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Bharti Airtel Ltd (BOM:532454) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus News
·3 min read

  • Consolidated Revenue: Just over INR38,500 crores.

  • India Revenue: INR29,046 crores, a sequential growth of 1.9%.

  • EBITDA Margins: 53.7%.

  • Operating Free Cash Flow: Approximately INR8,800 crores.

  • CapEx: About INR6,780 crores for the quarter.

  • Net Debt to EBITDA (India): 2.75, improved from 3.19 a year ago.

  • ARPU: INR211, up from INR209 in the previous quarter.

  • 5G Customer Base: 90 million.

  • Broadband Customer Additions: 350,000 new customers.

  • DTH Net Customer Additions: Over 190,000.

  • Airtel Finance Loan Book: INR3,300 crores.

  • Payments Bank Monthly Transacting Users: 71.4 million.

  • Payments Bank Annualized Revenue Run Rate: Over INR2,400 crores, growing 52% year-on-year.

  • Deposits: Over INR2,900 crores, growing by over 50% year-on-year.

  • Africa Revenue Growth: 4.6% sequential growth in constant currency terms.

Release Date: August 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Bharti Airtel Ltd (BOM:532454) reported a consolidated revenue of over INR38,500 crores, with India delivering a steady growth of 1.9% sequentially.

  • The company achieved an EBITDA margin of 53.7% and a strong operating free cash flow of about INR8,800 crores.

  • Bharti Airtel Ltd (BOM:532454) prepaid over INR24,250 crores of high-cost spectrum dues in the last year, improving the India net debt to EBITDA ratio to 2.75 from 3.19 a year ago.

  • The company expanded its 5G coverage, ending the quarter with a 5G customer base of 90 million, and continued to gain market share.

  • Bharti Airtel Ltd (BOM:532454) is focusing on digital capabilities, with Airtel Finance scaling up well and the payments bank growing its annualized revenue run rate by 52% year-on-year.

Negative Points

  • The global business segment of Bharti Airtel Ltd (BOM:532454) remained muted, with a need for green shoots in the order book to translate into revenue.

  • EBITDA margins were impacted due to seasonality, which is expected to unwind in the ensuing quarter.

  • The company acknowledged the need for a minimum ARPU of INR300 for long-term sustainable investments, indicating current ARPU levels may not be sufficient.

  • The enterprise business showed significant softening, with a slowdown in growth compared to the previous year.

  • Competitive intensity in the enterprise segment remains a challenge, particularly in government tenders and public sector units.

Q & A Highlights

Q: How is Bharti Airtel planning to allocate capital moving forward, considering the moderation in CapEx and reduction in net debt? A: Gopal Vittal, CEO, explained that capital allocation will focus on strengthening infrastructure, network, and cloud investments. The company will continue to invest in data centers and consider a mix of deleveraging and dividends as financial health improves.

Q: What is the outlook for Bharti Airtel's non-mobile businesses, particularly data centers? A: Gopal Vittal, CEO, stated that data centers are a key focus area, with ongoing investments in land and build-out across regions. The company aims to leverage its strong customer relationships to serve hyperscalers and domestic players.

Q: How does Bharti Airtel view the potential for operating leverage in the mobile business as ARPU approaches INR300? A: Gopal Vittal, CEO, noted that the business has high operating leverage due to its fixed cost nature. Tariff repairs will significantly impact the bottom line, improving return ratios and capital returns.

Q: What are Bharti Airtel's plans for 5G monetization and the impact of recent tariff changes on 5G users? A: Gopal Vittal, CEO, mentioned that while 5G monetization remains a challenge globally, the company has not seen significant dropouts among 5G users despite tariff increases. The focus is on optimizing plans for 5G users.

Q: How does Bharti Airtel plan to address the homes segment and the role of fixed wireless access (FWA)? A: Gopal Vittal, CEO, emphasized the growth potential in the homes segment, targeting high-value homes with fiber and FWA. The company aims to expand its market presence using FWA as a complementary technology to fiber.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.