Mumbai: Shares of Bharti Airtel Ltd on Wednesday fell as much as 3.9% after the company reported lower then expected earnings on demonetisation and free services offered by Reliance Jio.
The stock touched a low of Rs 304.10.
The Bharti Airtel shares closed down 1.52% at Rs 311.55 on BSE— down 1.52% against the previous session’s close of Rs316.35while India’s benchmark Sensex Index rose 1.21% to 27,708.14 points.
Bharti’s net profit slumped 55% in December quarter to Rs 503.60 crore compared to Rs 1,108.20 crore a year ago. Revenue declined by 3% to Rs23,335.7 crore
“Its weak results were along expected lines for revenues and EBITDA—in line with already considerably moderated expectations—although PAT came in much lower than our/consensus estimates due to movements below the line (hard to predict). Predictably, the India wireless business was hard hit, which the company attributed largely to RJio and to a limited extent to demonetization,” said JP Morgan in a note to its clients.
Bharti Airtel’s mobile services business reported a 6.1% sequential drop in revenues, with the data segment reporting a 13.7% fall. Ebitda of the mobile segment fell 15.9%, mobile data average revenue per user (ARPU) fell to Rs175 in the December quarter from Rs200 in the year-ago period.
Capex rose by around 20% sequentially to Rs4,410 crore.
“Airtel’s operating performance should remain weak due to competitive pressures. We expect persistence of double whammy; muted revenue growth and rising capital intensity for the telecom sector. Remain sellers on Airtel with unchanged estimates”, said Ambit Capital in a note.
However, Airtel’s non-mobile operations like home broadband, digital TV, towers and Airtel (B2B) continued to report better performance with revenues growing 12.2% and EBITDA jumping 14.1%.
Africa, too, reported good earnings with revenues rose 2.3% quarter on quarter in constant currency terms and EBITDA margins gained 100 basis points quarter on quarter to 24.5%.
“Despite these non-mobile India-related positives, we stay underweight on the company believing that surfacing speed bumps in the hitherto exciting data growth journey will mar revenue growth of the India telco industry and Bharti, and that weak revenue growth overshadows consolidation gains for Bharti,” the JP Morgan report added.
Rival Idea Cellular Ltd fell 2.3%, Reliance Communications Ltd declined 1.5%.
Analyst are waiting to see how customers will react when Jio starts charging for its services.
Jio’s free trial is expected to end in March.
Of the analysts covering the Airtel stock, 22 have a “buy” rating, seven have a “hold” rating, while six have a “sell” rating, shows Bloomberg data