Bharti Airtel's Q4 net down about 50% at Rs 508 cr

Telecom major Bharti Airtel on Thursday reported a 31.1 percent fall in standalone net profit at Rs 1,084.4 crore for the fourth quarter ended March 31, 2013, mainly due to higher expenses.

New Delhi: India's largest mobile operator Bharti Airtel Thursday reported 13th consecutive quarter of fall in profits with about 50 percent slump in consolidated earnings during January-March, but it said that the worst may be over as pricing stability was returning to the sector.

Net profit in the fourth quarter of 2012-13 fiscal dropped to Rs 508.6 crore crore, from Rs 1,005.9 crore a year ago on higher tax outgo and depreciation cost.

"I am pleased to see that market corrections have started with improvements in the quality of customer acquisitions and that pricing stability is returning to the sector in India," Bharti's Chairman and Managing Director Sunil Mittal said.

For the 2012-13 fiscal, Bharti made Rs 2,275.7 crore profit, its smallest in seven years. The net profit was 46.6 percent lower than Rs 4,259.4 crore in 2011-12.

Earnings before interest, tax, depreciation and amortisation, or EBITA, margin was 31.7 percent in the January-March quarter as opposed to 33.3 percent a year ago.

The company's network operating costs increased 18 percent while employee costs rose 24 percent.

Bharti shares fell about 5 percent soon after the results were announced, but recovered partially in an overall upbeat market to close at Rs 316.70, down 0.64 percent.

Revenues in Q4, however, rose 9.2 percent to Rs 20,448.4 crore from Rs 18,729.4 crore in the year-ago period. For the full fiscal, they were up 12.4 percent to Rs 80,311.2 crore.

"Overall, the last year or so, the data ecosystem in the country is growing really well, our 3G expansion is on track... The really good news is that pricing stability seems to be returning in market place," Bharti Airtel India Joint Managing Director and CEO Gopal Vittal told reporters.

Data has grown around 22 percent year on year and the customer base stands at 43.49 million.

Vittal, who took over the reins from Sanjay Kapoor said roughly 12.3 billion minutes have been added during this quarter and data continues to grow strongly.

"...Growth in minutes has been very strong. Secondly, pricing stability is returning. Our rates are more or less steady versus the last quarter and thirdly there has been substantial improvement in the quality of acquisition which is leading to a lowering churn," he added.

Monthly churn or attrition of the company improved from 7.6 percent last year to 6.6 percent with Q4 reporting a churn of 3.2 percent.

Led by decline in margins increasing costs, the company has been cutting down on freebies and promotional offers and is likely to follow the practise in future also.

"We have not tinkered with the base price at all, it stays steady and one of the things that we have done is to actually cut back on discounted and promotional minutes... going forward we are going to keep looking at opportunities to see where discounted minutes can be reduced," Vittal added.

The company's overall customer base stood at 271.22 million across mobile telephony, telemedia and digital services across geographies.

Airtel has 8.4 million active 3G customers of which 6.4 million are active 3G data users as on March 31, 2013.

Monthly average revenue per user (ARPU), a key metric for telecom carriers, from Bharti's Indian operations increased to 193 during the reporting quarter from 189 in the same period last year.

The net debt of the company stood at Rs 63,839.5 crore as on March 31, 2013.

Airtel is planning to invest USD 2.2-USD 2.3 billion in FY14, which include an investment of about USD 600 million in Africa.

"We will stick to about USD 2.2 to USD 2.3 billion for FY 14...We look at around USD 600 million investments in Africa," Bharti Enterprises Group Chief Financial Officer Sarvjit Singh Dhillon said.

Asked about the steps to check the declining profits, Vittal said: "The real challenge is to grow revenues because unless we grow revenues, our margins won't improve. We are actually determined to do that."

He added that the company needs to improve the quality of its acquisitions, improve the realisation rate of voice and reduce discounts.

Asked about the entry of Reliance Industries in telecom space, Vittal said: "For us, what really matters at the end of the day is that we are a product of competition, over the last 17-18 years if you look at Bharti Airtel, we have survived in an industry which is brutally competitive."