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Business News/ Companies / Company-results/  Bharti Airtel posts first profit growth in four years
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Bharti Airtel posts first profit growth in four years

Telco reports net profit of `610 crore, benefits from surge in data traffic and customer additions, reduced costs

Bharti Airtel’s net profit rose on the back of increase in yields for voice calls and mobile data consumption. Photo: Pradeep Gaur/MintPremium
Bharti Airtel’s net profit rose on the back of increase in yields for voice calls and mobile data consumption. Photo: Pradeep Gaur/Mint

New Delhi: Bharti Airtel Ltd’s net income more than doubled in the three months ended 31 December—its first profit increase in 16 quarters—as India’s largest telecom company benefited from a surge in data traffic and customer additions, and reduced costs.

Net profit rose to 610 crore in the fiscal third quarter, up 115% from 284 crore in the year-ago period, the company said on Wednesday. The profit fell short of the 1,050 crore estimate in a Bloomberg poll of 30 analysts, mainly on account of a one-time tax payout of 220 crore.

Bharti Airtel posted revenue of 21,939 crore in the quarter, up 13.3% from 19,362 crore in the year-earlier period, because of efforts to cut costs and improve operating efficiency in sales, distribution and customer acquisitions, and expand data services, said Gopal Vittal, joint managing director (MD) and chief executive officer (CEO) for India.

“Our focus on superior Internet experience has resulted in increased data adoption and usage. Data is now a huge source of revenue growth," said Vittal, who is being elevated to the position of MD.

Airtel and other telephone companies are benefiting from higher Internet traffic, helped by the rapid spread of smartphones, as well as an end to price competition in Asia’s third biggest economy. The company’s data customer base increased 31.2% to 54.4 million customers in the quarter gone by.

Airtel’s consolidated mobile Internet revenue rose 105% to 1,736 crore from a year earlier. It accounted for more than one-third of the incremental revenue for the company promoted by entrepreneur Sunil Mittal that posted year-on-year profit declines for 15 quarters in a row.

Shares of Bharti Airtel rose as much as 2.9% in morning trading on Wednesday after the results were announced. It pared all the gains on profit booking and ended 1.52% lower to 301.65 at the close of trading on BSE on a day the benchmark Sensex fell 0.18% to 20,647.30 points.

Bharti Airtel’s consolidated earnings before interest, tax, depreciation and amortization (ebitda) margin—a measure of operating profitability—widened to 32.3% from 29.8% a year ago.

Airtel’s India revenue grew 10.3% to 14,443 crore in the quarter from a year earlier, as mobile voice price realization improved by 1.96 paise to 37.13 paise in the December quarter from the year-ago quarter. Minutes of usage increased 5.9% year-on-year. Average revenue per mobile phone user increased by 9.7 to 195. Average data revenue per user rose 60% from 45 to 75.

The telco’s customer base in India is now just 1.5 million short of 200 million after it added as many as 16.6 million in the quarter.

Its mobile voice rate rose to 37.1 paise from 35.1 paise per minute in the same quarter last year, showing that increased tariffs, reduced discounts and free minutes had no impact on usage. The telco has been able to bring its monthly churn, indicating the number of subscribers leaving the network, down to 2.7%, considered the lowest in the market.

International revenue rose to 7,676.3 crore in the quarter, up 18.5% from the same quarter last year. Africa reported a growth of 17.2% and South Asia 44.8% mainly on account of a 16.8% increase in data revenue and stable tarriffs.

“The character of competition in Africa has become more collegial as compared to last year, where there was a lot of competitive intensity," said Manoj Kohli, MD and CEO (international) at Bharti Airtel, who will become managing director of Bharti Enterprises, which looks after all non-telecom businesses for the Bharti Group, from 1 April.

Mobile voice pricing in Africa remained stable at 3.31 cents per minute, and overall average revenue per user improved to $5.8.

“The growth in revenues was mainly fuelled by a strong 4.1% quarter-on-quarter increase in dollar terms in the top line from African operations to $1,165 million, which came as a positive surprise," said Ankita Somani, a telecom analyst with Mumbai-based Angel Broking Ltd.

“Overall, the key surprise from the results was better-than-expected India cellular margins and Africa business revenue growth," she added.

Net income for Bharti Airtel’s international operations rose to 1,123.7 crore, up 86% from 602.8 crore in the year-ago period. As part of a restructuring exercise, Bharti’s Sri Lanka and Bangladesh operations will revert back to the South Asia segment under Vittal from 1 April.

The telecom firm also saw an easing of its debt in the quarter. Net debt fell to $9.3 billion from $10.7 billion in the year-ago period, which took the net debt-ebitda ratio to 2.06.

Debt is expected to rise in the coming months as the company prepares to bid for spectrum in the auction starting next week. The telco has been actively raising its war chest for the auction through the international bond market. In the last quarter, Bharti Airtel raised $1.5 billion in the American bond market and €1 billion in Europe.

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Published: 29 Jan 2014, 09:55 AM IST
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