Bharti Airtel, the second-largest telecom operator, is expected to go big with 5G-led capex in the coming quarters. The telco has freer cash flow because of lesser than expected capex during Q4 FY22, said Bernstein. According to Bernstein, Airtel will again lead with hiking tariffs in the second of 2022 as it did in 2021. The brokerage firm has revised the target price of Airtel from Rs 900 to Rs 915. With the tariff hikes later this year, Bernstein said that Airtel’s medium-term target of Rs 200 ARPU (average revenue per user) would be achieved. The research firm has said that Bharti Airtel’s ARPU will grow at an annualised rate of 12% over FY23-25. This growth will be led by an increase in 4G subscribers and higher tariffs.
Indian Telecom Industry is Faring Well Despite Global Market Turmoil
Bernstein said that India’s telecom industry has been resilient despite the inflation and rising rates at a time when other sectors have had to face adverse effects. The reason cited for this by the brokerage firm was reasonable valuations and an improving outlook. The telcos are expected to add more 4G users in the coming quarters, and the ARPU for the entire sector will also grow after another tariff hike later this year. Further, with the relief measures announced by the Indian government, liquidity came back into the sector. Vodafone Idea (Vi), which was expected to go bankrupt, is now making long-term plans with 5G rollout in the near future because of the relief measures. The Indian government is taking equity in Vi against the interest-related dues the telco had. Factors such as increasing data consumption, higher consumer-spends for mobile services and more have placed India’s telecom sector in a good place for the investors to find a long-term gain opportunity. These are the contributing reasons why the telecom sector in India hasn’t succumbed to the market pressure created by the war between Russia and Ukraine.
