Airtel to benefit from doubling of fixed line penetration in next few years: ICICI Securities

New Delhi: Bharti Airtel’s ‘home services’ revenue is expected to outperform as fixed broadband (FBB) penetration can more than double in the next few years, benefitting from the work from home culture, brokerage firm ICICI Securities said.

ICICI said Bharti Airtel is well positioned to benefit from the rise in FBB and expect the company’s ‘home services’ revenue / EBITDA to outperform in coming years.

“With 2.4 million FBB subscribers, Bharti Airtel (Bharti) has 12.6% FBB subscriber market share, and likely much higher revenue market share due to its premium ARPU,” ICICI Securities said in a report.

Bharti’s presence has increased to 111 cities currently from 87 in FY17. Its FBB subscriber base has grown at 7% CAGR over FY17-FY20 to 2.41 million, but ARPU has declined by 10.8% to Rs799 due to cheaper mobile data services and competition from Reliance Jio, it said.

“The evolving post-Covid situation also provides opportunity for Bharti to sell more converged services like FBB + DTH (though Airtel Xstream), which should help drive much higher customer wallet share. However, we are yet to see efforts from Bharti in selling more combo services,” it said.

India is an under-penetrated wired market for both telephony and broadband, with FBB penetration currently at 6.1%, the brokerage said.

“FBB subs have grown at a CAGR of 4% to 19 million vs mobile broadband subscriber growth of 53.9% to 606 million in the past six years. FBB penetration (% of households) is just 6.1% vs 80-95% for many developed countries,” it added.

ICICI cited cheaper mobile data rates with generous allocation of 45 GB in per month packs as a reason for low adoption of FBB. Cable TV/DTH being cheaper to OTT is also a factor, it said.

“FBB+OTT viewing is a premium service in India, which costs over Rs1,400 per month in contrast to