Bharti Airtel Profit Falls For Sixth Straight Quarter

Bharti Airtel Ltd.’s profit fell for the sixth straight quarter after the telecom regulator reduced the fee that operators earn for cross-network calls by more than half.

India’s largest wireless carrier’s net profit in the December-ended quarter declined 11 percent over the previous three months to Rs 306 crore, Bharti Airtel said in a stock exchange filing. The consensus estimate of analysts tracked by Bloomberg had expected profit at Rs 359 crore.

• Revenue fell 6.7 percent to Rs 20,320 crore, less than the estimated Rs 21,095 crore.
• Operating income fell 5.7 percent sequentially, to its lowest level in the last fifteen quarters at Rs 7,469 crore.
• Operating margin rose slightly to 36.76 percent from 36.38 percent in the last quarter.
• Africa mobile operations reported a higher margin than its Indian business first time in at least eight quarters—35.5 percent compared to 32.6 percent, respectively.

The fall in profit for the Sunil Bharti Mittal-led company comes at a time when the world’s second-largest telecom market is locked in a tariff war unleashed by Mukesh Ambani’s Reliance Jio Infocomm Ltd. The country’s newest wireless carrier first launched services free and then offered cheaper data plans, forcing rivals to match its prices and benefits.

The Telecom Regulatory Authority of India’s decision to reduce interconnect fee—that operators earn for completing calls by rival network subscribers—to 6 paise a minute from 14 paise further hurt revenue and profit. Larger operators like Bharti Airtel that have a wider reach are the net earners of interconnect usage charges.

Airtel earned an average revenue of Rs 123 per user (blended) during in the three months ended December, below the estimated Rs 129. “Regulatory fiat in the form of a cut in domestic IUC rates has exacerbated the industry ARPU decline,” Gopal Vittal, managing director and chief executive officer at Bharti Airtel (India and South Asia), said.

Other Highlights

• Bharti Airtel added 81 lakh customers during the quarter.
• It recorded a 95.3 percent increase in data traffic, and 37.9 percent increase in Airtel Money transactions.
• Revenue from the African market went up 5.3 percent over last year, led by growth in data usage and Airtel Money transaction value.
• Consolidated net debt went up 0.3 percent sequentially to Rs 91,714 crore.
• Airtel announced an interim dividend of Rs 2.84 per share.

Shares of Bharti Airtel closed 1.17 percent lower ahead of the earnings announcement, while the benchmark S&P BSE Sensex ended trade 0.5 percent up. The stock appreciated 27.1 percent in the October-December period.