Q1 Results: Bharti Infratel’s Tower Tenancies Rise After Seven Quarters
Bharti Infratel’s profit and Ebitda rose due to one-off adjustments and change in accounting standard.
Bharti Infratel Ltd. reported a surprise growth in quarterly revenue, aided by an increase in the number of tenants on its towers.
Revenue of the telecom tower arm of Bharti Airtel Ltd. rose 3.1 percent sequentially to Rs 3,711 crore in the quarter ended June, according to its exchange filing. Analyst estimates compiled by BloombergQuint had expected Rs 3,577 crore, a 0.6 percent decline over the previous three-month period.
Key Highlights
- Net profit rose 45.8 percent sequentially to Rs 887 crore.
- Operating profit increased 27 percent to Rs 1,895.2 crore.
- Operating margin increased 10 percentage points to 51 percent.
- Rise in profit and Ebitda was due to one-off adjustments and a change in accounting standards.
- Tax credits worth Rs 175.3 crore also aided profit.
Telecom sector consolidation due to the price war triggered by Mukesh Ambani-led Reliance Jio Infocomm Ltd. has reduced the number of operators. Besides, the exit of Bharti Infratel’s two key tenants—Vodafone India Ltd. and Idea Cellular Ltd.—after their merger has been weighing on the tower operator’s financials. The company had earlier said it expected a monthly loss of Rs 60 crore due to the exits.
The number of telecom operators per tower, or the tenancy ratio, declined further to 1.87 times. The ratio fell below 2 times for the first time since 2014-15.
Still, Bharti Infratel added 355 towers to its network during the June quarter. Its total co-locations—towers that a company shares with multiple carriers—reduced by 593 to 1.73 lakh. As on June 30, the company said there are 3,566 co-locations for which exit notices have been received but actual exit is pending.
We are pleased to note that after negative trend in net co-locations for the last six consecutive quarters due to consolidation in the telecom industry, we had net additions in co-locations this quarter.Akhil Gupta, Chairman, Bharti Infratel
“We hope and believe that this trend would continue as the operators post consolidation and raising of significant capital recently will now focus on fresh rollouts of networks to increase both coverage and capacity which is the need of the hour.” Gupta said in a media statement.
The company has planned a merger with Indus Towers Ltd. to create a mega tower company. It has already received approvals from the Securities Exchange Board of India, the two stock exchanges, shareholders, lenders and the National Company Law Tribunal. It’s awaiting an approval from the Department of Telecommunications.
The consolidated entity will have an estimated 1.63 lakh towers in 22 telecom service areas in the country.
Other Highlights
- Tower rentals rose 7 percent to Rs 42,591 per operator per month versus Rs 39,685 quater-on-quarter.
- Due to lower energy cost, spreads increased to 5.4 percent from 3.2 percent year-on-year.
- Finance cost of Rs 112.5 crore versus Rs 24 crore
- Company did not receive any exit charges during the quarter compared with Rs 99.7 crore in the previous quarter.