The next growth levers for Bharti Airtel are aimed at postpaid, rural markets, and newer verticals such as 5G Fixed Wireless Access Service.
The Sunil Mittal-led telecom service provider is in a good position to take advantage of the current trends in the industry and improve its market share, analysts said.
“The tariff hikes are a reality now. Airtel will see higher operating leverage on that front. Tariff hikes should be segmented rather than being a one-size-fits-all model; Airtel’s ability to target customers is much better here. There is enough visibility for sustained high double-digit EBITDA growth over the medium-term,” analysts at B&K Securities said in a note.
The brokerage said Airtel is on track to generate over Rs 500 billion of FCF by FY26.
“We continue to believe that the tariff hikes in July and the expected hike in FY27 will drive strong earnings growth for the company,” Antique Stock Broking said in a separate note.
During the Q1 earnings call, Gopal Vittal, the managing director of Bharti Airtel, mentioned that the impact of the tariff hike will be seen in the second and third quarters. He stated that early indications are positive, but also noted that there has been limited SIM consolidation and downtrading in the weeks following the tariff hike.
The telco also sees 80 million customers as a potential market for its postpaid products.
Analysts say Bharti Airtel has sharpened its go-to-market strategy for 5G Fixed Wireless Access to complement its fibre broadband service in the country. This is aimed at growing its home broadband business.
To promote its 5G-based FWA service, Airtel will adopt the superior standalone (SA) 5G architecture to improve the service experience by August-September significantly. Airtel’s bigger rival, Reliance Jio’s 5G network pan-India, runs on the SA architecture.
“Bharti talked about a rejigged GTM approach for home broadband with FWA complementing FTTH. Considering the significantly higher data usage and throughput requirements for FWA, the company would roll out FWA in 5G standalone (SA) mode… Over time, the company intends to offer 5G mobile on SA without buying fresh low-frequency spectrum, through refarming/dynamic spectrum sharing. In our view, this strategy would work if 5G use cases take longer to evolve and mature,” IIFL said in a note.
Airtel revealed on August 6 that its Wi-Fi services, which combine FTTH and FWA, are available in over 1,300 cities. The telco said that FWA will complement your FTTH or home broadband business.
“FTTH will be the key prong of the home broadband strategy, especially FWA, especially in the 3.5GHz band, which has capacity and throughput constraints. FWA will complement FTTH… GTM strategy has been sharpened to sell FWA along with FTTH… Top 60 million households can see higher penetration of converged offerings (20-25mn such homes still do not have home broadband),” IIFL added in its note.
Airtel said its FWA sees 15-20 times higher data usage than 5G mobile. This, coupled with better uplink capacity, means that FWA needs SA 5G, instead of NSA.
As traffic progressively moves from 4G to 5G, Bharti said it will re-farm its 4G spectrum for 5G and move towards SA. “Thus, it will obviate the need to purchase expensive low-frequency spectrum. Bharti has already tested its core for 5G SA network readiness,” IIFL added.
Wi-Fi services (a combination of FTTH and FWA) are available in 1300+ cities.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
