Kotak Institutional Equities on Wednesday said in a report that the second quarter of the current financial year was a “stellar quarter” for Bharti Airtel’s India wireless business “on all counts.” The firm in its report said that the Bharti Airtel Africa wireless business did “even better” as compared to its Indian peer while the non-wireless India businesses of Airtel registered “steady prints.” Airtel on Tuesday announced its second-quarter financial results for the period ended September 30, 2020, with the company registering an 22% year-over-year (YoY) growth in its consolidated quarterly revenues.
Airtel Executed in Top Gear Says Kotak
The second-largest wireless operator said that its Indian mobile services revenue was up 26% YoY.
“At the core, the ‘but it competes with RIL’ concern is really a ‘RIL is gunning for an eventual ultra-dominant, near-monopoly or monopoly position’ concern,” Kotak Institutional Equities said in its report. “There is little in [the] way of argument against this concern – it is a fatalistic view.”
Further, Airtel said that its Indian Business and Homes division also registered 7.5% and 7.3% YoY revenue growth respectively.
“As a corollary, this concern can never be called ‘priced in’ insofar as Bharti’s stock is concerned,” Kotak Institutional Equities said in its report. “That a monopoly market is a massive net-negative for the Indian Telecom consumer is a purely academic point if one has firmed up a fatalistic view.”
Airtel said that its mobile average revenue per user (ARPU) hit Rs 162 in its second quarter in the current financial year as compared to Rs 128 in the same period in the previous financial year.
“In summary, 2Q saw Bharti progress well on its strategic focus areas while executing in top gear,” Kotak Institutional Equities said in its report.
Bharti Airtel Hit “Right Notes” on Multiple Segments
Kotak Institutional Equities also said that the second-largest wireless operator in India was “hitting all the right notes” on multiple segments including its India wireless business. The firm highlighted that Airtel registered a 13.1 million quarter-on-quarter (QoQ) data subscribers growth with the operator now having 162.2 million data users on its network. Kotak Institutional Equities said that 55% of subscribers on the Airtel network are now using data with 94.1% data users on 4G connection.
Additionally, the firm also reflected on the Airtel earnings call for the second quarter with Kotak Institutional Equities highlighting that the operator expecting further increase in ARPU is a key takeaway.
“[Bharti Airtel] Management said that the current tariffs are still at low levels,” Kotak Institutional Equities said in its report. “Management did not comment on the exact timing for a tariff increase. Secondly, the company believes that the current data allowances are way too generous and price architecture needs to become more sensible going ahead.”