Bharti Airtel Q1 net tanks 75% on Jio impact, African worries

Mobile revenues down 14% to Rs 12,914 cr; Naira devaluation in Nigeria adds to company's woes

Pricing pressures continue to impact the performance of India’s largest telecom services player, Bharti Airtel, which reported a 14 per cent year-on-year (YoY) fall in the April-June quarter with a consolidated revenue of Rs 21,958 crore. Revenues were, however, better than the consensus estimates of Rs 21,903 crore. 

Though the Naira (Nigerian currency) devaluation did impact the company’s consolidated revenues, yet the key reason for the downfall was the poor performance of the mobile segment in the country. 

Indian mobile revenues fell 14 per cent YoY to Rs 12,914 crore. Though the subscriber base of the company increased by 10 per cent YoY, decline in revenue collection was largely on account of a 21 per cent fall in the average revenue per user (ARPU) to Rs 154 per month.

Reliance Jio’s attractive offers forced the incumbent operators to match the new entrant's schemes, thereby, resulting in 34 per cent lower realisations from the voice segment on a year-on-year basis. Pricing pressure on the data front was even worse. Data realisations were down by 73 per cent over the corresponding period last year.

The silver lining, however, is on the volumes front that remains elastic and has gone up by 200 per cent in case of data, and 34 per cent in case of voice, thereby, cushioning the fall t some extent. 

The fall comes after two quarters (December and March quarter of FY17) of sequential revenue decline of 6 per cent each. The stability in revenues on a sequential basis is also visible in the results of Vodafone India that reported a 1.4 per cent increase, while revenues were down 15 per cent in the year-ago period.

Vodafone India’s performance, too, was boosted by volumes growth of 26-136 per cent in voice/data segment, while realisations were down by around 32 to 67 per cent on a year-on-year basis. 

The muted revenue performance also impacted the company’s operating profits that stood at Rs 7,823 crore, down by 18 per cent from last year’s figures in the same quarter. Profits were, however, exceeded the estimates for the period under review that stood at Rs 7,556 crore. 

Higher interest costs on account of spectrum debt as well as weaker operating performance led to a 75 per cent YoY fall in net profit to Rs 367 crore. But again, this is better than consensus estimates, which had pegged the company’s net profit at Rs 282 crore. However, on a sequential basis its net profit is flat with the March quarter number standing at Rs 373 crore.