Q2 Results: Bharti Infratel Profit Beats Estimates Even As Tower Rentals Fall First Time In Six Quarters
Higher exit charges and lower other expenses helped the tower operator deliver a surprise to analysts.
Bharti Infratel Ltd.’s profit beat analyst estimates in the quarter ended September even as its tower rentals fell for the first time in 18 months.
Net profit rose 8.6 percent sequentially to Rs 964 crore, according to its stock exchange filing. Analyst estimates compiled by BloombergQuint had pegged profit at Rs 753 crore.
- Revenue fell 2 percent quarter-on-quarter to Rs 3,638 crore. It was the biggest drop in top line since its listing.
- Operating profit fell 1 percent to Rs 1,878 crore.
- Operating margin expanded 50 basis points to 51.6 percent.
- Tenancy ratio or the number of tenants per tower, remained largely flat at 1.86.
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 full impact of tenancy cancellation is yet to come as 3,750 tenants have served exit notice but continue to remain on the network, the company said.
Bharti Infratel earned lower rent from its towers during the quarter. Tower rental fell 1 percent per operator per tower to Rs 42,160 a month—the first drop in last six quarters. Energy spreads—the difference between the firm’s energy income and costs—also became negative for the first time in almost eight years.
Profit was partly aided by the higher exit charges and lower other expenses for the tower operator during the quarter. Other expenses fell as the company recovered its bad debt during the quarter. In the prior quarters, the bad debt was booked as an expense which now has been reversed.
Other Highlights
- Other expenses down 66 percent to Rs 40 crore from Rs 117 crore.
- During second quarter, 159 tenancies were added on a net basis.
- Bharti Infratel recieved Rs 101 crore as exit charges compared with Rs 83 crore in the preceding three months.