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They added that the strong wireless revenue growth forecast is likely to boost Airtel’s free cash flow (FCF<\/a>) generation in the coming quarters.
“We are building in a price increase in early FY24, and coupled with continued 2G to 4G\/5G conversions, we forecast Bharti’s wireless revenues to grow at a 15% FY23E-25E CAGR (13% at consolidated level),” Goldman Sachs said in a note.
It added that the estimated wireless revenue growth is likely to translate into sharply improving margins, with EBITDA<\/a> (read: operating income) growing at a 23%, compounded annual over FY23-25, aiding FCF generation. “ We forecast $2.5 billion in FCF for Bharti’s India business in FY24,” Goldman Sachs added.
Analysts, though, cautioned that since the telecom sector subscriber additions are likely to stay weak in the near term, without industry-wide tariff hikes, revenue growth for both Airtel and Reliance Jio<\/a> could decline to less than 10% on-year by June ‘23, vs the 15-20% on-year level in recent quarters.
Goldman Sachs, though, added that Bharti’s 3QFY23 wireless revenue growth of 2.5% on-quarter is broadly in line with estimates and marginally higher vs that reported by Jio, resulting in revenue market share for Bharti expanding by 30 bps qoq, or 130 bps over the last four quarters.
Airtel’s consolidated net profit for the fiscal third quarter rose 91% on-year to rs 1588.2 crore, helped mainly by strong 4G user additions , data consumption growth and lower spectrum usage charges (SUC). Its quarterly net profit, though, fell nearly 26% sequentially, missing estimates, mainly due to an exceptional charge of around Rs 670 crore in the December quarter.
Brokerage CLSA said Airtel’s net profit in the December quarter fell 26% sequentially, hit by a Rs 670 crore exceptional charge and hefty provisions by Indus due to Vodafone Idea’s financial challenges.
Indus Towers<\/a>, in which Airtel is the biggest shareholder, had to make a hefty Rs 2,298.1 crore provision towards doubtful debt in December quarter after Vi indicated likely challenges in meeting its future higher payment commitments to the tower company from January.