Bharti Infratel Q4 Results: Profit Misses Estimates On Higher Other Expenses, Delayed Payments

Bharti Infratel Ltd.’s quarterly profit missed estimates on the back of higher other expenses due to non-payments by telecom operators.

Net profit of Sunil Mittal’s telecom infrastructure arm fell 18.7 percent sequentially to Rs 649.5 crore in the quarter ended March, according to its stock exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the profit at Rs 791 crore.

The company’s operating income or Ebitda declined by nearly 10 percent over the previous quarter to Rs 1,699 crore—the biggest sequential drop since its listing.

That came as the Bharti Infratel’s other expenses rose nearly 2.5 times sequentially to Rs 289 crore. That, a company executive told BloombergQuint on the condition of anonymity, was led by provisioning for bad debts triggered by non-payment by telecom firms, in line with company policy.

The company, however, didn’t specify the amount for provisioning as delayed payments were from telecom firms that are operational. The delays and missed payments were on account of the adjusted gross revenue dispute or novel coronavirus outbreak related disruptions, the official said.

Bharti Infratel said it doesn’t perceive this as a concern as it expects the payments to be eventually made, adding it will wait for a couple of months before considering them as defaults.

The telecom infrastructure firm had made similar provisions for bad debts in the previous quarters, but that was for operators that had exited the industry.

The tower arm of Bharti Airtel Ltd. has seen a staggered impact on its financials from the exit of its two key tenants—Vodafone India Ltd. and Idea Cellular Ltd.—after their merger. Still, some of the hit was partially offset by exit penalties from tenancy cancellations, other income, more savings from lower diesel prices and lower finance costs.

• Other income rose 1.7 times to Rs 57.6 crore.
• Finance cost fell nearly 10 percent to Rs 125 crore.
• Energy spreads at 5.9 percent vs 1.64 percent.
• Reported exit charges of Rs 107.3 crore vs Rs 105.3 crore.

Exit charges is the income the company earns from operators who stop using its towers before the end of contract. Energy spread is the difference between the energy income and energy cost that the company earns.

The company said in a statement that the telecom industry is among those businesses that are least impacted due to Covid-19 and it sees no significant impact on its financial position and performance. It, however, remained concerned on the negative outcome of the AGR case, as its top two customers—Bharti Airtel Ltd. and Vodafone Idea Ltd.—are the worst hit.

Separately, at a board meeting, the company once again extended the deadline for its merger with unlisted Indus Towers Ltd. to create the largest tower company outside China to June 24 from April 24, despite receiving all approvals.

The initial deadline for the merger was October 2019, which was then extended to December and then again to February 2020. Despite receiving the final approval from the Department of Telecommunications on Feb. 21, the tower company extended the deadline to April 24.

On Thurday, Bharti Infratel shares fell 0.81 percent to Rs 166.20 apiece on the National Stock Exchange while the benchmark Nifty 50 rose 1.38 percent to end the day at 9,313.90 points. The quarterly results were declared after market hours.