Bharti Infratel Q2 profit falls 17% to Rs638 crore

Akhil Gupta

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.

Profit fell to 3.43 billion rupees in the quarter ended September 30 from 14.61 billion rupees a year earlier. The mobile market continues to experience value erosion and financial stress led by competitive pressures.

The company's consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) for the September-quarter was at Rs 8,004 crore, down 15.4 per cent year-on-year with the EBITDA margin dropping by 1.6 percentage points to 36.8 per cent. "This will eventually force operator consolidation and exits as we have witnessed in the recent past", Gopal Vittal, managing director and chief executive, India and South Asia, Airtel, said.

Raghunath Mandava, MD and CEO, Africa, said, "Airtel Africa underlying revenues grew by 2.8% Y-o-Y with net revenues growing 6.3% on the back of increase in data penetration".

"The forex and derivative loss for the quarter was at Rs 422 crore compared to loss of Rs 302 crore in the corresponding quarter a year ago", it said.

The company further said it had "stepped up" the capex investments during the quarter to support additional data coverage and capacity.

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Reliance Jio, backed by India's richest person Mukesh Ambani, started commercial operations on September 5 with free voice and data offers that continued till March end. Jio's rivals - forced to slash effective data rates and offer free voice calling on some plans across price segments - have seen a key operational indicator - average revenue per user (ARPU) - crash over the a year ago or so.

The company said its consolidated net debt has increased to Rs 91,480 crore from Rs 87,840 crore in the previous quarter.

Revenue from Africa business grew 2.6%, while the company's efforts to control costs in the market helped expand its operating margins by 9.1% on a constant currency basis.

The stock already reacted to positive news flow (acquisition of consumer telecom business of Tata Teleservices, likely tower deals and hope of tariff rate stabilisation), he said.

Shares of Bharti Airtel ended 0.98% higher in Mumbai trading before the release of the earnings, while the benchmark S&P BSE Sensex closed 0.2% lower.

Mayuresh Joshi, Angel Broking fund manager and sector expert, wasn't surprised by the sharp drop in Airtel's net profit, "as the July-September period is, typically, a seasonally weak quarter". The move is also set to consolidate Bharti's leadership in India's mobile phone market, which was imperiled by the merger of second- and third-ranked Vodafone India and Idea Cellular.

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