Bharti Airtel net shrinks 27%

Margins from African business still low

Bharti Airtel, the country’s largest telecom company, today reported a 27 per cent drop in second quarter net profit at Rs 1,661 crore, from Rs 2,263 crore in the same quarter last year.

Revenue went up 47 per cent to Rs 15,215 crore from Rs 10,379 crore in the corresponding quarter last year.

Revenue from Africa was Rs 3,891 crore, even as the region continues to post losses in net income. These losses were Rs 106 crore for the quarter. The company says taxes from the African region increased its effective tax rate in the quarter to 25.5 per cent, pulling down net income.

The company’s Ebitda (earnings before interest, taxes, depreciation and amortisation) for the second quarter went up by 19 per cent to Rs 5,121 crore, as compared to Rs 4,301 crore in the corresponding period last year. Sanjay Chawla, a telecom analyst from Antique Stock Broking, said Ebitda was five to six per cent below estimates.

“Ebitda from the African business has shown significant margin pressure after they reduced tariffs (rates) there and costs have also increased. The company has also reported licence and spectrum fee in Africa at Rs 100 crore,” he said.

Income from Indian operations was affected by annual salary raises and increase in diesel prices, which resulted in a 77-basis point decline in the mobiles’ business. Ebitda margin for the quarter was 33.7 per cent, compared to 41.4 per cent in the same quarter last year.

Manoj Kohli, CEO of the African business, said the margins from there were still low and there would be improvements in the next financial year.

The total minutes of usage on the network was 216.4 billion for the quarter, up 42 per cent from last year. The average revenue per user for the quarter was Rs 202, down 20 per cent from Rs 252 in the same quarter last year. Average revenue per minute (ARPM) also fell by 21 per cent to 44 paise from last year. But on a quarter-on-quarter basis, ARPM fell only by one per cent, as compared to recent quarters where it fell by five to six per cent. Analysts say this indicates stabilisation in rates and reduction in free minutes offered.

The stock fell by 1.7 per cent in today’s trade to Rs 328 per share on the Bombay Stock Exchange.

The company also announced that Tsun-yan Hsieh has been appointed a non-executive independent director with effect from yesterday. He would replace Arun Bharat Ram, who retired at the conclusion of today’s board meeting.