Bharti Airtel is set to announce its Q3FY25 earnings on February 6 with analysts expecting strong sequential growth driven by higher ARPU (Average Revenue Per User) following the July 2024 tariff hike, continued 4G migration, and the Indus Towers consolidation. However, muted subscriber additions and subdued performance in Airtel Africa could be limiting factors.
A Moneycontrol poll of seven brokerage firms estimates Bharti Airtel's consolidated net profit to double year-on-year to Rs 5,039 crore, with revenue expected to rise nearly 16 percent to Rs 43,874 crore. A poll of six brokerages projects the company's EBITDA margin at 54 percent.
In the year-ago period, Bharti Airtel's consolidated net profit surged 54 percent to Rs 2,442 crore. Revenue from operations grew 6 percent to Rs 37,900 crore in Q3FY24. The company had noted that currency devaluation in Africa weighed on growth. ARPU in Q3FY24 saw a modest uptick to Rs 208 from Rs 203 in the previous quarter.
In Q2FY25 Bharti Airtel reported a more than two-fold increase in its profit, driven by its first tariff hike in over two years, which boosted revenue per user. The telecom operator's consolidated net profit surged 168 percent year-on-year to Rs 3,593 crore in the July-September quarter. However, the company recorded a one-time loss of Rs 854 crore due to a unit's foreign exchange loss from currency devaluation. Revenue of the company grew 12 percent to Rs 41,473 crore. ARPU rose 10 percent sequentially to Rs 233.
Also Read | Bharti Airtel Q3 PAT seen up 88.9% YoY to Rs. 4,858.3 cr: PL Capital
What factors are driving the earnings?
1. ARPU Growth & Tariff Hike Impact: Most brokerage firms expect the ARPU of Bharti Airtel to grow on tariff hikes and an improved subscriber mix. JM Financial said, "ARPU is expected to grow to Rs 244, up from Rs 233 in 2QFY25, led by residual passthrough of July 2024 tariff hike and aided by upgrades and improved subs mix."
2. Subscriber Additions & Wireless Revenue: Motilal Oswal expects Bharti Airtel's India wireless revenue to grow 5 percent on quarter, driven by residual flow-through of tariff hikes.
Analysts expect Bharti Airtel's subscriber base to see moderate growth in Q3 FY25. JM Financial projects a wireless subscriber addition of around 35 lakh, with strong momentum in MBB (Mobile Broadband)/4G/5G subscribers at 54 lakh, citing TRAI data showing a 21 lakh increase in MBB subscribers in October 2024.
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3. Indus Towers Consolidation Boost: The consolidation of Indus Towers from mid-Q3FY25 is expected to provide a one-time boost to Bharti Airtel’s reported revenue. Nuvama highlighted that "India mobile services business shall grow 4.1 percent QoQ led by consolidation of 42 days of Indus Towers and residual impact of tariff hike."
4. Enterprise & Home Broadband Growth: Bharti Airtel's non-wireless businesses are also contributing to overall growth. Kotak Institutional Equities expects "continued robust 7 percent sequential revenue growth for Homes Broadband (on continued strong net adds), flat QoQ revenue growth for Enterprise, and approximately 3.7 percent QoQ growth in Airtel Africa.
What to look out for in the quarterly show?
Analysts will be closely monitoring Bharti Airtel's 5G adoption trends, capex trajectory, and potential future tariff hikes. Additionally, Bharti Airtel's enterprise business expansion remains a key focus, with PL Capital highlighting the company's ambition to tap into a "~Rs 500bn market opportunity with its Enterprise offerings including CPaaS, cloud, cybersecurity, and data centers."
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