Bharti Airtel, India’s largest telecom services provider, on Wednesday reported a 37 per cent decline in net profit, at Rs 762 crore, for the quarter ended June, against a net profit of Rs 1,215 crore in the corresponding period last year. Cut-throat competition and high operating expenses continued to hit profitability.
This is the 10th quarter during which Bharti Airtel reported a drop in net profit.
It’s Africa operations, which it acquired from Zain in 2010, posted a net loss at Rs 670 crore compared to the year-ago period, and this hit the company’s consolidated numbers.
| WEAK SIGNAL This is the 10th quarter during which Bharti Airtel has reported a drop in net profit. Total revenue, however, rose 14 per cent, aided by 31.5 per cent growth in revenue from Africa operations | |||
| Financial snapshot (Rs cr) | |||
| Particulars | Quarter Ended |
% Growth (Y-oY) | |
cash flow
The Bharti Airtel scrip on Wednesday closed at a two-year low of Rs 274.4, down 6.6 per cent on the Bombay Stock exchange.
On Wednesday, the company announced it was considering an initial public offering for its telecom tower unit Bharti Infratel. It added the timing of the offering would depend on market conditions. It has appointed a committee of the board of directors to consider the proposal, through which it plans to sell up to 10 per cent stake in Bharti Infratel, which has about 33,000 operational towers. “Talk of stake sale in the tower business would lead to value unlocking, fund its capital expenditure plan and reduce debt burden,” said a Motilal Oswal analyst.
| Growth story (mn subscribers) | |||||
| Parameters | Jun ‘11 | Mar ‘12 | Jun’12 | % Growth (Q-o-Q) | % Growth (Y-o-Y) |
| Mobile services | 221.3 | 241.1 | 250.0 | 3.7 | 13.0 |
| India & S Asian | 175.0 | 188.0 | 194.0 | 3.3 | 11.0 |
| Africa | 46.3 | 53.1 | 55.8 | 5.1 | 20.6 |
| Telemedia Serv. | 3.3 | 3.3 | 3.3 | 0.1 | -1.5 |
| Digital TV Serv. | 6.3 | 7.2 | 7.4 | 2.4 | 18.2 |
| Total | 230.9 | 251.6 | 260.7 | 6.2 | 29.7 |
| Source: Company | |||||
The results for the quarter ended June left analysts disappointed. “The numbers were below our estimates. Both domestic and African operations reported margin declines,” said Rikesh Parikh, vice-president (markets strategy and equities), Motilal Oswal Securities.
The company stated during the quarter, revenue in India was hit by two significant changes — Telecom Regulatory Authority of India guidelines on processing fees, which restrict the sale of ‘combo packs’, and a rise in service tax from 10.3 per cent to 12.36 per cent. The rise in service tax led to all telecom services turning costlier by about two per cent, with the entire additional levy being passed to the exchequer.
The earnings before interest, tax, depreciation and amortisation margin, or operating margin, declined from 33.6 per cent a year ago to 30.2 per cent, owing to higher expenditure on sales, marketing and network expansion. Network operating expenses in the quarter rose 22 per cent year-on-year, as the company set up more mobile sites and expanded the 3G network, while sales and marketing expenses rose 31 per cent.
Monthly average revenue per user (ARPU) in India fell two per cent to Rs 185, against Rs 189 in the previous quarter. In the corresponding quarter last year, ARPU stood at Rs 190 a month. APRU from Africa operations fell to $6.5 from $6.8 in the year-ago period.
“It is difficult to see a major improvement in Bharti’s domestic business anytime soon, owing to significant cuts in 3G rates of companies and the prevailing regulatory uncertainties. Bharti is yet to turn the Africa operations profitable,” said Ankita Somani, research analyst (information technology and telecom), Angel Broking.
As of June-end, Bharti had a net debt of $12 billion, the majority of which was taken to fund its ambitious African purchase in 2010. The acquisition of Zain’s mobile operations in 15 African countries made Bharti the world’s fifth-largest mobile carrier, in terms of subscribers. The company’s total subscriber base across mobile, telemedia and digital television services in India, South Asia and Africa stood at 260.71 million.
The company declined to comment on whether it was planning to participate in the coming 2G telecom spectrum auction.
Crosses 200 million customers
Bharti Airtel on Wednesday said it has crossed the 200 million customers mark in India. The 200 million customer mark in India includes Bharti Airtel customers across categories of 2G, 3G and 4G mobile; fixed line and DSL broadband, IPTV and DTH services, the company said. It had started its operations in 1995.
