Motorist drive past a Bharti Airtel Ltd. store in Mumbai (Photographer: Dhiraj Singh/Bloomberg)

Bharti Airtel’s Profit Declines 73% In March Quarter

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Bharti Airtel Ltd. posted a surprise profit led by improvement in its Africa business and a deferred tax credit of Rs 464 crore.

Net profit of the country’s largest wireless carrier, however, fell 73 percent over the previous three months to Rs 83 crore in the quarter ended March, Bharti Airtel said in its stock exchange notification. That compares with a net loss of Rs 25 crore that analysts polled by BloombergQuint had forecast.

The Sunil Mittal-led company’s revenue fell 3.4 percent on a sequential basis to Rs 19,634 crore during the three months ended March. This is in line with the estimated Rs 19,837 crore. The average revenue per user fell for the seventh consecutive quarter to an all-time low of Rs 116 versus Rs 123 in the three months ended December.

Bharti Airtel’s profit from the Africa business touched an all-time high of Rs 699 crore, while its India business reported a loss of Rs 652 crore for the first time in 15 years. That’s largely on account of the tariff war triggered by Mukesh Ambani-led Reliance Jio Infocomm Ltd.’s entry into an already stressed telecom sector. The country’s newest wireless carrier offered free services upon its entry in the space, and then introduced cheaper monthly tariff plans, forcing rivals to reduce their rates.

“The telecom industry continues to witness below cost, artificially suppressed pricing. Industry revenues were further adversely impacted this quarter due to the reduction in International termination rates,” Gopal Vittal, managing director and chief executive officer - India and South Asia at Bharti Airtel said in a separate press statement.

  • Earnings before interest, tax, depreciation and amortisation fell 7.2 percent on a quarterly basis to Rs 6,930 crore
  • Operating margin contracted to 35.3 percent during the period.
  • The operator’s leverage, which is the net debt to Ebitda ratio, is at an all-time high of 3.23.

The company’s net debt has increased to Rs 95,228 crore for the quarter while the capital expansion stands at at an elevated level of Rs 6,282 crore. According to Ravi Menon, a research analyst with Elara Capital, Airtel “should continue investing to keep the network upgraded as that’s the only way to retain market share over time”.

If they let their network quality deteriorate versus Jio, we definitely then see them losing the top operator position.
Ravi Menon, Analyst, Elara Capital

Shares of Bharti Airtel closed 0.8 percent higher to Rs 406 apiece ahead of the earnings announcement. The stock declined 24.7 percent during January-March period, compared to 21 percent decline in S&P BSE Telecom Index.

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