Recent surge in bottomlines of telecom companies as indicated by the recent Q4 results has raised many eyebrows amongst industry observers. It comes not only at a time when there has been a stiff competition amongst the debt ridden operators but also as there is a strong pressure on operating margins with many having put on hold a hike in headline rates of tariff.
“There is an apparent rise in the earnings of major telecom companies but actually it is due to a lower base last year, “ Rajan Mathews, Director General of COAI told The Pioneer. last month all major telecom service providers announced their results. One leader - Idea Cellular for instance reported a 91. 4 per cent jump in net profits in Q4 ended March 2014 while Bharti Airtel’s net profits for the fourth quarter jumped 89 per cent from a year earlier. But then, if seen closely, the average realization per MB (ARMB) of Idea Cellular fell sharply by 4.3 paise in the reporting quarter to 25.3 paise. The company infact has admitted that this was ‘a harsh reminder of marketplace battle’ even as experts citing examples of reducing competition to have led to the rise in the profit margins of the telcos.
“There is a big competition in the sector and they will have a hard time in the coming days, unless there are lesser players which can come about only with more consolidation of the sector through mergers and acquisitions (in larger circles) “ he added. Adding to the woes are the high licence fees the telcos have to cough up in the recently concluded costly 2G/3G spectrum licences that fetched Rs 62,000 crore to the Government. Along with this their planned roll out in the future of their networks are expected to further add fuel to fire with higher CAPEX and OPEX.
leader of the pack, Bharti Airtel’s net profits for the fourth quarter jumped 89 per cent from a year earlier. India’s top carrier Bharti Airtel’s data revenue surged and voice business benefitted despite its Africa operations continuing to drag its revenues. Its net profit rose to Rs 962 crore from Rs 509 crore a year earlier. Revenue for the quarter was up by 13.5 per cent to Rs 22,219 crore. Bharti Airtel has for the first time in four years, reported a yearly profit increase in the third quarter which ended December 31, and continued the trend in the January-March period.
India’s third largest mobile phone services provider by revenue and market share -- Idea Cellular, beat analysts’ profit and sales estimates in the March quarter by clocking a 91. 4 per cent jump in net profits. Which, the company said was led by ‘exponential’ data growth and an increase in voice minutes and subscriber base. Net profit rose to Rs 589.8 crore during the quarter ended 31 March from Rs 308.18 crore a year ago. Consolidated revenue of the operator stood at Rs 7,043.8 crore which was up 16 per cent from a year ago. It also reported a net profit rise of 26 per cent over the preceding quarter while revenue was up 6.5 per cent.
However, the subscriber churn out also dropped from 7.8 per cent to 5 per cent. Idea’s EBITDA also rose 32.2 per cent to Rs 19,881 crore. While ARPU rose, average realised rate per minute (ARPM) declined 2.8 per cent to 43.6 paise from 44.9 paise. Idea’s net debt debt rose to Rs 19,855.5 crore on the back of spending in the spectrum auction. In the spectrum auction held in February, the telecom operator committed Rs.10,424 crore for acquiring 65.2 megahertz (MHz) of spectrum. While Rs 3143.6 crore has been paid upfront, Rs 7,280.6 crore have been booked under government-deferred payment liabilities towards the spectrum.
Videocon Telecom, the youngest telco in the country also reported its top line revenue of Rs 344.5 crore in Q4 2013-14, attaining a 77 per cent year on year growth. Its consolidated top line revenue stood at Rs 344.5 crore in Q4 2014, which is higher by 77 per cent year on year. The telco plans to invest Rs 1240 crore in FY 14 in its existing 4 circles and is targeting top-line revenue of over Rs 2500 crore revenue in FY 15. In 2014 it also is aggressively chasing to be EBITDA positive in two out of its four operational circles.