Earmarks $3.1 bn as capex for India, Africa, South Asia.
Leading mobile service provider Bharti Airtel on Thursday posted a 31 per cent drop in consolidated net income at Rs 1,400.7 crore for the quarter ended March 31, against Rs 2,044.4 crore in the same quarter last year, due to acquisitions and rebranding costs and higher interest outgo. Revenues rose 51.3 per cent to Rs 16,265.4 crore from Rs 10,749 crore in the year-ago period.
It has earmarked as much as $3.1 billion in capital expenditure for its India, Africa, South Asia and tower business for 2011-12.
For 2010-11, net income fell 32.6 per cent to Rs 6,047 crore from Rs 8,977 crore in the previous year due to increase in net interest outgo (Rs 1,480 crore), forex restatement losses (Rs 683 crore), rebranding expenses (Rs 340 crore) and increase in spectrum charges in India (Rs 265 crore). Total revenues stood at Rs 59,467 crore, compared to Rs 41,847 crore in 2009-10.
Bharti posted a 12 per cent drop in average revenue per user (ARPU) per month in the March quarter at Rs 194, compared to Rs 220 a year earlier. The average usage per user per month fell four percent from a year ago to 449 minutes.
Kamlesh Bhatia, a principal analyst at Gartner, said, “Bharti’s results reflect the expected drag from its Africa operations. This was expected as the company attempts to streamline its operations in the African subcontinent and service the large debit.”
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According to Bhatia, centralisation of operations and spinning off the tower business should ease pressure and unlock value in the short and medium term. However, the pressure on ARPU was expected to continue as operators pick up marginal subscribers, he said. The drop in competition levels compared to last year will help Bharti ease pressure on margins and contain churn.
Angel Broking’s telecom expert, Srishti Anand, said, “Bharti Airtel reported its fourth-quarter numbers, which were marginally below street as well as our expectation at revenue, but lower on net profit because of one-off expenses in Africa operations.”
Bharti, which acquired the loss-making mobile operations of Kuwait’s Zain in 15 countries last June in an enterprise deal of $10.7 billion, said Africa-related loss was at Rs 416 crore during the March quarter.
ARPU in Africa dropped three per cent from the previous quarter to $7.20, while the average minutes of use per user stood at 115, down by four per cent. When asked about the fall in minutes of use (MoU) in Africa, Manoj Kohli, Bharti Airtel’s CEO for international services, said it had happened because in Democratic Republic of the Congo (DRC), the regulator doubled rates. Other African countries reported 3.5 per cent growth in MoU.
Bharti expects to grow margins in Africa by trimming costs, but is still facing high cost structure in the region, according to Kohli. “In the last 10 months, we have grown our revenue market share steadily in each (African) market,” he said.
It is looking for long-term growth rather than turning a quick profit on the continent, a strategy that has hurt rivals such as Kenya's market leader Safaricom.
Bharti Airtel stocks were down 3.2 per cent at Rs 357.60 on the Bombay Stock Exchange.