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Bharti Airtel Ltd on Thursday reported a 49.4 per cent drop in net income at Rs 509 crore during the January-March quarter, disappointing market expectations. The fall, it said, was due to higher interest costs on loans taken for its African operations and tax changes.
The consolidated income, though, rose 9.2 per cent to Rs 20,448 crore during January-March, from Rs 18,738.8 crore in the corresponding quarter of 2011-12.
The quarterly result marks a 13th continuous one of decline in net profit for the country’s largest telecom operator by subscriber base. It had a net income of Rs 1,006 crore in the corresponding quarter of the previous financial year.
The results are in contrast to those of rival mobile carrier Idea Cellular, which reported a 40 per cent rise in net profit during the quarter ended March, at Rs 1,011 crore.
However, Bharti’s growth in subscribers and the usage trends suggest a better future for the mobile carrier, which operates in 20 countries. In recent months, Bharti, Vodafone India and Idea Cellular have gained market share because of easing competition. Many smaller competitors have either closed or trimmed operations in India after permits were quashed by the country’s apex court. The development has strengthened the pricing power of the market leaders such as Bharti.
However, regulatory uncertainties remain and the company is likely to face strong competition from Reliance Jio, after the Mukesh Ambani-led company launches 4G (fourth generation) services by the end of the year.
Bharti's net income for 2012-13 dropped 46.6 per cent to Rs 2,276 crore, its smallest annual profit in seven years, as against Rs 4,259 crore in 2011-12.
Issues
Consolidated average revenue per user (Arpu) in India increased four per cent to Rs 193 during January-March, against Rs 185 in October-December. An area of worry for telcos has been how to increase average realisation per minute (APM) — the money the company makes from customers. APM for voice in India fell one per cent to 35p from 35.2p in the previous quarter. Average realisation per MB for data came down to 29.27 paise from 29.32p. The total volume of minutes sold grew five per cent.
“Data continues to grow strongly. That's a positive,” said Gopal Vittal, chief executive of Bharti India. Its data usage per user increased to 187 MB a second during the quarter under review, from 161 MB a second in the previous quarter.
Africa worry
Meanwhile, Bharti continues to lose money in its Africa operations. It ventured there in 2010 with a $9 billion acquisition and is yet to break even. The Arpu in Africa was $5.9 during January-March, down five per cent from a year before. Bharti said it expected cash flow in Africa to improve as capital expenditure declines.
Bharti has planned to spend up to $2.3 billion in 2013-14 on its networks, including about $600 million in Africa.
“With Africa over its peak of organic investments, we are optimistic about potential for improved market shares and margin expansions,” Bharti Airtel chairman Sunil Mittal said in a statement.
Bharti also has a debt burden of Rs 63,839 crore, mainly on account of borrowing to pay for spectrum in India and purchase the Africa operations of Zain Telecom for about $9 billion.
“Ghana and Tanzania posted double-digit growth but central African countries are a bit slow,” said Kohli, adding the company would continue to purchase minority stakes to get control, whenever it got an opportunity in various markets.
Bharti also announced it would buy the remaining 30 per cent stake in its Bangladesh unit from Warid Group for an undisclosed amount. In March, the company raised stake in its Nigerian unit. Last month, Bharti announced the acquisition of Warid Telecom Uganda, enabling it to raise its customer base in that country by about 60 per cent.
“The Africa business continued to remain under pressure. This may weigh upon the performance in going forward as well. Elevated costs are likely to exert pressure on margins in the next couple of quarters,” said Ankita Somani, research analyst (IT & telecom), Angel Broking.
Bharti might also look at raising up to Rs 6,500 crore by issuing 200 million new shares to investors abroad.
The stock ended on Thursday at Rs 316.70, down 0.6 per cent on the BSE.
