Airtel to achieve mobile EBITDA growth driven by ARPU, cost savings

Airtel India will achieve growth in mobile EBITDA during financial year 2019-20, driven by improvements in average revenue per user (ARPU), easing competition and cost savings, said Fitch Ratings.
Airtel India's fastest network

Airtel India’s mobile EBITDA, after operating lease payments, improved 7 percent quarter on quarter in Q1 fiscal 2019-20.

Vodafone-Idea’s EBITDA declined 22 percent.

Financial performance of Airtel India, Vodafone Idea and Reliance Jio during the first quarter was affected by the introduction of Indian accounting standard 116 (IndAS 116), which removed the distinction between operating and finance leases, and classifies all leases as finance leases. This inflated reported EBITDA and finance leases.

Airtel’s consolidated revenue rose 5 percent year on year while EBITDA rose 2 percent, after deducting operating lease expenses to remove the effect of IndAS 116. Airtel Africa achieved revenue growth of 7 percent and EBITDA growth of 13 percent, subscriber growth of 9 percent and stable ARPU.

Airtel India’s mobile EBITDA rose 7 percent quarter on quarter to INR 25 billion after growing by 33 percent in Q4 fiscal 2018-19, driven by ARPU growth of 5 percent to INR129 as 4G subscribers increased by 10 percent to 95 million and average data consumption rose by 8 percent to 11.9GB per month per user.

Vodafone Idea’s revenue fell 4 percent and EBITDA declined 22 percent as it lost 14 million customers, partly due to a minimum recharge plan of INR35. Vodafone Idea’s ARPU rose 4 percent to INR 108 as it gained 4 million 4G customers, fewer than the 8 million 4G customers gained by Airtel India. Vodafone-Idea’s EBITDA of INR12 billion was driven by cost synergies from the merger of the two companies.

Reliance Jio reported revenue growth of 44 percent and EBITDA growth of 37 percent as it added 25 million new customers to reach subscriber base of 331 million, ahead of Vodafone-Idea’s 320 million and Airtel India’s 281 million.

Reliance Jio’s ARPU, which does not include interconnection revenue, was largely flat at around INR122 even as data consumption increased to 11.4GB per month per user and average voice consumption was 821 minutes per month per user, slightly lower than Airtel’s 888 minutes.

Airtel India and Vodafone Idea are improving their 4G coverage and capacity by expanding their mobile-broadband sites and fibre backhaul.

Airtel India has added 26,190 mobile-broadband towers. Vodafone-Idea has added 20,825 mobile-broadband towers.

Airtel is expected to raise about $2.5 billion-3.5 billion through a stake sale in the merged entity of Bharti Infratel and Indus Tower.

Vodafone-Idea is likely to sell its entire 11 percent stake in the tower merged entity for about INR 56 billion. Vodafone-Idea is also planning to monetise 158,000 kilometres of fibre assets.

Reliance Jio entered into an agreement to monetise its tower and fibre assets worth INR 252 billion via an infrastructure investment trust.