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Bharti Airtel’s June-quarter results show that its world is flat post-covid

Bharti Airtel’s revenue growth numbers for the June quarter were as flat as a pancake. In the key India wireless business, revenues were 0.6% lower compared to the March quarter, while the firm’s consolidated revenues were 0.9% higher

Bharti Airtel Ltd’s revenue growth numbers for the June quarter were as flat as a pancake. In the key India wireless business, revenues were 0.6% lower compared to the March quarter, while the firm’s consolidated revenues were 0.9% higher.

But flat revenues happen to be a good sign. Despite the hefty tariff hikes in December, and the impact on income due to the pandemic, consumers haven’t taken the downtrading path.

On a year-on-year basis, India wireless revenues rose 18.5%, while Ebitda of the segment was 35% higher. Ebitda stands for earnings before interest, tax, depreciation and amortization.

“Overall, it’s a steady quarter to follow the blockbuster March quarter," Kotak Institutional Equities analysts wrote in a note to clients.

The March quarter had captured the full benefit of the December tariff hike, and also helped Airtel capture a fair amount of market share from Reliance Jio Infocomm Ltd.

Jio reported a 11.6% growth in revenues in the first quarter of the current fiscal, on Thursday, as the impact of the tariff hikes flowed in with a lag. As such, Airtel’s market share gains in Q4 have now been reversed.

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Airtel’s June-quarter results were influenced by a number of moving parts. One would have imagined phone usage to explode, both in terms of voice minutes, as well as data traffic. But oddly, voice usage was 0.2% lower compared to Q4, and the 12.2% growth in data traffic was lower than the 15-16% growth in the past three quarters.

In the low-income segment, recharges are estimated to have reduced. It’s important to note here that even if voice traffic had increased meaningfully, revenue and profit would not have moved meaningfully, simply because of bundled packs, which come with unlimited talk time.

Likewise, even as data usage per customer increased sharply in the last quarter, most customers will still be within the data allowance included in their bundled packs. Data traffic didn’t grow at the same rate as preceding quarters because of the hit on smartphone sales during the lockdown. 4G customers rose by only 2 million last quarter, compared to average additions of 13.7 million in the preceding three quarters. Airtel and other telcos had also asked providers of streaming services to curb the use of HD videos to lower bandwidth usage. In the fixed broadband business, while most analysts were expecting a jump in revenue, Airtel ended up with only 1% growth. While some users upgraded to meet work-from-home requirements, this was offset by informal work establishments, which paused connections or stopped paying. Given these various moving parts, “Bharti’s 1% sequential revenue growth and 2% sequential Ebitda growth can be termed respectable", Kotak’s analysts said.

Airtel shares are trading 2.5% lower compared to their pre-pandemic highs of around 565 apiece. While many industries have been hit severely by the pandemic, Airtel’s world was flat, and investors are evidently relieved at the outcome.

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