Lowest quarterly profit for Bharti Airtel in 15 years: Q4 net plunges 78%

Telecommunications sector leader, Bharti Airtel, has reported a 78 per cent drop in net profit to Rs 830 million, for the quarter ended March 31, as an intense price war roils the industry. A cut in international termination rates further impacted the revenues of the company.

This is the lowest quarterly profit for the Sunil Bharti Mittal-led company in nearly 15 years. But, it was still better than analysts’ estimates that suggested a net loss for the company. Airtel’s net profit was Rs 3.73 billion in the same quarter last financial year.

Total revenues of the company also dropped 10.5 per cent to Rs 196.34 billion for the period, compared to Rs 219.35 billion in the same period of the last financial year.

The profit for 2017-18 was down 71 per cent to Rs 10.99 billion, compared to Rs 38 billion a year ago. Total revenue decreased by 12.3 per cent to Rs 836.88 billion from Rs 954.68 billion a year ago.

Since the entry of Reliance Jio, most telecom operators have reported drastic drop in revenues and decreasing profitability, as they have been forced to match low tariffs to remain competitive.

“The telecom industry continues to witness low cost, amid artificially suppressed pricing. Industry revenues were further adversely impacted this quarter due to the reduction in international termination rates,” said Gopal Vittal, managing director and chief executive officer, Airtel (India and South Asia).

The company’s consolidated net debt has increased to Rs 952.28 billion whereas the net debt to earnings before interest, taxes, depreciation and amortisation (Ebitda) ratio for the quarter stood at 3.23. A lower Ebitda, along with rising spectrum costs and continued investments, have resulted in deterioration of return on capital employed to 4.7 per cent from 6.5 per cent the previous year.

Airtel said the year was marked by a number of regulatory developments and heightened financial stress.

The Telecom Regulatory Authority of India (Trai) had reduced domestic mobile termination charges (MTC) from Rs 0.14 per minute to Rs 0.06 per minute effective October 1, 2017, and the international MTC rate was reduced from Rs 0.53 per minute to Rs 0.30 per minute effective February 1, 2018.

Airtel said these rate cuts had led to further decline in industry average revenue per user (ARPU).

In India, mobile data traffic has grown more than six times to 1,540 billion MBs in the March quarter as compared to 225 billion MBs in the corresponding quarter last year. Mobile broadband customers increased by 79.3 per cent to 76.6 million from 42.7 million in the corresponding quarter last year.

The total customer base of Airtel stood at 304.19 million in India. The ARPU for India declined 26.7 per cent to Rs 116 at the end of March 2018 from Rs 158 in the same period last year.

“Our strategic investments in data capacities, innovative digital content through Airtel TV, customer friendly bundles and upgrade programmes led to the highest ever mobile data customer additions of 15 million during the quarter,” Vittal said, adding usage parameters remained robust on a year-on-year basis, and data and voice traffic grew 584 per cent and 55 per cent, respectively.

The company ended the financial year with its highest-ever capital expenditure of Rs 240 billion. “We intend to continue the roll-out momentum next year as well,” Vittal added.

Airtel Africa revenues grew by 4.9 per cent to $3.03 billion from $2.89 billion the previous year.

“Airtel Africa’s revenues grew by 10.7 per cent on a year-on-year basis. Data traffic grew 88 per cent, voice minutes increased by 37 per cent and Airtel Money throughput grew by 45 per cent on a year-on-year basis,” Raghunath Mandava, MD and CEO, Airtel Africa, said.