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Bharti Airtel
Our verdict on Bharti Airtel isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The sovereign cloud platform was launched as planned, with management confirming its availability and initial strategic partnerships for deployment. (1 met across 1 tracked commitment)
“Our plan is to reach 1 gigawatt capacity in the next three to four years and grow significantly ahead of the market.”
India capex for the quarter was Rs. 7,100 crores, a significant reduction from the elevated levels of ~Rs. 34,000 crores annually seen during the peak 5G rollout phase. (1 met across 1 tracked commitment)
“You are right in the assumption that radio capex generally is trending down but at the same time, when you look at transport capex, the investments that are going in fiber, on our core networks, they continue”
See the full cited Management analysis of Bharti Airtel
How durable is the business?
India mobile revenue grew 15.3% for the full year, with EBITDAaL margins expanding to 50.7% in Q4. ARPU reached Rs.248 on an equal day basis, driven by 5G migration and premiumization. (5 expanding across 1 engine)
“Africa accounts for about 27% of our revenues, India mobile 53%, India non-mobile 13% and Indus 7%.”
The balance sheet strengthened significantly through aggressive deleveraging, with India net debt to EBITDAaL dropping to 1.5 after prepaying Rs.42,000 Crores of high-cost debt. (5 expanding)
“Airtel is now one of the lowest leveraged telcos globally within the industry, in fact, the external net debt... is almost down to nothing.”
See the full cited Business Model analysis of Bharti Airtel
Where does growth come from?
B2B and digital services are showing a steady growth trend, with Airtel Business revenue market share increasing from 26.6% to 36.8% over five years. (1 steady, 3 accelerating, 1 decelerating across 5 signals, 1 leading indicator)
“We have about 120 to 130 megawatts of power... in the next three to four years, we will have about a gigawatt capacity, which will give us about 25% share”
The home broadband market is in an accelerating growth phase, with the total market size expected to grow at a 15% CAGR through FY'26. Airtel's market share has risen from 12.8% to 19.3%. (5 accelerating across 5 signals)
“On broadband, we delivered another strong quarter with our highest ever quarterly net adds of 1.2 million customers. We have crossed 13 million installed connected homes customer base.”
See the full cited Future Growth analysis of Bharti Airtel
What could break the thesis?
The risk is easing as the Supreme Court has permitted the government to undertake a comprehensive reassessment and reconciliation of AGR dues, which may reduce the total liability previously calculated with errors. (1 easing, 1 stable, 1 high-severity)
“The AGR issue just does not seem to go away, and now with Vodafone Idea having gotten this AGR relief, and your own AGR payments starting in March, which is about a billion dollars, and you obviously also have recurring spectrum payouts”
The risk is intensifying in terms of capital requirement as the company plans a four-fold increase in capacity to 1 gigawatt, involving significant new investments and partnerships with Google. (2 intensifying)
“The B2B market in India, the top 500 companies account for about 65 to 70% of the overall industry, so it is very concentrated on the top”
See the full cited Risk analysis of Bharti Airtel
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