Bharti Airtel’s volumes, realizations grow in Q1
The company reported better-than-expected results for its India mobile business
Like Idea Cellular Ltd, Bharti Airtel Ltd reported better-than-expected results for its India mobile business. Revenue grew by 5.5% and earnings before interest, tax, depreciation and amortization (Ebitda) jumped 14.4% quarter-on-quarter (q-o-q). Kotak Institutional Equities had estimated sequential growth of 3.9% and 5.5% in revenues and Ebitda.
But Bharti Airtel’s shares are unlikely to rally too much for two reasons. First, they have already risen by about 5.5% since Idea Cellular reported strong results last week. Secondly, the company’s Africa business continues to be a drag.
Domestic wireless revenues were driven by growth in both volumes as well as average price realizations. Voice minutes carried on the company’s network grew by 2.26% sequentially and voice revenue per minute rose 2.48%. The volume growth was expectedly lower than that of Idea Cellular (5.2%), but the increase in average price realization is heartening to note.
The comfortable growth in voice realizations implies that the drop in average realization in the March quarter was a mere blip. Thanks to the fact that competition has reduced considerably, large companies such as Bharti Airtel and Idea Cellular have been able to raise tariffs and, at the same time, maintain stable volume growth. Even on a year-on-year basis, the growth in Bharti Airtel’s mobile revenues was healthy at around 10% with Ebitda growing by 25%.
Of course, like in the previous quarters, the data business has grown at a brisk pace—19% q-o-q in volume terms and 14% in revenue terms. The decline in data realizations appears to have ebbed a bit as well.
The Africa business takes some of the sheen off the results. In dollar terms, revenues grew by 1.7% sequentially, but Ebitda fell 2.4%. On a year-on-year basis, the Ebitda is flat despite a 9.6% growth in revenues.
Also, now that both Idea Cellular and Bharti Airtel shares have rallied handsomely in the past week, investors may choose to take a pause, considering worries among some investors about Reliance Jio’s looming entry.
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