Airtel Q3 Preview: Revenue Could Rise 18% YoY; ARPU rose to Rs 258

Telecom giant Bharti Airtel is expected to report a steady set of numbers for the December quarter, with brokers expecting healthy revenue growth and sharp profit growth, driven by continued ARPU expansion in India, strong growth in its home broadband business and solid performance from Africa.According to an average of six brokers, Airtel’s consolidated revenue is expected to grow about 18% year-on-year in the third quarter, while adjusted profit after tax will grow 35% in the same period. On a sequential basis, most analysts expect growth in the low to mid-single digits, reflecting a stable operating environment rather than a one-time trigger.

The wireless business in India is likely to remain the key earnings driver. Analysts broadly agree that ARPU improvement, led by the continued migration from 2G to 4G and the addition of higher quality subscribers, will continue to support revenue growth.UBS estimates that mobile revenue in India will grow 2.3% quarter-on-quarter, driven by a 1.7% improvement in implied ARPU. The brokerage highlights that while the total number of net subscribers is muted, Airtel has consistently added higher value postpaid users, a trend that has accelerated over the past few quarters.

Center expects Airtel to add about 3 million subscribers sequentially, taking its total subscriber base to about 367 million. ARPU is estimated to increase by 2% QoQ to around Rs 261 per month, keeping Airtel at the top of the industry in terms of prices. Centrum expects total revenue to grow approximately 3.3% sequentially.

Nuvama is slightly more constructive on near-term growth, building on 4.1% quarter-on-quarter growth in consolidated revenue. This includes a 3.3% quarter-on-quarter increase in its Indian operations and sharper 9% quarter-on-quarter growth in African rupee sales, helped by currency movements. The brokerage expects mobile services revenue in India to grow 2.6% quarter-on-quarter and sees consolidated EBITDA margin expanding 10 basis points sequentially.

Kotak Equities expects revenue and EBITDA to grow 1.6% and 2.7% quarter-on-quarter, respectively. It models net wireless additions of around 3 million, higher than the previous quarter, and sees ARPU rising from Rs 255 to Rs 258. Kotak also expects net broadband additions of around 0.95 million in the quarter, while operating margins are likely to remain stable at around 41.6%. Motilal Oswal expects around 3% quarter-on-quarter growth in consolidated revenue, supported by strong performance in the Homes segment and Airtel Africa, with favorable currency movements contributing to the reported numbers. The company’s Indian wireless revenue and EBITDA are expected to grow by a more modest 1.4% quarter-on-quarter. The broker estimates wireless ARPU at Rs 258, up 0.8% QoQ, along with 3.5 million net paying subscriber additions and 6 million 4G-5G net additions.

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Wireline businesses are also expected to play an important supporting role this quarter. UBS expects home broadband revenues to grow 32% year-over-year and 7% sequentially, while operating revenues will grow 2.5% quarter-over-quarter. Airtel Africa remains a strong growth driver, with UBS expecting approximately 5% quarter-on-quarter growth in both revenue and EBITDA, supported by market share gains, ARPU improvement and continued 4G upgrades.

On the profitability front, EBITDA growth is expected to broadly follow revenue growth, with some operational benefit from higher ARPU and economies of scale. Most brokers expect margins to remain stable to slightly higher as network costs and subscriber acquisition costs remain under control.

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