Bharti Airtel Ltd, India’s second-largest telecom operator by market share, is expected to report a stable April-June quarter, with growth likely to be driven by premiumization, subscriber additions, and the Africa business.
The telecom operator is scheduled to report its first-quarter earnings on Tuesday. It is expected to report a 14.5% year-on-year (y-o-y) and 3.3% quarter on-quarter (q-o-q) increase in its revenue from operations to ₹57,224 crore, according to the average estimate of five brokerage firms. Net profit is expected to increase 47% on-year and 20% on-quarter to ₹8,759 crore, the estimate showed.
Arpu recovery
“Bharti should see continued healthy subscriber additions, like in Q4. Ongoing premiumization on the back of data consumption (+3-5% q-o-q) and shift towards post-paid should aid Arpu (average revenue per user),” said analysts at Axis Capital in a note dated 2 July.
Arpu refers to the average monthly revenue earned from each mobile customer and is a key indicator of telecom spending. Even as two additional billing days would aid the company’s Arpu, it is expected to see a marginal growth in the June quarter due to the absence of tariff hikes.
Analysts expect Airtel’s Arpu growth at 1.5% on-quarter to ₹261 from ₹257 in the preceding quarter. In the June quarter, Jio’s monthly Arpu rose marginally quarter-on-quarter and 3.3% y-o-y to ₹215.6 a month from ₹214 at the end of March.
In the March quarter, Airtel, for the first time in five years, reported a fall in Arpu to ₹257 from ₹259 in the December quarter.
Airtel reported a 33.5% on-year fall in fourth-quarter profit to ₹7,325 crore due to one-time items and a high base effect in the preceding quarter. Consolidated revenue rose 15.7% on-year to ₹55,383 crore in the quarter, driven by an increase in its mainstay mobile services business, enterprise business, its focus on premium services, upgrades from 2G to 4G/5G, postpaid subscribers, and its Africa business.
“Bharti may see 1.8% qoq mobile Ebitda growth. We estimate Bharti to have added 3 million mobile subscribers in 1QFY27 vs 4.7 million in 4QFY26,” said analysts at IIFL Securities in a note dated 7 July.
In the March quarter, Bharti Airtel’s earnings before interest, tax, depreciation and amortization (Ebitda) rose 16.9% y-o-y and 2.9%sequentially to ₹32,038 crore.
Airtel’s mobile user base in India was at 373.2 million at the end of the March quarter, and 482 million in total, including fibre-to-the-home (FTTH), machine-to-machine, and wireline connections.
In comparison, Reliance Jio net added 8.9 million subscribers during the June quarter, taking its subscriber base to 533.3 million.
“We expect 1QFY27 to see continued improvement in net subscriber adds, while Arpu growth should be 1%, which is lower than usual seasonality due to softer International roaming and lower premiumisation thanks to rising entry-level smartphone pricing,” said analysts at J.P. Morgan in a note dated 13 July.
Analysts at J.P. Morgan said Airtel's growth in adjacencies, deleveraging, and rising dividends should be the key catalysts for the stock, aside from better-than-expected 5G premiumization and tariff hikes.
Africa growth
The telecom operator is also expected to benefit from growth in its Africa business. In the June quarter, Airtel Africa reported a 31% on-year growth in revenue to $1.85 billion. Net profit grew 27% on-year to $198 million, which was affected by derivative and foreign exchange losses and recognition of one-time finance cost.
Analysts at brokerage house Nomura expect the company’s enterprise business to report a steady growth in the June quarter. According to the brokerage, the enterprise segment is expected to report a revenue growth of 11% on-year and 2% on-quarter to ₹5,600 crore and Ebitda of ₹2420 crore, with margins remaining largely stable at 43%.
Airtel Business houses the enterprise connectivity solutions, including data centres, cloud and internet of things (IoT) solutions.
While growth in the direct-to-home (DTH) business is expected to be flat year-on-year, continued momentum in home broadband additions is expected to aid the company’s homes business, analysts said.
“We estimate Bharti to have added 0.45 mn home broadband subscribers in 1QFY27 (vs 1.13 million in 4Q) due to slowdown in FWA (fixed wireless access) adds on account of cost to connect a home going up significantly,” analysts at IIFL Capital said.
When the company reports its earnings on Tuesday, investors will closely watch for commentary on potential tariff hikes in the current year, capex for FY27 and incremental use of cash. Besides, commentary on the data centre business Nxtra will also be key.