Bharti Airtel's India biz grows, but Africa still a concern

Bharti Airtel's performance indicators have been improving over the past three quarters. The fourth quarter has been good, too, with Bharti reporting growth in subscriber base, volumes and realisations.

It is after a long time that operators such as Bharti have added two million subscribers a month.

Analysts expect this to settle at one million or 1.5 million in the coming months. While the India business has performed, Africa continues to be a drag on Bharti. Average revenue per user (ARPU) in Africa has fallen five per cent, while voice realisations declined two per cent sequentially.  

The India business is showing signs of stabilising. Bharti's 13.5 per cent year-on-year (y-o-y) revenue growth, 21 per cent Ebitda growth and 101 per cent recurring profit after tax growth have been driven by strong operating metrics.  

The core mobility business grew both during the March quarter and full year. In the March quarter, customer base grew four per cent sequentially and nine per cent y-o-y. India ARPUs have risen one per cent sequentially and two per cent y-o-y to Rs 196.  

The traffic on its network in India (volumes) has also grown four per cent sequentially and five per cent y-o-y to 265 billion minutes. According to Kotak, Bharti's minutes growth has been lower than Idea's 8.6 per cent. Even absolute minute additions for Idea (13 billion quarter-on-quarter) has been higher than Bharti's 10 billion.  

Bharti's voice realisations (revenue per minute) remained flat sequentially at 37.07 paise, but were up six per cent compared to the year-ago quarter.

Ankita Somani of Angel Broking says this is positive, as Idea has reported a decline in realisations for the fourth quarter. If RPMs have to improve, Bharti will have to increase base rate, which is unlikely given Reliance Jio is set to launch later this year.  

Bharti's operating margin for India wireless business grew 80 basis points sequentially to 34.9 per cent.

This is higher than the Street's estimate of 70 basis points. At the consolidated level, too, Bharti managed to surprise. Consolidated operating margins expanded 60 basis points sequentially to 33 per cent.  

 Mobile data revenue (consolidated) has grown 93.4 per cent y-o-y during the quarter to Rs 1,900 crore, of which India accounts for Rs 1,325 crore  or Rs 13.25 billion (up 89.2 per cent)

Despite the continued improvement in operating metrics, analysts are not willing to put a 'buy' call on Bharti, as spectrum payouts and the launch of Reliance Jio continue to be a big overhangs.