Bharti Airtel Results for FY19 Indicate Rebound in the Indian Telecom Sector: Fitch Ratings

Bharti Airtel’s results for fiscal 2018-19 indicates a “rebound” in the Indian mobile sector amid easing competition, and industry revenue may rise by 5-10% this year, Fitch Ratings said Wednesday. “We believe the Indian mobile sector’s recovery is underway as the top-three telcos are likely to turn their focus towards profitability, while their revenue market shares are relatively equal at around 30-33%,” Fitch Ratings said in a note. Bharti’s ratings headroom is likely to improve with an equity infusion, planned asset sales and growing Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) from Africa, it noted.

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“We expect industry revenue to rise by 5-10% in 2019 – the first growth in three years – underpinned by easing competition and growing data traffic with the proliferation of affordable 4G handsets. We expect blended average revenue per user (ARPU) to rise by 10-20 per cent to around USD 1.6-1.7 per month in 2019, underpinned by the incumbents’ introduction of a minimum mobile tariff of Rs 35 (USD 0.50) per month and growing data use,” the note said.

The top three telcos are likely to drive tariffs higher by bundling value-added services, such as music, movies and sports, amid growing data consumption.

On Bharti Airtel, it said that an equity injection of USD 3.5 billion, a public equity offer by its African operations, and a stake sale in the merged entity of Indus Tower and Bharti Infratel would significantly ease pressure on the balance sheet.