The Telecom Regulatory Authority of India (TRAI) released the latest telecom subscription data as of October 31, 2023, at the start of the new year, i.e., on January 3, 2024. According to the report, Bharti Airtel added 352,640 wireless subscribers in October 2023, bringing the total wireless subscriber base to 378,133,211 (378.13 million). Airtel added a significant number of wireless subscribers in West Bengal, Delhi, and Andhra Pradesh and Telangana Circles. Considering the subscriber data reported by TRAI, various brokerages have published reports emphasizing their market perspective. Let's now see what brokerages have to say with respect to Airtel.
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Kotak Institutional Equities
In its sector-wise expectations for the December 2023 quarter results report, Kotak expects around 2 percent sequential growth in India's wireless business revenue, with approximately a 1 percent QoQ ARPU uptick to Rs 205, driven by continued subscriber mix improvements. Kotak models around 3 million wireless net adds (versus 3.7 million QoQ) and around 6.5 million 4G net adds (versus around 7.7 million in 2QFY24).
Among the other business segments, Kotak expects a 7 percent sequential revenue growth for Home Broadband (continued strong net adds, contribution from FWA). Kotak expects market share gains to continue for Bharti, while expecting a decline in Airtel's wireless EBITDA due to likely higher 5G-related costs in P&L.
With respect to Indus Towers, Kotak models net tower additions of around 5,000 and net tenancy additions of around 4,750 for the quarter, driven mainly by Bharti's rural rollouts.
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Morgan Stanley
In its F3Y24 Preview for Airtel India, Morgan Stanley expects stable subscriber addition trends, a slight uptick in ARPU, moderating EBITDA growth, higher capex QoQ but peaking out in 3Q, and lower net debt QoQ. For India mobile services, Morgan Stanley expects closing subscribers of 345 million (+3 million QoQ), ARPU of Rs 206 (vs. Rs 203 in F2Q24), with a flat EBITDA margin QoQ at 53.9 percent. Citing its exhibit, Morgan Stanley said during the last five months, Bharti Airtel and another player have been adding net subscribers at the expense of weaker players.
ICICI Securities
ICICI Securities, in its Q3FY24 Preview report, suggests a steady quarter for Bharti Airtel (India), with ARPU expected to grow 1 percent QoQ to Rs 205, aided by premiumization (2G to 4G) and strong additions in the postpaid segment. The report also mentions Bharti India’s EBITDA margin expansion being capped by 5G-related costs. ICICI Securities recommends a BUY with a target price of Rs 1,125.
Emkay expects that Bharti Airtel’s ARPU is likely to grow 1.3 percent QoQ to Rs 205, given a better mix with more users converting to 4G from 2G. Overall, subscriber addition QoQ is expected to be 3.5 million vs. 3.7 million in Q2, leading to India mobile revenue growing 2.4 percent QoQ. Bharti’s focus on rural and 5G rollout is likely to aid Indus’s tower/tenancy addition.
In its 3Q Preview, BofA Securities says it expects a stable quarter for telcos and estimates India cellular revenues for Bharti to increase 2.5 percent QoQ, driven by 3.5 million net adds and a 1 percent QoQ implied ARPU improvement, led by premiumization. The research firm also expects momentum in the broadband business to be strong, led by continued net adds. BofA expects one round of tariff hike in CY24 but likely in 2H24.
JM Financial expects net subs for Bharti to grow by around 3 million, MBB (Mobile Broadband) subs addition at around 6 million, and improving postpaid subs penetration, resulting in a 1.5 percent QoQ rise in ARPU to Rs 206, driving 2.4 percent QoQ growth in India wireless revenue to Rs 215 billion and 2.5 percent QoQ growth in EBITDA to Rs 118 billion.
