The price hikes taken in December 2019 and a healthy 4G subscriber adds improved Arpu, which in turn led to an increase in Ebitda. However, capex doubled q-o-q to Rs 11,300 crore, which resulted in operating FCF turning negative. Further, the QIP amount was utilised to partly pay AGR liabilities. We largely maintain our FY21E consolidated Ebitda estimates building Arpu increase of 8% on a favourable 4G subscriber mix. We increase our FY22E Ebitda by 5% with higher Arpu increase of 14%, after building in some tariff increase.

Consolidated revenue/Ebitda on post Ind-AS 116 basis was up 8%/10% q-o-q (inline) to Rs 23,720 crore/Rs 10,200 crore due to strong Arpu growth in the India wireless business. Ebitda margin expanded 80 bps to 43%. Reported net loss stood at Rs 5,240 crore due to higher interest cost (up 11% q-o-q) and an exceptional charge.

India wireless revenue grew 16% q-o-q (5% beat). Ebitda rose 27% q-o-q with incremental Ebitda margin of 60%. Arpu jumped 14% q-o-q to Rs 154 (v/s est. Rs 147).

Over the last 2 quarters, cumulative Arpu rose 20%. Bharti’s Arpu growth was better than RJio’s 2% Arpu. Subscriber adds were flat q-o-q at 284 million, but 4G subs grew 10% q-o-q to 136 million, thus leading the estimated incremental 4G market share.

Bharti has delivered strong execution in the last 2 quarters, with industry leading revenue growth, Arpu rise and 4G subscriber adds. It also has a healthy network capacity v/s its peers. Further, it is well-placed to drive additional Arpu growth and market share gains. However, given the current economic woes and market conditions, the next round of price increase could go beyond 6-9 months. We assign EV/Ebitda of 12x to the India wireless business and 6x to the Africa business on FY22E to arrive at a TP (SOTP) of Rs 710 (prior: Rs 620). Maintain ‘buy’.