Bharti Airtel - Soft Landing Ahead: Motilal Oswal

Motilal Oswal Report

Bharti Airtel Ltd. has seen decent earnings growth for the last 12 quarters. However, we expect Bharti Airtel to witness-

1. a period of soft earnings given low probability of a price hike, and

2. high capex over the next two-three years given increased investments in 5G and rural densification.

Over the last three years (FY20-23E), Bharti Airtel reported a compound annual growth rate of 19%/34% in India Mobile revenue/Ebitda, driven by multiple tariff hikes (strong 40% increase in average revenue per user), a shift from 2G to 4G subscribers, and spectrum usage charge savings leading a signification free cash flow generation.

Going forward, we see low probability of a tariff hike in the near term and heightened competition for market share among telcos, which may increase churn and drive SIM consolidation. As a result, we factor in India Mobile revenue/Ebitda growth of 11%/43% over FY23-25E versus 19%/34% growth over FY20-23E.

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