Rural expansion and 5G deployment underway Airtel is in the process of strengthening its network with rural expansion and the rollout of 5G services. In 4QFY23, Airtel had the highest quarterly tower additions in its history. This led to double-digit 4G and post-paid subscriber growth y-y and lower churn.
However, the translation into revenue growth was limited in 4Q due to stable tariffs and fewer days q-q. Despite higher capex, capex / sales was well below the recent peak as the revenue pie has expanded significantly.
While it remains uncertain whether the next tariff hike will be in FY24 or after the elections in FY25, we expect Airtel to report strong India Mobile EBITDA CAGR of 15 per cent over FY23-25 along with a decline in capex as the rural expansion and initial 5G deployment will be behind.
We lower our FY24/25 India Mobile revenue by 4 per cent/3 per cent and EBITDA by 3 per cent/2 per cent amid a delay in hiking tariffs. We also build in higher interest and amortization costs on elevated capex, resulting in sharper EPS estimate cuts.