Bharti Airtel’s growth is going to propel upwards with the company’s core focus areas on 5G, broadband, better average revenue per user (ARPU), and enterprise services. The second-largest telecom operator in the country during Analyst Day said that all the lifting in terms of capex is ready.
Airtel said that it has 5G ready networks with successful trials to back them. In the near term, the only thing that might go towards heavy capex for 5G for Airtel would be the cost of radios. Further, the telco said that it would go for another prepaid tariff hike by the end of CY2022 which will be followed by more hikes in the coming years.
Airtel said that its ARPU at Rs 250 levels can propel RoCEs (return of capital employed) to 20% vs 6% in FY21 at an ARPU level of 160. The company said that broadband is going to be a core focus with plans for expansion of home pass from 16 million to 40 million by 2025 through its own and LCO model.
Another area where Airtel is focusing on is the enterprise services such as IoT (internet of things), security, cloud, data center, Communications as a Service (CaaS) and more.
VIL Stressed Balance Sheet to Help Airtel
Vodafone Idea Limited (VIL’s) stressed balance sheet is also going to help Bharti Airtel. VIL is going to raise funds, but it will not be remotely enough to fund capex and also help in the 5G spectrum auctions. Further, VIL has a lot of debt on the books. In the enterprise revenues with 5G, Airtel will be able to take a lead over VIL because of the already built infrastructure and brand of services across the nation.
Bharti Airtel is also making multiple acquisitions and reducing debt aggressively with all the free cash flow it has been able to generate via fundraising and profitability in the mobile business.
ICICI Direct Research Maintains Buy Call for Airtel
ICICI Direct Research has maintained a “buy" call for Bharti Airtel considering that the telecom sector has received relief from the government and the sweet spot Airtel is in with the ability to move tariff hikes and the potential revenues from the enterprise services.
