Bharati Airtel Ltd today said the strong third quarter performance was driven by tariff hikes, investment by Google among other factors.
In a post earnings call, the top management of Airtel said there might another tariff hike, if not in the next three to four months, but later in the current calendar year itself and that the company wouldn't hesitate to lead in tariff hikes.
The management further added that the company would be hoping to take ARPU (average revenue per user) per month to ₹200 in 2022.
On Wednesday, Bharti Airtel shares rose 1.55% to close at ₹719.90 apiece on NSE.
Airtel reported a 3% drop in net profit in the December quarter to ₹830 crore as against ₹854 crore in the year-ago period, while revenue from operations rose 13% year-on-year. The ARPU during the quarter improved to ₹163.
The company's board has also approved raising up to ₹7,500 crore in debt instruments via issuance of debt securities, bonds etc.,
During the post earnings call, Airtel said the early signs of tariff hikes have been encouraging and that the company will continue its emphasis on acceleration of new products.
"The full impact of the revised mobile tariffs will be visible in the fourth quarter. Our Enterprise, Homes and Africa business continue to deliver strongly, with steady increase in contribution to the overall mix of the portfolio. Our balance sheet is robust and we are now generating healthy free cash flows. This has enabled us to recently prepay some of our spectrum liabilities to the Government thereby reducing the interest burden," Airtel CEO Gopal Vittal said in earnings statement.
Vittal further said Google’s recent investment is a strong validation of Airtel’s role in being a leading pioneer of India’s digital revolution.
Airtel further said reserve prices of 5G spectrum need to be rational to see more demand and while commenting the reforms, the company said government measures are welcome, but more needs to be done.
“Bharti's 6% sequential rise in India mobile ARPUs was the key positive surprise in 3Q. Bharti's subscriber mix improved further; a reflection of its network investments. Homes, enterprise segment and Africa also surprised positively," it added. Jefferies has reiterated Buy rating on the telecom stock with a target price of ₹910 per share.
The brokerage believes that Bharti's focus on raising tariffs/ARPUs will keep its churn high, particularly among voice subscribers, but the change in mix will drive up its ARPUs.
