Tariff hike could help Bharti Airtel reduce Q4 loss, post strong EBITDA

Telecom operator Bharti Airtel on May 18 will report its results for the quarter ended March 2020. The company is expected to report solid growth at the operating level and Q4 FY20 loss could reduce significantly after tariff hikes announced in December.

Kotak Institutional Equities expects Bharti to post a loss of Rs 573.9 crore for the quarter ended March 2020, while Motilal Oswal and ICICI Direct see the same at around Rs 400 crore for the quarter.

The company had posted an adjusted loss at Rs 1,112.3 crore in the December quarter and Rs 1,914.8 crore in the corresponding period of last fiscal.

Revenue growth for the March quarter is likely to be strong at around 9-10 percent due to strong India wireless business with average revenue per user (ARPU) at around Rs 142-148, while Africa business had a steady quarter.

"We expect 8.3 percent QoQ and 13.7 percent YoY increase in India wireless revenues with bulk of the December's tariff hike impact likely to be seen in Q4FY20," said Kotak Institutional Equities which sees revenue growth at 9.4 percent for the quarter.

"We are building a 7.4 percent QoQ (13.7 percent YoY) increase in ARPU to Rs 142," it added.

ICICI Direct feels with tariff hike in December 2019, reported ARPU is likely to witness around 10 percent QoQ growth at Rs 148. "Indian wireless revenues are expected to witness 9.4 percent QoQ growth."

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At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to show around 50 percent YoY and 5-9 percent sequential growth for the quarter ended March 2020.

"We expect around 230 bps sequential expansion in India EBITDA margins at 43.5 percent driven by tariff hike. Africa margins are expected to be stable at 45 percent," said ICICI Direct which sees EBITDA growth at 7 percent QoQ.

Date: May 19