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Bharti Airtel Q1 preview: Expect lower ARPU, wireless revenue; adjusted PAT may fall 90% YoY

Emkay's estimates show Airtel's net sales may rise 15 percent year-on-year (YoY) for Q1FY21. However, sequentially it will not be much changed at 0.5 percent higher.

July 29, 2020 / 08:26 AM IST
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Bharti Airtel will report its Q1 FY21 numbers on July 29 in which the company is expected to show a decline in wireless revenue, ARPU, subscriber base and adjusted PAT.

Brokerage firm Emkay Global Financial Services said in a note that Bharti Airtel's India wireless revenue and ARPU may fall 4 percent and 5 percent quarter-on-quarter (QoQ), respectively, on account of lower recharges, lack of international roaming revenue and subscriber loss of 70 lakh.

However, despite revenue decline in the wireless segment, EBITDA margins are likely to be stable on account of lower SG&A costs, Emkay said.

Subscriber additions are projected to moderate due to the lower sale of cell phones in the quarter, while data subscribers shall rise marginally.

Data volume will swell 12 percent QoQ on account of increased usage during the lockdown, while minutes on network is expected to stay flat QoQ, Emkay said.


Home broadband shall see increased traction driven by data demand.

The Africa business is projected to record EBITDA growth after a sequential decline in the previous quarter, partially aided by lower opex and rupee depreciation.

Emkay's estimates show Airtel's net sales may rise 15 percent year-on-year (YoY) for Q1 FY21. However, sequentially it will not be much changed at 0.5 percent higher.

The company's EBITDA may rise 23.8 percent YoY but only 0.5 percent QoQ, while EBITDA margin may rise 307 bps YoY but it will be lower by 1 bps QoQ, Emkay said.

Bharti Airtel may report a 0.7 percent QoQ or 15.3 percent YoY growth in net sales at Rs 23,900.6 crore for Q1FY21, said brokerage firm Kotak Institutional Equities.

The company's EBITDA may rise 1.4 percent QoQ or 25 percent YoY while EBITDA margin may improve 29 bps QoQ or 337 bps YoY, Kotak said.

Adjusted PAT, however, is likely to plunge 70.6 percent QoQ or 90.1 percent YoY, said Kotak.

As per the estimates of Kotak, Bharti Airtel may report a 1.3 percent QoQ decline, but 17.6 percent YoY growth, in India wireless revenues.

Due to COVID disruption and Bharti's stringent subscriber policy, Kotak expects the company's reported subscribers will be lower by 45 lakh QoQ. The brokerage is building a marginal decline in ARPU.

For the Africa business, Kotak expects Bharti Airtel to report a 3 percent QoQ or 20.7 percent YoY growth on a reported basis.

"Among the other businesses, we expect a 5 percent QoQ growth in revenues for the home broadband, a 2 percent QoQ growth for the enterprise business and a 12 percent QoQ growth in the DTH business," Kotak said.

Brokerage firm Motilal Oswal Financial Services also expects a mild rise in the company's Q1 revenue but a steep fall in adjusted PAT.

As per Motilal Oswal, Bharti Airtel's Q1FY21 revenue can inch up 12.9 percent YoY but adjusted PAT may see a steep 90 percent fall YoY.

Motilal expects the company's ARPU to remain flat while there may be a 9-10 percent subscriber growth in the home broadband business.

Besides, the brokerage expects a subscriber churn of 10 percent, along with nearly 75 percent QoQ lower 4G off-take due to COVID-19.

The estimates of Motilal Oswal show a 3–5 percent revenue impact on India wireless business due to validity extension and SIM consolidation.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jul 29, 2020 08:26 am
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