Bharti Airtel Q1 profit dips 37%; down for 10th straight quarter
Bharti Airtel profit dips 37% in Q1; down for 10th quarter
New Delhi: Country's largest telecom operator Bharti Airtel's net profit fell for the tenth straight quarter, declining by 37 percent to Rs 762.2 crore in the April-June 2012 quarter as stiff competition squeezed margins.
The company's net profit stood at Rs 1,215.2 crore in the same period last fiscal.
Though Bharti Airtel has gained subscribers from smaller rivals including Loop and S Tel (whose licences were cancelled by the Supreme Court), but lower average revenue per user (ARPU) continued to trouble the company.
The ARPU in the reported quarter stood at Rs 185 per month compared to Rs 190 in the same period last year and Rs 189 in the January-March 2012 quarter. As on June 30, 2012, the company had 187.3 million mobile customers on its network, of which 5.1 million were 3G customers.
"Sustained hyper competition has driven this industry to become structurally defective with abnormally high rotational churn. The industry is witnessing high levels of gross customer additions resulting in net additions of less than 10 percent. This has a significant bearing on the telecom industry's profitability," Bharti Airtel on Wednesday said in a statement.
The total revenues were, however, up by 14 percent to Rs 19,350 crore in the quarter against Rs 16,975 crore in the first quarter ended June 30, marked by growth of 31.5 percent in Africa and 44.2 percent jump in mobile data revenues from India.
"Telecom revenues in India have been depressed due to hyper-competition and recent regulatory and tax developments. Despite these adverse developments, Airtel has kept its focus on network expansion, market investments, superior customer experience and new product innovations," Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal said.
The company said the revenues in India during the quarter were impacted by two significant changes -- Trai guidelines around processing fees which restricts the sales of "combo packs" and hike in service tax from 10.3 percent to 12.36 percent, effective April 1, 2012.
The service tax hike made all telecom services dearer by nearly 2 percent, with the entire additional levy being passed onto the exchequer.
Bharti Airtel CEO Sanjay Kapoor, however, said during an investor call that an alternate strategy will be worked out to counter this impact.
During the reported quarter, Bharti Airtel incurred depreciation and amortisation expenses of Rs 3,757.1 crore, net finance cost at Rs 821.1 crore and the interest on borrowings and finance charges stood at Rs 1,072.6 crore.
After the result announcement, Bharti Airtel scrip plunged over 4 percent. Its shares finally settled at Rs 274.40 apiece, 6.60 percent down over yesterday's closing on BSE.
Kapoor said Airtel added 9.4 billion minutes during the quarter, taking the total minutes on network at 274.6 billion.
He added that the company had gained market share and was the second largest beneficiary of mobile number portability (MNP).
Asked about the public offer of its telecom tower unit Bharti Infratel Ltd (BIL), Kapoor said it is subject to market risks and regulatory approvals.
Bharti Airtel has appointed a Committee of the Board of Directors to consider the IPO of BIL by selling up to 10 percent stake. BIL has more than 33,000 towers in operation.
Bharti Airtel may use the proceeds of the IPO to fund its debt, which stands at Rs 68,298.3 crore, and pay for spectrum when its licences come up for renewal.
On Africa, the company said revenues came in at Rs 5,758.6 crore, representing a strong growth of 32 percent over last year, which helped "lift the overall consolidated growth of the company."
At the end of June quarter, Airtel Africa had 55.9 million GSM mobile customers on its network with an addition of 2.7 million customers. The ARPU for the quarter was USD 6.5 per month, while the blended monthly voice usage per customer stood at 120 minutes.
In 2010, Bharti Airtel had ventured into Africa by acquiring Kuwaiti firm Zain's operations in 15 countries in a USD 10-billion deal.
During the quarter, Bharti Airtel incurred a capital expenditure of Rs 645 crore on its African operations, while the same stood at Rs 1,941.1 crore for India mobile services (including investments towards launch of 4G services).