Bharti Airtel Ltd’s qualified institutional placement (QIP) and FCCB (foreign currency convertible bond) issue have reportedly received high demand from investors. The firm was looking to raise up to $3 billion through the two issuances.
One of the reasons for the reported success of the issue could be the sharp increase in subscriber additions and voice traffic in the December quarter. The company released certain operating metrics for Q3 while announcing the launch of the fundraise.
Total voice volumes on the Airtel network grew 5.9% sequentially last quarter. In the September quarter, they had dropped 2.8%.
The growth came even as market leader Reliance Jio Infocomm Ltd began charging an additional amount to recover mobile termination charges levied on outgoing calls to rival networks.
“Jio’s decision to charge for outgoing voice calls has likely resulted in the 4G net adds acceleration for Bharti. This should reflect in improved net additions for Vodafone Idea Ltd as well, even as the extent of acceleration may be lower than Bharti Airtel,” said analysts at Kotak Institutional Equities in a note to clients.
Of course, investors were also relieved following the truce on tariffs between the telcos. All telcos had raised tariffs in December, while Jio had levied an additional amount for outgoing calls to rival networks in October.
The limited set of operating metrics released by Bharti Airtel looked fairly strong and seemed to suggest that the recent price hikes have largely been absorbed well, added Kotak’s analysts.
Of course, with all telcos raising tariffs in December, and Reliance Jio’s tariffs now priced meaningfully lower than its competitors, the advantage Bharti Airtel had in Q3 may have been a temporary one.
Indeed, an analysis of the Telecom Regulatory Authority of India’s October subscriber data by Motilal Oswal Financial Services Ltd had indicated no slowdown in mobile broadband subscriber additions at Reliance Jio, even as the pace of additions improved at Bharti Airtel and Vodafone Idea.
Bharti Airtel’s total data subscribers expanded 11%, sequentially, the best growth in recent quarters. Higher-value 4G data subscribers rose 20%. Growth in the earlier three quarters stood in the range of 8-12%. “LTE data subs base, end of the period, of 124 million, implying a just under +21 million net additions QoQ, the strongest print in many quarters. This print is meaningfully ahead of our expectations,” said analysts at Kotak.
The trends show Bharti Airtel is withstanding the market changes relatively well. After the recent tariff hikes, consumers are expected to rationalize spends on telecom services. But data subscriber additions trends till December indicated a rather smooth transition of the price hikes, though the full impact of the price hikes will be known only this year.