India's largest telecom company Bharti Airtel today posted sixth straight quarter of drop in earnings as its consolidated net profit plunged 76.5 per cent to Rs 343 crore for the September quarter, hit by the price war triggered by newcomer Reliance Jio.
Airtel has warned that financial stress in the industry "continues" and will be "further accentuated" by cut in call connect charges in the next quarter (October-December).
The September quarter net profit of the 2017-18 fiscal is the lowest since January-March 2013 for Bharti Airtel which like other established telcos has been engaged in a fierce tariff war with Mukesh Ambani controlled Reliance Jio, to wrest control of the market.
The total revenue of Airtel -- which has operations in 17 countries across Asia and Africa -- fell 11.7 per cent to Rs 21,777 crore during the second quarter of the current fiscal, from Rs 24,651.50 crore in the year-ago period.
The net profit was 6.5 per cent lower compared to Rs 367 crore seen in the June quarter, but a whopping 76.5 per cent drop over Rs 1,461 crore logged in the corresponding period of last fiscal.
"The financial stress in the industry continues due to double digit revenue decline and will be further accentuated by the reduction in IUC (Interconnect Usage charges) rates in the next quarter," Gopal Vittal, CEO, India and South Asia, Bharti Airtel said in a statement.
These factors will eventually force operator consolidation and exits as the industry has witnessed in the recent past, he added.
The consolidated revenues for the just-ended quarter, at Rs 21,777 crore, represented a year on year drop of 10.4 per cent (reported drop of 11.7 per cent) on an underlying basis when adjusted for Africa and Bangladesh divested operating units and tower asset sale, Airtel said.
India revenues for the September quarter at Rs 16,728 crore have declined by 13 per cent over the year-ago period, led by mobile drop of 16.8 per cent.
The company -- which has 282 million wireless subscribers -- admitted that the mobile market continues to experience "value erosion and financial stress led by competitive pressures".
The Africa market fared better with revenue rising 2.8 per cent on an underlying basis, while the operating profit margins improved over 9 per cent year-on-year buoyed by "continuous cost control initiatives".
The company said that the mobile data traffic grew four- fold in the quarter in India, and the mobile broadband customers rose by 33.6 per cent to 55.2 million.
"Airtel remains committed to its goal of increasing revenue market share in this competitive environment by providing superior customer experience and strategically investing behind building more data capacities," Vittal said.
Airtel's consolidated net debt rose to Rs 91,480 crore against Rs 87,840 crore in the previous quarter. Net debt excluding the deferred payment liabilities to the Telecom Department and finance lease obligations increased by Rs 2,554 crore sequentially in the quarter, the company added.
The Sunil Mittal-led company, in a separate statement, confirmed that it has been approached by global investors for "a significant stake" in its mobile tower arm Bharti Infratel, which if accepted, will see the investors acquiring control of the subsidiary.
The shares of the company closed at Rs 497.65 a piece, up by 0.98 per cent, on BSE. The second quarter earnings announcement came in after market hours.
The company further said that it "stepped up" capex investments during the quarter on the back of data coverage and capacity.
Bharti Airtel's net interest costs increased to Rs 1,905 crore (Rs 1,603 crore in the same quarter last year) on account of lower investment income.
The forex and derivative loss for the quarter widened to Rs 422 crore compared to loss of Rs 302 crore in the same quarter last year.
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