Airtel Q4 Earnings on Track: Growth Amidst Strategic Shifts
Airtel Q4 Earnings Preview: Stable Performance Despite Changes
Bharti Airtel is gearing up to release its fourth-quarter earnings for the 2024-25 fiscal year (Q4FY25) on May 13th. While analysts predict stable earnings overall, they expect revenue growth to be somewhat tempered due to Airtel’s strategic decision to exit the low-margin wholesale voice and messaging market.
Revenue Projections Show Steady Growth
Despite the exit from the wholesale business, Airtel’s consolidated revenue from operations is projected to increase significantly. Estimates from five brokerage firms suggest a year-on-year (YoY) growth of 31% and a quarter-on-quarter (QoQ) growth of 9% to ₹49,200 crore. This growth is mainly attributed to a rise in subscribers, the full consolidation of Indus Towers (which Airtel now fully owns), and strong performance in its core India and Airtel Africa markets.
Impact of Indus Towers and Enterprise Segment
Analysts at BofA Securities point out that the company’s revenues might be slightly impacted by exiting the low-margin commodity wholesale voice business. However, this impact is expected to be partially offset by the full three months of revenue contribution from Indus Towers.
On the other hand, Airtel’s enterprise business, which accounts for 13% of its revenue, is anticipated to see a decline during this quarter.
Strong Underlying Performance and ARPU Outlook
Despite the headwinds in the enterprise segment, analysts remain optimistic about Airtel’s core business drivers. India’s cellular revenues are projected to increase by 2.5% sequentially, reaching ₹26,269 crore. This segment contributes 58% to Airtel’s overall revenue.
Airtel’s average revenue per user (ARPU), a key performance indicator, is expected to remain stable sequentially at ₹245, according to estimates from six brokerage firms. This indicates that the impact of the tariff hike implemented by telecom operators last July is gradually fading.
Looking Ahead: Dividend Payout, Capex, and Key Questions
Brokerage firm Morgan Stanley predicts a higher dividend payout in FY25 compared to FY24 and anticipates lower capital expenditure (capex) numbers in FY26 compared to FY25. The focus on balancing capital allocation towards debt reduction and shareholder returns remains a key strategy for Airtel.
During the earnings call scheduled for May 14th, investors and analysts will be closely watching for insights on several key issues, including Airtel’s equity conversion proposal with the government, spectrum trading with Adani, future tariff hikes, and dividend plans.
