Country’s largest telecom operator Bharti Airtel on Tuesday posted 6.6 per cent plunge in its second quarter consolidated profit sequentially to Rs 343 crore, dented by pricing war in its India business, but the operational earnings and Africa business beat the estimates. Profit for the quarter ended June 2017 stood at Rs 367.3 crore, while revenue from operations slipped 0.8 per cent quarter-on-quarter to Rs 21,776.9 crore for September quarter, which was largely in line with estimates.
Hit by reduction in interconnect usage charges (IUC) and tariff war caused by industry's newcomer Reliance Jio, the company's consolidated net profit was severely plunged by 76.5 per cent for the September quarter. The telecom giant had posted net profit of Rs 1,461 crore for the July- September quarter of last fiscal.
Reacting the financial results of the company, Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said, “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.”
Bharti Airtel along with other established telecom firms has been engaged in a fierce tariff war with Mukesh Ambani controlled Reliance Jio. Over the past few quarters, Bharti Airtel has been blaming the pricing war in the Indian telecom market caused by the Jio entry for the declining industry revenues and stress on sector profitability, cash flows and leverage.
“This will eventually force operator consolidation and exits as the industry has witnessed in the recent past. 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 added. According to the company, the consolidated revenues for 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 that is adjusted for Africa and Bangladesh divested operating units and tower assets sale.
However, Raghunath Mandava, MD and CEO, Africa said, “Airtel Africa underlying revenues grew by 2.8 per cent year-on-year with net revenues growing 6.3 per cent on the back of increase in data penetration. Data traffic grew by 83.8 per cent year-on-year. Airtel Money continues to lead with transaction values growing over 30 per cent year-on-year.” 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.
“Mobile market continues to experience value erosion and financial stress led by competitive pressures,” it said. However, the company's consolidated net debt rose to Rs 91,480 crore against Rs 87,840 crore in the previous quarter. The company said it had stepped up the capex investments in the quarter on the back of data coverage and capacity.
“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,” it added. Bharti Airtel's net interest costs increased to Rs 1,905 crore compared to Rs 1,603 crore in the same quarter last year on account of lower investment income. “The forex and derivative loss for the quarter was at Rs 422 crore compared to loss of Rs 302 crore in the corresponding quarter last year,” it said.