Bharti Airtel’s Q1 Profit Beats Estimates As Reliance Jio Ends Free Services 

Bharti Airtel Ltd.’s earnings beat estimates as Reliance Jio Infocomm Ltd. began charging its users after six months of free services, easing pressure on its rivals.

Net profit of India’s largest telecom operator fell 1.6 percent to Rs 367 crore in April-June over the previous three months, it said in an exchange filing. That’s the fourth straight quarterly decline but surpassed the Rs 317 crore consensus estimate of analysts tracked by Bloomberg.

Revenue remained largely unchanged at Rs 21,958 crore, after falling for three straight quarters. Analysts had expected Rs 21,927 crore.

Reliance Jio had triggered a tariff war by offering free services as part of an inaugural offer in September last year. The company began charging subscribers in April, offering some respite to its older rivals. The Mukesh Ambani-led operator still offers plans cheaper than rivals.

That hurt the operating performance at Bharti Airtel in the quarter ended June. Earnings before interest, tax, depreciation, and amortisation fell 1.3 percent to Rs 7,758 crore, while EBITDA margin contracted 50 basis points to 35.3 percent.

Revenue Per User Falls

The blended average revenue per user in India fell 2.5 percent to Rs 154. Though the lowest so far, it is ahead of the estimates of Rs 152. The data average revenue per user declined 4 percent to Rs 156, while data usage per customer almost doubled to 2,611 megabytes.

Bharti Airtel’s average realisations declined – down 51 percent to 5.97 paise per megabyte for data and fell 10 percent to 21.98 paise per minute for voice over the previous quarter.

It added close to 7 million customers in the first quarter, taking its total user base to 280.6 million as on June 30. Amid rising competition, the telecom operator’s churn ratio marginally increased to 3.8 percent from 3.6 percent in the previous quarter.

Consolidated net debt stood around Rs 87,840 crore, down 4 percent from the March-ended quarter as its interest costs fell 5 percent to Rs 1,827 crore. The company’s capital expenditure almost doubled to Rs 6,586 crore.

Ahead of its earnings announcement, Bharti Airtel’s shares closed 2 percent higher at Rs 428 compared to an unchanged benchmark NSE Nifty 50 Index.

19 of the 34 analysts who track the stock have a ‘Buy’ rating, according to data by Bloomberg. The consensus 12-month target price stands at Rs 388.5 apiece, 9.2 percent lower than the current market price.