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Bharti Airtel, the country’s largest telecom operator, on Wednesday reported a strong set of operating numbers for the quarter ended September. Not only did its India wireless business show steady improvement but Africa, too, reported growth in revenues and margins — after three quarters of volatility.
The company’s consolidated revenues grew 10 per cent year-on-year and five per cent sequentially to Rs 21,324 crore during the quarter. The consolidated revenue growth was mainly driven by a 16 per cent year-on-year revenue growth in Africa (in rupee terms) and six per cent growth in India. Overall, the company’s international revenues grew 18 per cent year-on-year. But the striking story this quarter was a secular uptick in margins and volumes in the India wireless business.
Compared with last year, both data and voice usage rose for the company in India. Mobile voice realisation improved 1.31 paise on an annual basis and three paise quarter-on-quarter. Data usage per customer went up from 133 MBs per customer in the September quarter of 2012-13 to 231 MBs in the same quarter this year. As a result, the average revenue per user (Arpu) moved up Rs 15 year-on-year to Rs 192. “Mobile internet is now a major engine of growth for Airtel across geographies. Our sustained investment in this segment will further enhance customer experience and seamless coverage,” said Bharti Airtel Chairman Sunil Mittal.
The company’s consolidated operating margins rose 142 basis points year-on-year to 32 per cent. However, the operational gains were not visible in the bottom line because of a hit on account of the rupee’s sharp fall against the dollar during the quarter. Bharti’s net profit fell 29 per cent year-on-year, and 25.7 per cent sequentially, to Rs 510 crore, due to forex restatement and derivative losses of Rs 342 crore during the quarter. The company’s profitability was not comparable on a year-on-year basis, as there was a one-time income of Rs 586 crore and its impact on the net profit was Rs 238 crore. So, this quarter’s net profit had to be adjusted for this one-time income. Dalal Street reacted positively to Bharti’s quarterly numbers and pushed its shares 5.2 per cent. Analysts said the company had reported a solid set of numbers, despite a miss on the net profit level.
Earnings
The company’s consolidated earnings before interest, tax, depreciation and amortisation (Ebitda) increased 4.4 per cent quarter-on-quarter, and 15.1 per cent year-on-year, to Rs 6,832 crore. Operating profit margin dropped 30 basis points on a sequential basis (increased 140 basis points year-on-year) to 32 per cent in the quarter under review. Bharti Airtel’s net finance cost, including forex loss, rose about 38 per cent during the quarter to Rs 1,611 crore, compared with Rs 1,168 crore during the year-ago quarter. Its half-yearly finance cost jumped Rs 1,117 crore to Rs 2,778 crore, compared with Rs 1,661 crore during the corresponding quarter last year. This, the company said, was because of an increase in forex restatement due to the rupee’s depreciation. Bharti Airtel also reported an exceptional loss of Rs 81.9 crore during the July-September quarter due to a regulatory levy on one of the group’s international operations. The industry and customers were contesting this, the company said.
Consolidated Arpu in India dropped four per cent to Rs 192 during the July-September quarter, from Rs 200 during the previous quarter. But an area of worry for telcos has been increasing average realisation per minute — the money a telecom operator makes from customers. Bharti Airtel reported a marginal increase in this. Average realisation per minute for voice in India increased just one per cent to 36.74 paise, from 36.39 paise the previous quarter. For data usage, average realisation per MB declined two per cent to 30.26 paise, from 30.97 paise.
Data business improves
The company’s mobile internet revenue doubled to more than Rs 1,500 crore during the quarter, compared with the same quarter last financial year. “We are obsessed with getting the right quality of customers and reducing churn. We are focused on Arpu and operating cost,” said Gopal Vittal, chief executiveof Bharti Airtel’s India operations.
Bharti’s 3G data customer base also rose about 18 per cent, to a little more than eight million, during the July-September quarter, from 6.7 million in the corresponding quarter last year. “It’s a very positive sign for Airtel, and the Indian telecom industry at large, that subscribers are increasing their data usage and, thereby, data Arpu,” said Forrester analyst Katyayan Gupta.
Africa operations
The company is hopeful about its Africa business. “The Africa market is coming back to growth. After three tough quarters, markets are buzzing again and showing good a growth momentum. Mobile customer base is growing again, rates are stable, mobile internet is growing and mobile commerce is booming,” said Managing Director Manoj Kohli.
Revenue from the Africa operations rose about two per cent to $1.1 billion during the quarter, as against $1.09 billion in the corresponding quarter last year. However, the quarter-on-quarter revenue growth for the Africa business was about 5.4 per cent, primarily backed by net addition of about 2.18 million subscribers and about seven per cent improvement in minutes of usage on the network. Ebitda margins for the Africa business were almost flat, at 26.9 per cent, during the quarter.
“The revenue growth in Africa reflects the inherent potential in the world’s most promising continent. I am also pleased to see the evolution of Airtel Money, a significant service in geographies that are relatively under-banked,” Mittal said in a statement.
Voice Arpu in Africa increased four per cent to $4.7, but voice realisation per minute fell about two per cent to 3.30 cents sequentially. Data Arpu, however, increased 15 per cent to $1.5, but data realisation per MB dropped four per cent to 1.74 cents sequentially.
“Even as we need sustenance of good performance in Africa to change our view there, the quarter provided ample data points to support out positive view on the India wireless business,” Kotak Institutional Equities said in a report.
As at the end of September 2013, Bharti’s total net debt burden had dropped to $9.6 billion, from $9.8 billion the previous quarter. This debt burden is mainly because of its borrowing to pay for spectrum in India and purchase the Africa operations of Zain Telecom for about $9 billion in 2010.
Its revenue from entire international operations grew about 18 per cent on a yearly basis in rupee terms. Bharti Airtel’s revenue from the digital TV business rose 28.8 per cent and those from its B2B segment increased 20.8 per cent during the quarter.
