Airtel net soars 115% on data revenue

Reports growth in net income after 15 consecutive quarters of decline

Bharti Airtel, India’s largest telecom operator by subscriber base, on Wednesday reported a 115 per cent rise in net profit at Rs 610 crore for the quarter ended December, against Rs 284 crore in the year-ago period. The company had reported declines in net profit for 15 consecutive quarters.

The rise was primarily due to strong growth in earnings before interest and taxes (Ebit), Bharti said in a statement. Mobile data revenue and realisation from voice services rose in the period.

During the December quarter, revenue increased 13 per cent to Rs 21,939 crore, compared with Rs 19,362 crore in the year-ago period. Revenue from India operations rose 10 per cent due to strong growth across business segments; international revenue rose 18 per cent.

On Wednesday, the Bharti Airtel stock closed at Rs 301.65 on the BSE, down 1.5 per cent.

Realisation from mobile voice per minute (which indicates the profitability of a telecom operator) in India, rose one per cent to 37.13 paise from 36.74 paise in the quarter ended September. Average revenue per user (ARPU) from mobile services in India also rose one per cent to Rs 195, compared with Rs 192 reported in the previous quarter. The company’s data ARPU in India increased seven per cent to Rs 75, while realisation in data revenue (per megabyte) declined to 30.14 paise in the December quarter from 30.26 paise in the previous quarter.

While minutes on the network improved marginally, monthly churn fell to 2.7 per cent from 3.2 per cent during the two previous quarters. Said Gopal Vittal, joint managing director and chief executive“Our efforts to improve the quality of customer acquisitions through the last 12 months have resulted in a significant reduction in customer churn. Our focus on superior internet experience has resulted in increased data adoption and usage. Data is now a huge source of revenue growth.”

While realisations inched up during the past few quarters, after the company discontinued free minutes, Vittal said the company would continue to look at further cuts in discounted minutes.

He added the company’s growth in India was backed by an improved go-to-market strategy and focus on quality acquisition of subscribers, among others.

Consolidated earnings before interest, tax, depreciation and amortisation (Ebitda) stood at Rs 7,093 crore, up 23 per cent year-on-year; the Ebitda margin rose from 30 per cent to 32 per cent, led by improved operational performance in India. At Rs 3,175 crore, the consolidated Ebit was 56 per cent higher than in the year-ago period.

In Africa, its revenue increased just 3% to US$ 1.16 billion. The company said mobile voice pricing in Africa remained stable at 3.31 cents per minute, and overall ARPU rose just one% to US $ 5.8. However, tariffs have fallen in a few markets, leading to negative elasticity. Voice APRU declined one% but data ARPU rose 6% in Africa. On the other hand, while net realisation from voice in Africa remained stable, realisation from data dropped 9% during the past two quarters.

Manoj Kohli, MD and CEO (international operations) said: “The international operations continued to achieve steady revenue growth. Africa had another quarter of strong growth from the 3G/Data and Airtel Money services across all its markets and we expect this trend to sustain due to large investments in brand and network. The market growth came back in Nigeria which is the largest telecom market in the continent.”

During the earnings call, Kohli, who will move out of operational involvements in telecom business starting April this year, said that the company aims to become the No. 1 or a strong No. 2 operator in each of the markets in Africa with more than 30% market share, and there is “no negative call” to explore possible exits from any of the markets in Africa.

According to Bharti Airtel, there is still headroom for more improvement in net realisation with steps such as reduction of free minutes in India. For the current fiscal year, the company has earmarked a capital expenditure of US $2 billion, of which majority will be spent on network expansion.

Net finance cost during the quarter came down by 13.2% to Rs 1,068 crore as compared to Rs 1,230 crore in the corresponding quarter last year. Interest costs increased by 2.9% to at Rs 1,084 crore during the quarter.

“Bharti’s India cellular revenues indicated steady operational momentum led by realisation per minute and data improvement. However, similar to Idea, minutes of usage (MoU) growth was slow – implying changing industry dynamics of slowing MoU due to free minutes being curtailed. Bharti’s India cellular EBITDA margin improvement surprised us positively; we see more room for margin improvement, albeit at a slower pace,” said an analyst with Goldman Sachs, in a note.

Ankita Somani, analyst, Angel Broking believes that increase in contribution from non-voice revenue is a good sign as data revenue inched up. “In India, Bharti Airtel witnessed addition of 3.8 million data subscribers, leading to overall data customer base to 54.4 million. Bharti’s 3G customer base during the quarter increased by 18% quarter-on-quarter to 9.48 million with data usage per customer increasing by 8% (q-o-q),” she added.

Bharti Airtel stock was down 1.52% to last trade at Rs 301.65 on the Bombay Stock Exchange on Wednesday.