Bharti Airtel Q2 net profit tanks 65.4 pc to Rs 119 cr; India losses mount

Bharti Airtel Thursday reported a drop in consolidated net profit for the tenth straight quarter as losses on mainstay India business widened due to pricing pressure from aggressive competition.

Overall, the consolidated net profit of Rs 118.8 crore in July-September represented a drop of about 65 per cent from Rs 343 crore in the year ago period, according to a company statement.

The loss from India operations (before exceptional items) mounted to Rs 1646.4 crore in the second quarter of the current fiscal compared to about Rs 940 crore in the preceding three-month period.

The company had clocked a net income of Rs 649.4 crore in the July-September quarter of 2017.

A bruising price war sparked by the entry of richest Indian Mukesh Ambani's Reliance Jio into the telecom sector with free voice calls and SMS bundled with cheap data has led to pressure on margins of incumbents which have scrambled to match competition.

The price war has already led to the merger of Idea Cellular Ltd and Vodafone Plc. Prior to the announcement of the second quarter earnings on Thursday, Bharti Airtel Chairman Sunil Bharti Mittal said the consolidation had come with a "significant pain" of nearly USD 50 billion of investment being written off and jobs being axed.

Bharti Airtel's consolidated revenues dipped about 6 per cent to Rs 20,422 crore for the just-ended quarter.

The company said the exceptional gain during the quarter stood at Rs 1.013.7 crore (net of tax) "largely on account of creation of deferred tax asset in DTH partially offset by charge towards network refarming/ up-gradation program during the quarter".

Gopal Vittal, MD and CEO (India & South Asia), Bharti Airtel, said the average revenue per user (ARPU) decline has "moderated" this quarter driven by focus on quality customers through simplified pricing and content partnerships.

"We remain focused on driving quality base growth with value adding propositions for our customers. We also remain committed to investing in enhanced capacities and have deployed 27000+ broadband sites during the quarter, enabling a 239 per cent YoY growth in mobile data volumes," Vittal added.

The total revenues from India-South Asia operations at Rs 15,022.3 crore in July-September was lower than Rs 16,826.5 crore in the same period a year ago.

The revenue from Africa business, however, rose to Rs 5,647.2 crore during September quarter from Rs 5,203 crore in the same period of the previous year.

In a statement announcing the Q2 earnings, Airtel said the consolidated mobile data and voice traffic grew 225 per cent and 55 per cent respectively year-on-year. Overall, the customer base stood at 445 million across 16 countries, up 15 per cent year-on-year excluding divested units.

"India revenues for Q2'19 at Rs 14,920 crore have declined by 3.6 per cent year on year (declined 10.9 per cent on reported basis) on an underlying basis. Mobile revenues have witnessed a year on year de-growth of 7.2 per cent on an underlying basis led by continued average revenue per user down-trading impacted by competitive pricing pressures," the statement said.

The company said other businesses for India continue to experience healthy growth.

Airtel said mobile 4G data customers jumped 132 per cent to 65.7 million from 28.3 million in the corresponding quarter of the last year.

"In constant currency terms, Africa revenues grew by 10.8 per cent year on year led by strong growth in data and Airtel money transaction value," the statement added.

Consolidated EBITDA at Rs 6,343 crore represented a drop of 20.7 per cent over the year ago period. Earnings before interest, tax, depreciation and amortization or EBITDA reflects a company's operating performance.

The consolidated EBITDA margin fell to 31.1 per cent in September 2018 quarter from 36.8 per cent.

Its consolidated net debt for the company increased to Rs 1,13,204 crore as compared to Rs 1,029,02.8 crore for the previous quarter.

The company's board has declared an interim dividend of Rs 2.50 per equity share of Rs 5 each for the financial year 2018-19, Airtel said in a regulatory filing.

The shares of Bharti Airtel closed at 295.85 apiece on the BSE, about 6.60 per cent lower than the previous close. The results were declared after market hours.