, b) low concern on 5G, and c) the company turning profitable with high 50% plus growth due to operating leverage.
Further, they added that the ₹ 160b uncalled Rights issue and ₹ 52b investment by Google should offset Bharti’s investment in 5G over the next two years.
They see upside potential for its business in India as well as Africa, due to strong earnings growth. The value Bharti Airtel on FY24E, assigning 11x EV/EBITDA to the India Mobile business and 5x to the Africa business, and arriving at their SoTP-based target price of ₹ 910. This translates to an upside of 27.85% as compared to its current share price of ₹ 711.75
Written by Simran Bafna
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