Bharti net profit dips 28%; warns on regulatory framework
New Delhi: India's largest mobile operator Bharti Airtel Wednesday reported 28.19 percent dip in net profit at Rs 1,006 crore for the fourth quarter ended March 31 -- its ninth straight quarterly drop in earnings -- as high interest cost and price war hit margins.
During January-March, 2010-11, the company had reported net profit of Rs 1,401 crore.
However, it saw 15 percent jump in revenues at Rs 18,729 crore for the fourth quarter, 2011-12, compared to Rs 16,293 crore in the year-ago period.
Meanwhile, Sunil Mittal, Chairman of Bharti, which has lost market share in past year to smaller rivals in the fiercely competitive market, warned of significant implication on the future of telecom sector because of uncertainty in the regulatory framework.
"The recent regulatory developments in India will have significant implications on the future of telephony and broadband, as well as India's global competitiveness," Mittal said.
Bharti Airtel's parent Bharti Enterprises Deputy CEO and Managing Director Akhil Gupta told reporters here, "From our point of view, a very good and satisfactory quarter. In India, we got the growth back... As far as Africa is concerned, the upward trajectory continues, both in terms of revenues, Ebitda and the overall operations."
For the entire 2011-12, Bharti's net profit fell 29.6 percent at Rs 4,259 crore, compared to Rs 6,047 crore in 2010-11.
It was down due to higher costs on account of 3G licence fee amortisation (Rs 593 crore), 3G interest costs (Rs 421 crore), forex fluctuation losses (Rs 422 crore) and tax provisions (Rs 481 crore).
Besides, during the year immense competition in India led to a tariff war affecting margins across the industry.
Total revenue for the 2011-12 fiscal stood at Rs 71,451 crore, as against Rs 59,538 crore in 2010-11, up 20 percent.
During the fourth quarter, the company saw a marginal rise in average revenue per user (ARPU) at Rs 189 per month as compared to Rs 187 per month in the quarter ended December 31.
"In the last two quarters, we have been busy correcting some structural defects and rate increases and this has given us the headroom to re-invest this increase back into the market and consolidate our market position," Bharti Airtel CEO (India and South Asia) Sanjay Kapoor said.
Bharti has over 250 million subscribers in 20 nations.
Though the company is confident of the investments it has made in its infrastructure for 3G and 4G services, there could be an impact of the uncertainty in the regulatory environment.
"We have made massive investments in 3G, or in 4G or in Airtel Africa. We believe that we have made all necessary investment in all forms. However, on the flip side, this was perhaps the most disturbed year on the regulatory front," Gupta said, echoing Mittal's concerns.
Sectoral regulator Trai has recently recommended base price of Rs 3,622 crore per megahertz (MHz) for pan-India spectrum, which means that airwaves in 1800 MHz band will cost over Rs 18,100 crore for buying 5 MHz bandwidth nationwide.
The entire telecom industry has termed the price too high saying that it will make the business unsustainable.
Bharti, meanwhile, has announced consolidated capital expenditure of between USD 3 billion and USD 3.2 billion for FY'13. This includes USD 2.2 billion for India and South Asia businesses and USD 1 billion for the African region.
However, it excludes any potential payment for spectrum, Bharti Enterprises Group CFO Sarvjit Singh Dhillon said.
On being asked about the timing of the listing of the telecom infrastructure firm Bharti Infratel, Gupta said, "There is a plan we have stated... Both for Infratel and Indus, we just have to wait for the right time."