Bharti Airtel's margins likely to improve to 45% in 2021: Moody’s

MUMBAI: Indian telecom war may be long from being over. Bharti Airtel could their margins improve going ahead as consumers continue to spend more and increasingly more people move to the 4G network, Moody’s outlook research report said.

“Bharti Airtel Ltd’s (Ba1 stable) margins are likely to improve to about 45 per cent in 2021 from 40 per cent for the 12 months through September 2020, on the back of rising average revenue per user (ARPU) and a higher proportion of 4G subscribers,” the research report said. Bharti Airtel will deliver on the back of improving profitability in the Indian mobile sector the report added.

The report said that globally telecom operators would see a healthy revenue growth. In India tariff hikes will drive an increase in ARPU, which together with a rising 4G subscriber base will support revenue growth, it added.


India has seen a three way war between Bharti Airtel, Reliance Jio and Vodafone. While the country boasts to be the second largest telecom network globally, companies are struggling to maintain profitability. This also comes at a time when there is already a talk of India moving to fifth generation network.

Capital expenditure or Capex to revenue will decline marginally, driven by lower capital intensity in developed markets including India the report said. “Average capex/revenue in Asia Pacific region will fall to about 22 per cent in 2021 from 25 per cent in 2019, but continue to be higher than US and European telcos’ ratios of below 20 per cent. Emerging market telcos will spend around 30 per cent of revenue on capex in 2021 with investments primarily in infrastructure to enhancing existing networks and expand coverage and developed market telcos’ capex to revenue will fall to 14 per cent from 18 per cent in 2019, as they benefit from well-established networks; while most markets have launched 5G services, network rollout will be progressive, keeping capital intensity stable,” the Moody’s outlook report said.