Bharti Airtel: India business firing from all cylinders

Robust customer additions, higher data realisations drive earnings

Bharti Airtel continued to improve the quality of its profit growth in the December quarter. Over the past month, the firm’s earnings estimates for FY15 have been revised upwards by several brokerages and yet, the company has beaten expectations. Other than the havoc a strong dollar has wreaked on the already struggling Africa business, the company's reported an improvement in the India wireless business. Bharti has seen improvement on customer additions, traffic growth, and expansion data margins, among others.

During the December quarter, consolidated revenues (India and Africa) grew 1.6 per cent sequentially and six per cent over a year to Rs 23,217 crore. Beating the consensus estimates, net income rose 135 per cent over a year and 3.8 per cent sequentially to Rs 1,436 crore, highest quarterly profit since September 2010. India revenues registered a 12.6 per cent growth over a year.

  Revenues from India mobile services grew four per cent sequentially to Rs 13,163 crore. Minutes on the network grew one per cent sequentially to 267 billion, despite robust customer additions. Increased efforts on customer additions have yielded results. During the quarter, Bharti added 5,463 customers, up 133 per cent sequentially. Voice continues to decline, with per-user minutes declining one per cent sequentially and four per cent over a year to 416. Voice realisation per minute has remained flat sequentially but is up one per cent over a year to 37.67 paise.

Data, emerging as the new driver of growth, accounts for 16.2 per cent of total mobile revenues against 10 per cent in the previous year. Sequentially, data customers have increased five per cent, while 3G consumers have grown 10 per cent. Average revenue from data per user has risen 13 per cent sequentially to Rs 170, while data usage is up 10 per cent to 622 MB. Data realisation has increased three per cent sequentially to 27.36 paise per MB. Operating margin in India has risen 60 basis points sequentially and 280 basis points over a year to 38.9 per cent.

Africa business continues to hurtle from one crisis to the other. The strong dollar has impacted revenue growth in dollar terms. The business has also taken a hit due to the sharp fall in commodity prices. While the customer base and minutes on the network grew five per cent sequentially, the average revenue per user in voice declined six per cent to $3.9 and voice usage grew two per cent. The story in data is no different, and realisation per MB declined 14 per cent sequentially.