Stock Analysis: Is Bharti Airtel a good buy?

Published: December 8, 2020 at 10:00 am

One sector and market that has always attracted the attention of both investors and customers is the Telecom market, and rightly so the market has gone from a transformation in the past 2 decades in terms of technology, customer reach, telecom service providers, services and whatnot.

The question that investors often ask is whether there is any juice left in the Indian telecom space and if it is still worth owning a telecom stock after an exit of even global telecom behemoths from the Indian telecom market.

About the author:  Ravi Kumar has a degree in Computer Engineering. He is interested in Behavioural Finance, Stock market, reading Indian History and Mythology. Disclaimer: No part of this article should be construed as investment advice. Also by the same author: (1) Is Tata Motors share a good buy? (2) Is IDFC First Bank share worth buying? (3) ITC Dividend Analysis (4) Should you sell ITC and book losses? (5) Stock analysis: Are Tata Consumer Products share worth a buy?

Before we could answer the question, we need to dig into data to analyze the situation. Let’s take a look at the Indian telecom market first. This is how the Indian telecom market has evolved over the past decade.

Indian telecom market share 2013, 2016 and 2020
Indian telecom market share 2013, 2016 and 2020. Source:

Key Observations:

  • The market has not only seen the exit of some of the leading business houses like Tatas but also has seen consolidation into the hands of a few key players.

Notice the impact of fierce competition on the leading global players in the Indian Telecom market.

  • Telenor Group
  • Tata Docomo
  • Once eyed as the most lucrative growth market in the world has now turned sour for even the big business houses which had to either shut the shop or surrender licenses, which of course came at a huge price itself. [Reason: Upfront Spectrum costs for 10-15 years to paid through cut-throat competitive auctions even before the cash starts flowing in]
  • The consolidation of the telecom market happened at the time when the number of subscribers kept growing consistently, which itself is a case study for management students.
  • The catalyst of this consolidation was the entry of newest player into the ‘game,’ i.e. Reliance Jio which offered 4G data rates at one of the cheapest price bands in the world and completely changed the way data was consumed by the subscribers.
  • Vodafone and Idea chose to merge the business and balance sheets to save the backend/infrastructure costs and to become more efficient by cross-utilization of the spectrum.
  • PSU companies [BSNL & MTNL] could not survive the onslaught as well and chose to merge the business to efficiently utilize the priciest part of the story, i.e. Spectrum.
  • Fast-forwarding to FY21: if you are a telecom service user, then you are saved with the effort to choose from a variety of service providers.
  • Investors are left with even fewer choices:
    • Bharti Airtel [the only surviving company which started operations in 1996]
    • VodafoneIdea [Merged entity after Vodafone acquired Hutchison Telecom’s 67% stake in Hutchison-Essar]
    • Jio [Company owned by Conglomerate Reliance Industries Ltd]
    • BSNL [Stated owned Telecom company]
      • Unlisted

Bharti Airtel: Financial Performance

Moving on: let us analyze the company in focus, i.e. Bharti Airtel Ltd: The company is engaged in the following businesses:

  • Mobile Services
  • Digital TV
  • Tower Infrastructure
  • Airtel Business
  • Home
  • Payments Bank

Digital Assets: Airtel Xstream, Wynk Music

Bharti Airtel Revenue Comparison FY 13 vs. FY 21
Bharti Airtel Revenue Comparison FY 13 vs FY 21. Source:
Bharti Airtel EBIDTA Comparison FY 13 vs. FY 21
Bharti Airtel EBIDTA Comparison FY 13 vs. FY 21. Source:

Key observations:

  • The company has been able to fairly diversify the revenue and income streams by entering newer geographies as well as new business segments.
  • African business of the company now commands a 25.7% share in the EBIDTA, and this business segment has been a turnaround story for the company from being a loss-making entity into growth and profit-making market.
  • Company’s EBIDTA has also diversified into several new business segments, and all the investments made by the company, e.g. Airtel Business, Tower Infra have started contributing positively into the balance sheet.
  • The South Asia business of the company which was earlier reported jointly with Indian operations has grown, and the company has started capturing significant market share in 2 geographies of Bangladesh and Sri Lanka, thus making the company a seamless telecom service provider in South Asia.
Bharti Airtel Financial Performance FY17 to FY 20
Bharti Airtel Financial Performance FY17 to FY 20. Source:

Key Observations:

  • The company has been showing consistency in growth in revenue terms as well as EBIDTA terms over the past years.
  • EBDITA margins have been showing growth as well, which is a healthy sign originating from the fact that the company has been able to improve efficiency and contain costs.
  • Margins of the company are higher than margins currently shown by its peers; the main reason behind this factor is the grip of the company in the corporate segment.
  • The corporate segment comprises of the premium [Postpaid and Value-Added Services] customers who provide higher margins [Profits] without added costs vis a vis its prepaid customers.
Bharti Airtel Gross Revenue Growth Drivers
Bharti Airtel Gross Revenue Growth Drivers. Source www.

Key Observations:

  • Revenue contribution from the Voice segment has been consistently eaten away by the growth of the data segment.
  • Management is looking forward to shutting down the 3G network segment completely and moving the customer base from the 3G network to the 4G network.
  • Due to the significant presence of the 2G network segment [wider reach] than the 4G network, it would still take time before the voice segment revenue mix is moved to the data segment.

ARPU Trend [Average Revenue per User]
ARPU Trend [Average Revenue per User]. Source MOFSL
Key Observations:

  • The ARPU has been stabilising over the past few years and the days of consistent decline in ARPU due to ongoing price war triggered by new entrant Jio appears to be the thing of the past.
  • Company has taken a conscious call to raise the price tags of the various data packs and plans over the past quarters, which has led to the growth of ARPU.
  • ARPU rose to ₹162 in the September quarter, from ₹128 a year ago, and ₹157 in the June quarter, the company is keen to take it beyond 200 levels.
  • The ongoing WFH [Work from Home] situation in metropolitan areas has significantly boosted demand for faster data plans, thus improving margins and profitability for the telecom companies.
Bharti Airtel Net Debt
Bharti Airtel Net Debt. Source:

Key Observations:

What lies ahead for investors

Looking Ahead

Telecom is a high entry barrier business.


  • High Spectrum charges and upfront costs to acquire licenses.
  • National Presence with wider reach is a preferred choice for customers.
  • Strong backbone infrastructure to sustain traffic and reduce costs.
  • Companies with End-to-End service offering are only poised to make profits.
  • The Indian telecom market is slowly turning to become a duopoly market where few key players drive the prices of the services offered.
  • The big business houses of the country have already left the telecom market or shut their shop. They are unlikely to try their luck at any given point in time soon, which makes the survival of the current operators easier.
  • The company faces challenges from the entry of the Jio and its platform business, mainly due to the price wars triggered by the competition.
  • Despite the challenges faced on the financial front, overall debt and high costs in spectrum auctions, the company has been able to maintain profitability over the past years.
  • The ARPU growth trend is a healthy sign from a profitability perspective signalling the fact that days of offering cheaper rates to remain in business are over.
  • Reduced mobility of the customers improves the viability of the telecom business as companies [Customers] are willing to spend on telecom infra to have an online presence.
  • Reduction in the overall debt of the company is a positive sign for the investors.
  • The stock of the company trades at 2.5 Lakh Crore valuations which is significantly lower than the nearest competitor Jio. Source: Jio Platforms valuation to jump to $110 bn by FY22, propelled by sharp mobile ARPU growth: BofA Securities

In summary,  Investors looking to make an entry into the telecom market of the country can have a look at the stock of the Bharti Airtel Ltd which offers a better value proposition compared to its listed peers. The company offers lower debt on the balance sheet as compared to its peers. Also, it has diversified its revenue and profit streams by investing in other related businesses and expanded across geographies.

Existing investors of Bharti Airtel Ltd stock can expect the stock to reward shareholders in tune with the growth in the telecom market as well as the earnings growth of the market leaders.

The company is one of few survivors of the fierce battle played out between the telecom players in the Indian Telecom market. The company has not only reaped the benefits of the growth of the telecom market but also is a partner to the development of the market as its one of the pioneers in the industry to bring the culture of the mobile telephony to the end consumer.

Do share if you found this useful

Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 700 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 2600 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 600 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored three print books, You can be rich too with goal-based investing (CNBC TV18), Gamechanger, Chinchu Gets a Superpower! and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps