Bharti Airtel’s Earnings Suggest Reliance Jio Impact Waning, Says UBS
Reliance Jio impact has bottomed out as Bharti Airtel’s earnings beat estimates, say brokerages.
Bharti Airtel Ltd.’s better-than-estimated earnings indicate early signs of stability in the telecom industry as the impact of disruption caused by Reliance Jio Infocomm Ltd. has bottomed out, brokerage UBS said.
India’s largest telecom operator’s revenue rose marginally in the three months ended June, snapping a three-quarter losing streak.
Bharti Airtel’s revenue fell in the previous three quarters as it cut tariffs after its newest rival Reliance Jio started by offering free services in September last year. The Mukesh Ambani-led operator began charging its users from April, offering some respite to its older rivals.
Bharti Airtel’s net profit stood at Rs 367 crore in April-June, falling for the fourth straight quarter but was 16 percent higher than a consensus estimate of analysts tracked by Bloomberg.
Profit was ahead of estimates led by lower-than-expected net interest costs and depreciation.CLSA
Data usage doubled while realisations halved as the company started providing more data at the same or lower prices. This indicates that while Bharti Airtel managed to maintain customer traffic on its network, it’s not the cheapest data provider.
Data realisation will improve as Jio has raised prices since early July and we expect incumbents to follow suit.UBS
CLSA hiked the target price to Rs 444 from Rs 387 after the earnings as it expects the telecom operator’s performance to improve.
While the international brokerage expects the launch of JioPhone to impact Bharti Airtel’s average revenue per user, it could be offset by a faster consolidation in the sector.