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MOSL: BHARTI AIRTEL (Buy)-Growth steady; gaining market share; await a pickup in deleveraging

BHARTI AIRTEL: Growth steady; gaining market share; await a pickup in deleveraging

(BHARTI IN, Mkt Cap USD51.6b, CMP INR713, TP INR860, 21% Upside, Buy)

 

• Bharti posted a strong 2QFY22, with consolidated EBITDA up 6% QoQ (above our estimate) on India Mobile/Africa EBITDA growth of 6%/5%, led by a 5% increase in India Mobile ARPU. This has continued to drive FCF, post interest, despite higher capex. The only dampener was the steady rise in net debt, which should fall with rising FCF and proceeds from the rights issue.
• The management is making the right noise in terms of steady market share gains, premiumization, cross selling through digital initiatives, and healthy inroads in non-Mobile revenue streams like payments bank, Home, and Enterprise segments. It expects 20% consolidated EBITDA CAGR over FY21-23E, along with tariff/consolidation to drive FCF/deleveraging. We maintain our Buy rating. 

All segments fire – Mobile India EBITDA up 6% QoQ

• Consolidated revenue grew 5.5% QoQ to INR283.2b on strong performance across segments, particularly the India business.
• Consolidated EBITDA grew 6.4% QoQ (in-line) to INR138.1b on healthy all-around revenue growth and 330bp margin improvement, led by the non-Wireless India business.