Airtel Will Climb to Rs 200 ARPU Level Only When This Happens

In Q4 FY22, Bharti Airtel’s performance and growth was robust as the telco outperformed its peers including Jio and Vodafone Idea. The telco’s mobile revenues grew 16% while Jio’s mobile revenues went up by only 11.6%. Airtel’s higher tariffs and a strong brand recognition helped the company in acquiring and retaining high paying customers.

Highlights

  • Bharti Airtel, the second-largest telecom operator in India reported its ARPU (Average Revenue Per User) figure to be Rs 178 on Q4 FY22.
  • Since the ARPU currently stands at Rs 178, reaching Rs 200 doesn’t seem too far-fetched for Airtel.
  • ICICI Securities has maintained a ‘Buy’ rating on Airtel’s stock and revised the target price to Rs 812 from Rs 850 earlier.

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Bharti Airtel

Bharti Airtel, the second-largest telecom operator in India reported its ARPU (Average Revenue Per User) figure to be Rs 178 in Q4 FY22. The company’s management has reiterated that the short-term goal is to reach Rs 200 ARPU level and in the long run, the company is eyeing for Rs 300 ARPU level.

Since the ARPU currently stands at Rs 178, reaching Rs 200 doesn’t seem too far-fetched for Airtel. ICICI Securities in a note said that Airtel can reach Rs 200 ARPU level, but for that, it needs another round of tariff hikes. Further, the analyst said that the next tariff hike is possible in FY23.

This doesn’t sound very surprising as Airtel has said before that it won’t shy away from hiking tariffs within a year again. The last tariff hikes came around December 2021, after a gap of two years. This time the telco doesn’t want to wait that long. Thus, reaching and crossing the Rs 200 ARPU level seems like an easy milestone for the company.

Of course, with Airtel hiking tariffs, Vodafone Idea would also follow. It will be interesting to see whether Jio would follow or focus on reaching the 500 million customer figure first.

ICICI Securities has maintained a ‘Buy’ rating on Airtel’s stock and revised the target price to Rs 812 from Rs 850 earlier.

Airtel Outperformed Peers in Q4 FY22

In Q4 FY22, Bharti Airtel’s performance and growth was robust as the telco outperformed its peers including Jio and Vodafone Idea. The telco’s mobile revenues grew 16% while Jio’s mobile revenues went up by only 11.6%. Airtel’s higher tariffs and strong brand recognition helped the company in acquiring and retaining high paying customers.

Airtel’s non-mobile business also performed quite well during the quarter. All its subsidiaries including Airtel Payments Bank, Airtel Digital TV, and more saw strong growth in business and revenues. This will help Airtel with generating more free cash flows and enable the telco in deleveraging fast.

The strong financials also put Airtel in a great position ahead of the 5G spectrum auction which would involve thousands, if not lakhs of crores.

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