Bharti's tariff hikes in India could be boon for Singtel

This is expected to counter the telco’s weakening performance of its Singapore and Australia operations.

Bharti Airtel will impose tariff hikes, which is expected to boost Singtel’s FY2021 earnings by 3% or $82m, according to a DBS note. This follows after Bharti’s announcement of raising tariffs by 10% from December to sustain their businesses.

The report also noted that mobile revenue is also likely to rise 5%. Assuming 80% of additional revenue flow to EBITDA, Bharti’s EBITDA could rise by $310m (INR16.3b) or 4% whilst net profit could increase by $230m (INR12.2b).

“We think a 10-20% tariff hike is quite possible in India, given ~30% discount ot Indonesia’s ARPU despite much higher data-usage in India. Our Indian partner Emkay Global expects ~21% revision in mobile tariffs over the next 12-15 months,” said Sachin Mittal, an analyst at DBS Group Research.

In addition, Mittal noted that the effects from the tariff hike will counter the weakness seen in Singapore and Australia. Unlike its operations in these two nations, no further earnings cuts are to be expected in India as average revenue per user (ARPU) is said to have ample room to rise after having declined 30% in total over the last three years.

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