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Exclusive: MOFSL Maintains the Longer-Term Growth Story of Bharti Airtel

Bharti Airtel aims to roll out 5G by 2024, with a capex target of INR 750 Billion.

According to the report, Bharti Airtel is growing its wireless subscriber base and revenue, but the hefty capital expenditures required for 5G rollouts and network development could cause revenue to decline for a while. The Indian telecom sector has a sizable market and little competition, so there are prospects for long-term monetization even though the stock may stay range-bound in the medium term.

HIGHLIGHTS

  • For the past 12 quarters, Bharti Airtel’s earnings have grown moderately.
  • By March 2024, Bharti Airtel hopes to have 5G available throughout metropolitan regions, with a capital goal of INR 750 billion over the next three years.
  • Bharti Airtel’s stock may stay range-bound in the near future, according to MOFSL, which is how they arrived at their SOTP-based target price of Rs 950.

Bharti Airtel has been steadily increasing its entire cellular customer base for many months, and over the past 12 quarters, the telecom has also had respectable earnings growth. In all circles, Bharti Airtel has introduced Rs 155 entry-level rates. However, MOFSL anticipates a period of challenging profitability due to the low likelihood of further price increases and substantial capex required over the next 2-3 years for 5G rollouts, Network Expansion, and rural densification.

5G Rollouts and Rural Expansion

The telecom plans to build out 5G in all metropolitan areas by March 2024, while Bharti Airtel has guided for India Mobile spending of INR 750 billion over the following three years. As was the case previously with the 4G deployment and will be with 5G as a new technology upgrade cycle, MOFSL predicts in its analysis that the expenditure will surpass the target.

It is anticipated that as the 5G eco-system matures, the need for the deployment of new spectrum bands, Standalone 5G, and VO5G calling may need significant expenditures.

According to the research, Bharti’s projected operating cash flow and free cash flow totals of INR 1.4 trillion and Rs 700 billion over the next two years, along with proceeds from a rights issuance of around Rs 210 billion, might aid in the company’s debt reduction. The research predicts a decrease in gross and net debt in FY25.

Long-Term Growth Intact

The present market environment, in contrast to the 3G/4G investment cycles, is significantly better, and it is anticipated that Bharti Airtel would profit from VIL’s declining market share given that the business is unable to generate money to update its network. The Indian telecom sector, with a market size of INR 2.2 trillion, is only served by two major competitors, so there should be plenty of opportunity to profit in the long run.

Conclusion

The stock of Bharti Airtel may therefore stay range-bound in the near future, according to MOFSL, who also determined a SOTP-based target price of Rs 950. In a recent announcement, Bharti Airtel announced the arrival of 5G Plus services in Ladakh. Leh and Kargil districts now have access to lightning-fast Airtel 5G Plus services, which offer speeds up to 20–30 times faster than those of the present 4G network. In more than 500 places throughout India, Airtel 5G Plus is accessible.

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Written by Shallu Srivastav

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