Bharti Infratel Q3 Results: Profit Falls The Most In 12 Quarters On Higher Tax Rate

Bharti Infratel Ltd.’s profit fell the most in 12 quarters in the three months ended December on higher taxes.

Net profit fell 17.14 percent sequentially to Rs 798.7 crore in the October-December period, the tower arm of Bharti Airtel Ltd. said in an exchange filing. A consensus of analysts estimate compiled by BloombergQuint had pegged the profit at Rs 791 crore.

The company’s tax rate stood at 25.3 percent in the third quarter compared with 7.6 percent in the preceding three months.

Its revenue remained flat at Rs 3,673.3 crore, against an estimate of Rs 3,646 crore.

Bharti Infratel’s operating profit, or earnings before interest, tax, depreciation and amortisation rose to Rs 1,883.1 crore from Rs 1,878 crore in the preceding quarter. That’s against the Rs 1,899-crore estimated. Margin contracted to 51.26 percent from 51.6 in the quarter ended September.

The company reported an exit charge—or income the company earns from mobile operators who stop using towers before end of contract—of Rs 105.3 crore in the quarter, higher than the Rs 90 crore it had guided for.

Bharti Infratel’s tower rentals rose 2 percent sequentially to Rs 42,987 per operator per month in the period. That comes after rentals fell for the first time in 18 months in the quarter ended September.

The exit of the tower operator’s two key tenants—Vodafone India Ltd. and Idea Cellular Ltd.—after their merger weighed on its financials. The full impact of tenancy cancellation is yet to come, Bharti Infratel said, as 2,798 tenants have served exit notices but continue to remain on its network.

Last Month, Bharti Infratel’s merger with unlisted Indus Towers Ltd. to create the largest tower company outside China was deferred as it hasn’t received government approval. The company is awaiting the Department of Telecommunications’ nod for enhancement of foreign direct investment limit. Hence, the board has extended the long stop date till Feb. 24, 2020, the company had said in an exchange filing.

Other Highlights (QoQ):

• Other expenses rose three times to Rs 117.7 crore over the previous quarter.
• 744 tenancies were added in the third quarter.
• Tenancy ratio remained stable at 1.85 times versus 1.86 times.

Shares of the company fell 0.12 percent ahead of the earnings announcement compared with the NSE Nifty 50 Index’s 0.39 percent gain.