Bharti Airtel surges after announcing tariff rate hike

The revised tariffs shall enable the company to provide a reasonable return on capital, and enable it to procure investments required in networks and spectrum.

Bharti Airtel Ltd, an Indian multinational telecom service provider, announced a revision in its prepaid tariffs today. The revised tariffs, which shall come into effect from 26 November, would provide customers with additional benefits, albeit with a price increase.

While providing an explanation for this increase, the company said that it has always maintained its stance that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300. The reason is that at this ARPU, the company can generate a reasonable return on capital, and subsequently lead to a financially healthy business model.

Moreover, the company believes that this level of ARPU will enable the substantial investments required in networks and spectrum. Most importantly, it will provide the company with the elbow room to roll out 5G in India.

Earlier this month, the company had announced a collaboration with Oracle to cater to the rising demand for cloud services in India. As a part of this collaboration, Airtel announced to offer Oracle Cloud solution to its customers.

Let’s take a look at the company’s performance in Q2FY22:

In the recent quarter Q2FY22, on a consolidated basis, Bharti Airtel’s net revenue went up by 13% YoY to Rs 28,326.4 crore. The PBIDT (ex OI) grew 24.76% YoY to Rs 13,810.5 crore, while its corresponding margin expanded by 458 bps to 48.75%. The net profit came in at Rs 1399.3 crore, as against a net loss of Rs 367.6 crore in the corresponding quarter last year. The PAT margin during the quarter stood at 4.94%. 

Reacting to the revised tariffs announcement, at 1.16 pm, the share price of Bharti Airtel Ltd stood at Rs 735.65, which was an increase of 3% from the previous week’s closing price of Rs 714.2 on BSE.