Data grows fourfold for Airtel but revenues continue to fall

01 November, 2017, 01:06 | Author: Carmen Reese
  • Bharti Infratel Ltd reported a 17 per cent drop in second-quarter profit missing analysts’ estimate as higher expenses weighed

"The financial stress in the industry continues due to double digit revenue decline and will be further accentuated by the reduction in IUC rates in the next quarter", said Gopal Vittal, MD and CEO, India & South Asia. The revenue during July-September quarter jumped almost 11% to Rs3,648 crore from Rs3,292 crore in the year- ago period, according to a company statement. However, consolidated mobile data traffic came in at 853 million MBs for the quarter, up 293.8 percent on year-on-year basis.

The company said it had "stepped up" the capex investments in the quarter on the back of data coverage and capacity.

Airtel's total revenue fell 11.7 percent to Rs 21,777 crore during the second quarter of 2017-18, from Rs 24,651.50 crore in the year-ago period. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 17.4 percent to Rs 7,922 crore, while EBITDA margin contracted to 36.4 percent from 30.72 percent in the previous quarter, the company said.

India revenues for September quarter at Rs 16,728 crore declined 13 per cent year-on-year, caused primarily by mobile revenue drop of 16.8 per cent.

The company - which has 282 million wireless subscribers - admitted that the mobile market continues to experience "value erosion and financial stress led by competitive pressures". Recurring PAT of Rs3.43 bn (Rs 343 crore) was ahead of our expected Rs 2.32 bn (Rs 232 crore) despite materially higher-than-expected net finance costs of Rs 23 bn (Rs 230 crore) (Rs19 bn (Rs 190 crore) expected).

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Reliance Jio, backed by India's richest person Mukesh Ambani, started commercial operations on September 5 with free voice and data offers that continued till March end. Mobile broadband customers jumped 33.6 per cent to 55.2 million from 41.3 million in the corresponding quarter a year ago. The merger will potentially create the biggest Indian telecoms company, surpassing Airtel, which recently increased its customer base with its acquisition of the Tata conglomerate's consumer mobile business.

Interestingly, for Airtel, its Africa market fared better with revenue rising 2.8 per cent on an underlying basis, while the operating profit margins improved over 9 per cent year-on-year buoyed by "continuous cost control initiatives".

Profit was estimated at Rs 319 crore on revenue of Rs 21,746 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Shares of Bharti Airtel ended 0.98% higher in Mumbai trading before the release of the earnings, while the benchmark S&P BSE Sensex closed 0.2% lower.

If we look at net profit of the company from a six-month period, Airtel earned Rs 710 crore from April to September 2017 compared to Rs 2923 crore in the same period in 2016, showing a plunge of 75.7%.

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