NEW DELHI: If Bharti Airtel’s results released Monday are anything to go by, India’s telecom sector may well be among those lucky few who may come out of the pandemic in better shape than they went in. In fact, the telco’s stock hit an all-time high on Tuesday — rising over 11 per cent — despite a Rs 5,237 crore net loss recorded for the quarter.
This loss was primarily due to exceptional charges drawing away Rs 7,004 crore of its earnings. In purely operational terms, the company has recorded one of the best quarters it has seen in recent times. For instance, earnings before interest and tax for its India mobile business has turned positive for the first time in several quarters and India wireless segment revenues have grown by 16 per cent against the previous quarter.
More importantly for the sector, Airtel has seen a sharp 14 per cent rise in Average Revenue Per User (ARPU) — a measure of profitability — compared to the previous quarter. This is in contrast to rival Reliance Jio’s 2 per cent increase and the expected 9 per cent rise for rival Vodafone Idea, which is yet to release its Q4 results.
Rising ARPU is a welcome indication that the sector’s desperate price hikes in December last year are having an effect on revenues and margins, and Airtel seems to have come out ahead in the race to beef up profitability.
In fact, Bharti Airtel also saw a significant increase in 4G subscribers even as its overall subscriber count remained flat. The result has been that the Sunil Mittal-owned telco has clawed back a significant portion of market share from Mukesh Ambani’s Reliance Jio.
“4G subs grew 10% quarter-on-quarter to 136 million — 12.5m fresh adds — garnering a healthy 40%-plus incremental market share,” Motilal Oswal analysts wrote in a note.
Other analysts note that the strong data subscriber additions despite the tariff hikes bode well for telcos, especially since more such hikes may have to be made over the next two-three years.
The only dampener may be that a pandemic-driven recession may make future tariff hikes difficult. But, analysts think the impact may be marginal. According to Goldman Sachs, while wireless revenue growth may be hit this quarter, investor focus will be on the next tariff hike round.
NOT QUITE LOSS