Bharti Airtel Q1 Results: Loss Widens Due To AGR-Related Provisioning
Pedestrians walk past an advertisment for Bharti Airtel Ltd. in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Bharti Airtel Q1 Results: Loss Widens Due To AGR-Related Provisioning

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Bharti Airtel Ltd. reported its fifth straight quarterly loss as it made one-time provisions related to payment of statutory dues mandated by the Supreme Court of India.

The carrier’s net loss widened to Rs 15,933 crore in the quarter ended June from Rs 5,237 crore in the preceding three months, according to an exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the loss at Rs 138 crore.

  • Revenue rose 1% sequentially to Rs 23,938.7 crore—higher than the Rs 23,776-crore estimate. This is the highest revenue Airtel has reported in 31 quarters.
  • Operating profit rose 2% to Rs 10,408 crore.
  • Margin expanded to 43.5% from 43%.
  • Average revenue per user—the amount Airtel earns per subscriber per month—rose further to Rs 157 from Rs 154.

The Sunil Mittal-led telecom operator has made an incremental provision of Rs 10,744 crore due to a Supreme Court that said non-core revenue must be included while calculating statutory levies. The change in definition of adjusted gross revenue has increased liabilities of Bharti Airtel Ltd. and Vodafone Idea Ltd. to over Rs 90,000 crore. The matter continues to be heard in the top court with operators demanding to stagger out payments over several years.

Yet, the loss may not be a dampener for Bharti Airtel which saw average revenue per user improve to an almost three-year high despite disruptions from the nationwide lockdown. Operational metrics too hit an all-time high. That was despite near negligible earnings from roaming services, lower recharges from voice customers and slower 4G subscriber additions due to fall in smartphone sales.

“Data traffic growth surged by around 73% year-on-year even as 4G net additions slowed down to 2 million caused by supply chain shocks in the device ecosystem,” Managing Director and Chief Executive Officer Gopal Vittal was quoted as saying in a statement.

Still, revenue from its non-mobile segments and African unit helped offset some of the pandemic impact, according to Jefferies. The brokerage expects Airtel to gain further share in India’s telecom market and improve its cashflows. However, that will depend on how quickly the operator can turn around the Covid-19 impact on its ARPU and the timing of its next round of tariff hikes, it said.

Airtel has a daunting challenge ahead. It’s direct rival—Mukesh Ambani’s Reliance Jio Infocomm Ltd.—has raised over Rs 1.5 lakh crore from investors including Silicon Valley giants Facebook Inc. and Google. Besides making the Jio’s parent Reliance Industries Ltd. debt-free, the deal spree also puts Ambani in a strong position to upend online retail, content streaming, digital payments, education and health care.

Sunil Mittal, on the other hand, has continued to see his operator’s net debt increase even after raising as much as $8 billion.

Yet, Airtel is preparing to not give away any ground. The company is collaborating with original equipment manufacturers and application developers and conceptualising 5G trials, it said in its annual report. The proposed investments in the current networks will lay a strong foundation for 5G services in the near future, it said.

Other Highlights

  • Overall customer base stood at 420 million worldwide.
  • Total capital expenditure for the quarter stood at Rs 3,975 crore.
  • Total 4G subscribers stood at 138.3 million at the end of the quarter.

Shares of Bharti Airtel closed 0.3% higher, ahead of the results, while the benchmark BSE Sensex fell 1.1%.

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