Bharti Infra: Lower energy costs hit sales growth

Tenancy up at 2.15 times per tower in Q2 from 2.05 times last year

Shares of Bharti Infratel fell 3.4 per cent on Friday as the company's earnings for the September quarter were marginally below the Street’s estimates. The company’s share price has fallen 14 per cent over the past three months on concerns that spectrum trading would lead to the exit of smaller players and new-age equipment would reduce loading on existing sites. The company, however, believes the sharp uptick in data consumption would provide plenty of new growth levers.

During the quarter, Bharti Infratel’s consolidated revenues grew four per cent, year-on-year (y-o-y), to Rs 3,038 crore, while net profit rose 25 per cent y-o-y to Rs 579 crore. Operating margins remained flat at 43.1 per cent during the quarter. The company’s chief executive officer D S Rawat says the underlying Ebitda (earnings before interest, taxes, depreciation and amortisation) for core business has grown two per cent sequentially and 10 per cent y-o-y. Revenue growth during the quarter was also impacted by the lower energy costs.

Bharti Infratel’s management remains upbeat about its business prospects, despite the market's disappointment. Excluding some of the clutter, the company’s rental revenues rose 9.4 per cent y-o-y, implying fairly healthy underlying fundamentals. In a conference call with analysts on Friday, the firm said installations are up three times compared to a year ago, driven the data boom in the country and higher capital expenditure by the operators.



In Indus Towers, where Bharti Infratel holds 42 per cent equity, its economic interest stood at 87,184 towers and 188,636 co-locations in India at the end of September. The company’s management said while the first phase of data consumption resulted in loading new equipment on existing sites, subsequent tenancies would be driven by fresh infrastructure. The average sharing factor or tenancy rose to 2.15 times per tower during the quarter from 2.05 times a tower in the comparable period last year. Monthly sharing revenue per tower, too, rose 1.2 per cent quarter-on-quarter and 5.9 per cent y-o-y to Rs 73,856. The company expects tenancies to go up as more operators look at increasing their 3G and 4G rollouts.

Bharti Infratel expects to benefit from tighter regulations on service quality, as it would lead to greater demand for towers and improved tenancies for existing sites. The outlook for the tower industry looks promising thanks to surging data traffic across the country, explains Rawat.