Bharti Airtel hits 52-week low; stock falls 35% in thus far 2018

Bharti Airtel hit 52-week low of Rs 345, down 4%, trading at its lowest level since May 10, 2017 on the BSE.

Shares of Bharti Airtel hit 52-week low of Rs 345, down 4% on the BSE, on concerns of weak earnings for the quarter ended June 2018 (Q1FY19).

The stock of telecom services provider was trading at its lowest level since May 10, 2017. Thus far in the calendar year 2018, Bharti Airtel underperforming the market by falling 35% as compared to 7.3% rise in the S&P BSE Sensex.

Bharti Airtel is likely to report its first quarter of net loss of Rs 1.1 billion in Q1FY19, with a continued decline in EBITDA (-4% QoQ), according to analyst.

“We expect Bharti’s India wireless revenue to remain flat QoQ (-20% YoY) at Rs 103.7 billion, as the impact from ARPU downtrading would largely be offset by the synergies (around Rs 0.2 billion) from Telenor. Bharti’s consolidated revenue is expected to grow 2% QoQ (-8% YoY) to Rs 201.2 billion, led by decent 2-3% QoQ growth in the Africa, passive infrastructure and enterprise segments,” Motilal Oswal Securities said in June 2018 results preview.

Bharti Airtel once again leads the pack of possible bottom five companies in terms of PAT de-growth, mainly attributable to price erosion and interconnect usage charge cut on a YoY basis.

“The downgrading to bundled offer is likely to impact Bharti's ARPU again in Q1FY19, albeit at a moderate pace. However, consolidation of Telenor customers (who have ARPU of around Rs 50/month) is likely to be the key dilutive factor in bringing about 8% QoQ decline in monthly ARPU to Rs 106. Given the higher network operating costs and access charges (driven by bundled offer adoption) and muted topline, we expect around 340 bps sequential decline in India EBITDA margins at 32%,” ICICI Securities said in result preview.

Analysts at Elara Capital expects Bharti Airtel’s ARPU to remain under pressure in Q1FY19, with downtrading by high ARPU subscribers not being fully offset by uptrading by low ARPU subscribers to gain unlimited calling, Reliance Jio’s Rs 49 per 28 days plan for the Jio phone attracting some higher ARPU 2G subscribers of incumbents, and the full-quarter impact of the cut in international termination rates effective 1 February 2018.