1. Improvement in industry structure and easing competitive intensity result in improved profitability and leverage.
  2. Airtel announced increase in tariff by ~28% within prepaid segment from the month of Dec, along with Vodafone-Idea and Jio. A 12-24% ARPU increase by FY21 will result in incremental revenues flowing through into EBITDA, resulting in significant improvement in profitability and leverage ratios.
  3. Post the price hikes and deferment of spectrum payment, the key issue concerning the sector currently is AGR liabilities where we expect some clarity through the legal route.

Valuation and view: With net debt to EBITDA estimated at 3.5x FY20, leverage is under control and a calibrated increase in tariffs over the next few years would help increase Bharti’s operating cash flows.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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