Bharti Airtel Q4 profit falls 72% amid Reliance Jio onslaught
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New Delhi: Bharti Airtel Ltd reported a 72% drop in quarterly profit on Tuesday, missing analysts’ estimates, as free voice and data services offered by Reliance Jio Infocomm Ltd until 31 March undercut rivals and forced them to slash tariffs to retain customers.
Net profit fell to Rs373.4 crore in the three months ended 31 March from Rs1,319.2 crore in the year earlier, the company said. A Bloomberg poll of 15 analysts expected Airtel to report Rs542.5 crore in profit.
This is the second straight decline in quarterly profit at the country’s largest telecom company. Profit fell 55% in the three months ended 31 December.
Revenue declined by 12% to Rs21,934.6 crore in the March quarter. Earnings before interest, tax, depreciation and amortization—an indicator of operating profitability—declined 13% to Rs7,992.8 crore from Rs9,188.1 crore a year ago.
Bharti Airtel’s average monthly revenue per user fell sharply to Rs158 in the March quarter from Rs194 a year ago. Average data revenue per user declined to Rs162 from Rs196.
Data ARPU fell by 4.5% to Rs185 in the year ended 31 March from Rs194 in the previous year. The number of minutes spent on calls on its network, however, grew 13.4% in the full year.
In response, Bharti Airtel slashed capital expenditure to Rs3,808.2 crore in the March quarter, down 37.13% from Rs6,057.4 crore in the year-ago period.
For the year ended 31 March, company’s net profit declined 37.4% from last year to Rs3,800 crore. Revenue rose 1.1% to Rs95,468 crore.
“The year was marked by several business and industry developments including the entry of a new operator in India, offering free voice and data, leading to an unprecedented wave of consolidation in telecom sector in India,” the company said in its quarterly report.
Mukesh Ambani’s Jio offered free voice calls and data until 31 December 2016 in a promotional offer, and later extended it to 31 March, and further to June end, when it was forced to withdraw the offer on data.
Reliance Jio has signed up more than 100 million subscribers since its launch in September.
Bharti Airtel and other operators responded by lowering prices to retain customers.
Jio’s entry also sparked consolidation, with Vodafone Group Plc.’s India unit and Idea Cellular Ltd deciding to merge to create India’s largest telecom firm.
The annual revenue of Indian telecom firms declined for the first time since 2008-09 to Rs1.88 trillion in 2016-17 (from Rs1.93 trillion the previous year), and is likely to decline further to Rs1.84 trillion in 2017-18, CLSA said in a report released on 7 April.
“The industry is going through severe economic and financial crisis. Government has taken cognisance of that. An inter-ministerial committee has been put together. We hope steps are taken before it starts to have impact on the banking sectors and then on jobs that the industry offers,” said Rajan Mathews, director general of telecom lobby group Cellular Operators Association of India (COAI).
JPMorgan Asia Pacific Research said it expects a Rs1,500-crore annualized shortfall in the government’s revenue due to a tariff war that has disrupted the industry.
Bharti Airtel also saw a marginal decline of 1.5% in the number of data customers to 57.4 million customers in the year ended 31 March.
In an indication of how it tried to retain its customers from moving to Jio’s network, the total data consumed on Airtel’s network for the full year increased by 47% to 733.1 billion MBs from 497.7 billion MBs in the previous year.
Mobile data usage per customer for the full year rose 31% to 1,049 MBs per month as compared to 801 MBs in the previous year.
Bharti Airtel’s Africa operations reported a profit before tax (PBT) for the first time during the year ended 31 March. The Africa unit reported a PBT of $33 million compared to a loss of $159 million in the previous year.
Airtel shares fell 1.64% to close at Rs345.50 on the BSE while the benchmark Sensex ended barely changed at 29,933.25 points. The earnings were announced after the close of trading.