Bharti Airtel Ltd. will consider forming a dividend policy as its free cash flow rises even as the first priority remains deleveraging, according to Managing Director and Chief Executive Officer Gopal Vittal.
In the next few quarters, the focus will continue to be deleveraging, he said in the third-quarter earnings conference.
Consolidated leverage (net debt/Ebitda) is currently at 2.5, noted Harjeet Kohli, joint managing director of Airtel.
The telecom company is striving for closer to two net debt/Ebitda before it moves to form a dividend policy, he said. Cashflows for the next four to six quarters will be focused on.
Of the company's total net debt of $2,020.7 billion, the majority is for India operations.
Nearly 50–55% of Indian debt is for adjusted gross revenue dues and other dues to the telecom department, Kohli said. The balance is in financial lease obligations.
"Ideally, both business units (India and Africa) should have that (net debt/Ebitda below two). Africa is much less than 1.5."
Vittal reiterated the need for an industry-wide tariff hike. However, 5G—which is currently not monetised—shouldn't have differential pricing.
"Monetisation is about overall tariff repair, but free data on 5G is obviously a headwind on any sort of monetisation, as far as 5G is concerned," the MD said.
Fixed wireless will give some ability to monetise, but it's really modest in the overall scheme of things, given the capex that has gone behind 5G, Vittal said.
Bharti Airtel's third quarter average revenue per user rose higher than the street's expectations. Its net profit increased 37% sequentially to Rs 2,876.4 crore in the quarter ended December, according to an exchange filing on Monday.
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