Airtel Q2 profit falls 76.5% to Rs 343 crore on tariff wars

01 November, 2017, 01:07 | Author: Grady King
  • Bharti Infratel Ltd reported a 17 per cent drop in second-quarter profit missing analysts’ estimate as higher expenses weighed

Profit in the April-June quarter was Rs 367 crore. "This will eventually force operator consolidation and exits as we have witnessed in the recent past", Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said in the statement.

It had posted net profit of Rs 1,461 crore for the July- September quarter of last fiscal.

The telecom operator's consolidated revenues for the reporting quarter, at Rs 21,777 crore, represented a year-on-year drop of 10.4 per cent on an underlying basis when adjusted for Africa and Bangladesh divested operating units and tower asset sale.

"The financial stress in the industry continues due to double-digit revenue decline and will be further accentuated by the reduction in IUC rates in the next quarter", Vittal said in the statement. The revenue during July-September quarter jumped almost 11% to Rs3,648 crore from Rs3,292 crore in the year- ago period, according to a company statement. The company, however, revealed that its mobile broadband customer base increased 33.6% year-on-year to reach 55.21 million in the quarter.

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Average revenue per user (ARPU) during the quarter stood at Rs 154 which was lower than Rs 188 during the corresponding quarter year ago.

However the company said its mobile data traffic has increased fourfold. Recurring PAT of Rs3.43 bn (Rs 343 crore) was ahead of our expected Rs 2.32 bn (Rs 232 crore) despite materially higher-than-expected net finance costs of Rs 23 bn (Rs 230 crore) (Rs19 bn (Rs 190 crore) expected). Mobile data traffic for Airtel has grown four-fold to 784 billion MBs in the quarter compared to 178 billion MBs in the same quarter previous year, the company said.

In an indication of how Airtel tried to retain its customers from moving to Reliance Jio's network, mobile data usage per customer during the quarter rose 308% to 4.08 GB per month as compared to 1 GB during the year ago period.

The company has reported net sales of Rs.4383.89 crores during the 6 months period ended September 30, 2017 as compared to Rs.5024.44 crores during the 6 months period ended September 30, 2016.

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On the day of the quarterly results, the shares of the company closed at Rs 497.65 a piece, after rising by 0.98 per cent over the previous close on BSE.

The average revenue per user for India, a key metric to check profitability, was also down 23 per cent to Rs 145 as compared to Rs 188 past year.

The margin of earnings before interest, tax, depreciation and amortisation expanded to 36.8% from 35.6% in the previous quarter, as the company controlled operational expenses. Foreign exchange and derivative loss for the quarter was Rs 422 crore compared to loss of Rs 302 crore in the corresponding quarter past year.

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