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On Wednesday, Citi reaffirmed its Buy rating on Bharti Airtel (NSE:BRTI) Ltd, maintaining its price target of INR1,920.00. The telecom giant has recently announced a new agreement with SpaceX to provide Starlink’s satellite communication services to its customers in India. This collaboration is contingent on Starlink receiving the necessary regulatory approvals to operate within the country.
The financial specifics of the deal, including how much Starlink’s services will cost, remain undisclosed. However, the price is expected to be significantly higher than that of terrestrial services. Citi analysts see three major positive outcomes for Bharti Airtel stemming from this partnership. The deal with SpaceX’s Starlink is in addition to Bharti Airtel’s existing partnership with Eutelsat Oneweb, indicating a strategic move to expand its offerings in satellite communications.
Bharti Airtel’s venture into satellite services through agreements with SpaceX and Eutelsat Oneweb could potentially enhance its market position by offering diversified communication solutions. The company’s foray into satellite communication represents a forward-thinking approach to meet the evolving demands of connectivity in India.
The endorsement from Citi comes as Bharti Airtel seeks to broaden its services portfolio, which may appeal to a wider customer base, especially in remote areas where traditional terrestrial networks are not feasible. The arrangement could also pave the way for Bharti Airtel to establish a foothold in the nascent satellite internet market in India.
Investors and industry watchers will be keeping a close eye on the progress of Bharti Airtel’s satellite communications initiatives, as well as the company’s ability to secure the necessary regulatory approvals to bring Starlink’s services to its customers. The successful implementation of this agreement could potentially lead to new growth avenues for Bharti Airtel.
In other recent news, Bharti Airtel Ltd reported strong quarterly earnings, showing significant subscriber growth and financial performance. The company saw a 5% quarter-over-quarter increase in Average Revenue Per User (ARPU) to INR 245, which surpassed competitor Jio’s 4% growth. Bharti Airtel’s mobile revenue increased by 5.8% quarter-over-quarter, with EBITDA margins expanding by 170 basis points to 58.8%. The wireless subscriber base grew to 356.6 million, adding 4.9 million subscribers compared to the previous quarter. Capital expenditures in India were notably reduced by 22% year-over-year to INR 79.8 billion, leading to a 21.6% quarter-over-quarter and 126% year-over-year growth in operating free cash flow. Bernstein analysts maintained an Outperform rating for Bharti Airtel, with a price target of INR1,770, highlighting the company’s strong ARPU growth and moderated capital expenditures. The analysts expect the positive free cash flow cycle and potential for rising dividends to be key catalysts for the company.
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