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Home / Markets / Mark To Market /  Airtel outperforms peers in Q4; debt reduction underwhelms
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Bharti Airtel Ltd’s March quarter (Q4FY22) results were good on many counts. For one, sequential net additions in mobile subscriber base stood at 3 million. This compares to a fall in Reliance Jio’s net subscribers of 10.8 million and Vodafone Idea’s decline of 3.4 million. However, Airtel’s churn remained elevated at 2.8%.

Airtel’s average revenue per user (Arpu) rose to 178 from 163 in Q3. For perspective: Q4 Arpu of Reliance Jio and Vodafone Idea stood at 168 and 124, respectively. As a result, Airtel’s mobile services India segment reported 9.5% quarter-on-quarter increase in revenue to 17,617 crore. In comparison, Jio and Vodafone’s sequential revenue growth stood at 8% and 5%, respectively. Airtel’s healthy revenue performance can be attributed to the rise in Arpu led by healthy flow through of tariff revision and strong 4G customer additions.

On the other hand, revenues from Africa in Q4 rose 1% sequentially, and were below expectations. India’s non mobile segments, homes and airtel business, also saw a strong growth in revenue by 10% and 2%, respectively. The homes segment added 323,000 customers in the March quarter driven by an increase in local cable operator tie-ups.

Overall, Bharti Airtel’s consolidated revenue rose 5.5% sequentially to 31,500 crore. Ebitda (earnings before interest, tax, depreciation and amortisation) margin expanded 170 basis points sequentially to 50.9%. One basis point is 0.01%. 

Growth in Ebitda along with the 2% decline in capital expenditure in Q4 led to a significant increase in free cash flow (FCF). According to Nomura Financial Advisory and Securities (India), consolidated operating FCF stood at 10,000 crore, up about 14% quarter-on-quarter.

Nonetheless, debt reduction remains underwhelming. “Airtel’s net debt (excluding lease liability) of 1,23,500 crore saw limited reduction due to Indus Towers’ stake acquisition and AGR (adjusted gross revenue) interest capitalisation," said analysts from Motilal Oswal Financial Services.

As such, the management’s commentary on further tariff hikes and 5G spectrum auction remains key. “With improved free cashflow generation, cashflow relief from moratorium on government dues and ongoing rights issue, we think Bharti remains well-placed to compete with R-Jio on 5G rollouts," said Aditya Bansal, analyst at Nomura in a report on 18 May.

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