Five million new 4G users, tariff hike hopes and record broadband customer addition send Airtel's stock to a 6-month high
- Airtel has posted its third consecutive profitable quarter.
- After being mostly subdued over the last few months, the Airtel stock has surged by over 9% in August so far.
- Analysts expect the telco to report strong earnings growth over the next three years.
In the first four trading days in August, Airtel’s share price has surged by nearly 9%.
There are three factors behind Airtel’s recent rally – five million new 4G subscribers, the hopes of tariff hikes seeing some degree of action, and record broadband customer additions.
Here’s how Airtel’s June quarter panned out:
Source: Company reports
|Particulars||June 2021 (₹ in crore)||June 2020 (₹ in crore)|
In its report, Airtel revealed that it continues to add millions of new 4G subscribers, reducing the gap between its 4G base and that of Jio’s. In the June quarter, Airtel added 5 million new 4G subscribers – while this is a positive for the company, its rate of growth has slowed down compared to previous quarters.
Tariff hikes fuel the Airtel rally
Tariff hikes have been on the table of Indian telecom operators – especially Airtel and Vodafone Idea – since last year. However, it is only now that these two telcos are taking the first few steps in this direction.
Earlier last month, Airtel and Vodafone Idea began hiking tariffs of base plans for select customers.
Analysts expect that Airtel will continue to be careful in this regard.
“The tariff hike in the mass segment will be done carefully as Bharti’s does not want to increase the premium and getting impacted by the price elasticity,” said an Emkay Research report dated August 3.
In the more lucrative postpaid segment, the new Airtel Black plans are aimed at boosting the company’s average revenue per user (ARPU), which is currently stagnant at ₹146.
“Its recent steps to take direct tariff hikes, in postpaid as well as prepaid segments, indicate its willingness to break the tariff impasse in the sector,” said a report by Phillip Capital dated August 4.
Further, the report adds that tariff hikes will drive a strong growth in Airtel’s revenues over the next three years.
Record broadband subscriber additions
The last factor driving the rally in Airtel share price is the record additions of broadband subscribers. In the June quarter, Airtel added 2,85,000 broadband subscribers, its highest ever.
“The subscriber addition momentum is accelerating and connections by small businesses have started to re-activate,” the Emkay Research report added.
Revenue in the broadband segment was also up by 9% compared to the previous three months.
Overall, the Emkay report states that the healthy growth in the broadband subscriber base has contributed to a strong quarter for Airtel.
Note: Upside compared to Airtel’s share price of ₹613.5, as of 1:05 p.m., August 5
The enormous gap between Vodafone Idea on one hand, Airtel and Jio on the other
As Vodafone Idea shares dive 10% and more, here's a look at what analysts had to say about it prospect in recent weeks
Vodafone Idea sinks nearly 10% and Airtel tumbles a bit after India’s Supreme Court denies a discount on past dues
Popular on BI
- Elon Musk sparks another Shiba Inu rally ‘to the moon’ — other Shiba coins follow suit
- Elon Musk’s puppy, a new strategy to burn tokens, and altcoins playing catch up — the perfect storm for cryptocurrency Shiba Inu to skyrocket
- Chinese smartphone brands under scrutiny, government to check components, pre-installed apps: Report
- Best AMD desktop processors — which one to buy in India?
- Best AMD Ryzen laptops in India
- Best TVs with HDR support in India
- Bored Ape NFT sells for $2.7 million, making it the most expensive in Yacht Club collection
- Startup salaries have increased over 40% in the last six months