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Bharti Airtel's strong financial performance in the third quarter of fiscal year 25 (FY25) is attributed to a combination of factors, primarily the rebound in SIM consolidation and reduced subscriber losses, coupled with the positive impact of recent tariff hikes. Analysts from various brokerage firms point to this strategic combination as the key driver of Airtel's success during this period. Goldman Sachs' analysis reveals that Bharti Airtel's revenue growth of 21% year-on-year marginally outpaced Jio's 16% growth, resulting in a 50 basis point increase in Airtel's revenue market share during the third quarter and a significant 190 basis point increase over the past four quarters. This demonstrates a clear shift in market dynamics, with Airtel gaining a considerable competitive edge.
A closer examination of the Average Revenue Per User (ARPU) reveals further insights into Airtel's performance. JP Morgan highlights that Airtel's ARPU growth of 5% exceeded Jio's 4%, a difference primarily attributed to the continued impact of tariff hikes, seasonal factors, and organic growth drivers such as smartphone and postpaid upgrades, as well as roaming revenue. The rebound in wireless net additions, following a period of SIM consolidation, further underscores Airtel's strategic success in optimizing its subscriber base. This targeted approach appears to have effectively addressed challenges related to subscriber churn and optimized profitability.
Beyond the core wireless business, Airtel's home services segment exhibited remarkable growth, recording its highest-ever quarterly additions. This significant achievement fuels renewed optimism for Bharti Airtel, even in the face of strong competition from Jio. However, the report also highlights a decline in Airtel's enterprise segment, attributed to the company's strategic decision to deleverage its global bulk voice business. This strategic repositioning suggests a shift towards more profitable and sustainable business areas. While Jio's substantial FTTH (Fiber-to-the-Home) additions of 1.9 million subscribers during the quarter exceeded Airtel's home broadband additions of 674,000, the positive performance in Airtel's home broadband segment, which saw a 3.6% quarter-on-quarter increase in earnings to Rs 750 crore, remains a notable achievement, particularly considering the contribution of the FWA (Fixed Wireless Access) rollout.
The analysis also examines Airtel's capital expenditure (CAPEX) and its enterprise business. Despite completing the majority of its 5G rollouts, Airtel's CAPEX intensity for India remained robust, with a marginal increase to Rs 6,960 crore, as noted by UBS. The relatively flat performance of the enterprise business revenue is explained by JM Financial as a consequence of the continued slowdown in the global business due to declining demand for bandwidth, CPaas (Communications Platform as a Service), and related services, particularly from global over-the-top (OTT) players. Conversely, the domestic business within the enterprise segment continues to show strong growth. Airtel's proactive response to this market dynamic involves a comprehensive retooling of its Airtel Business portfolio, focusing on increased investments in digital services such as cloud, security, and IoT, while simultaneously shedding low-margin commodity voice and wholesale businesses.
In conclusion, Airtel's strong Q3 results, marked by its outperformance of Jio in revenue growth and ARPU, highlight the effectiveness of its strategic initiatives. While challenges remain in certain segments, Airtel's proactive approach to optimizing its subscriber base, strategically adjusting its product offerings, and focusing on high-growth areas suggests a positive outlook for the company's future. The significant increase in net profit, although partly due to one-time gains from the Indus Towers stake consolidation, reflects a generally healthy financial standing. This overall picture, combined with the considerable growth in the home services segment and strategic investments in the enterprise sector, points towards a promising trajectory for Airtel's continued success in the competitive Indian telecommunications market. The stock market's positive response, with a 4.43% increase in Airtel's stock price on Friday, reflects investor confidence in the company's future prospects.
Source: Airtel outpaces Jio in FY3Q on rebound in user loss, SIM consolidation, rate hikes: Analysts