Q1 results: Airtel posts ₹ 97.3 crore profit on deferred tax gain
Bharti Airtel’s net profit fell to ₹ 97.3 crore in the June quarter from ₹ 367.3 crore in the year earlier, consolidated revenue stood at ₹ 20,080 crore, down from ₹ 21, 958
Mumbai: Bharti Airtel Ltd reported a consolidated net profit during the June quarter (Q1) on the back of a deferred tax gain of ₹ 515.6 crore, which helped it avoid a loss, as the brutal tariff war triggered by Reliance Jio Infocomm Ltd continued unabated during the quarter. Net profit fell to ₹ 97.3 crore in the three months ended 30 June from ₹ 367.3 crore in the year earlier, the telecom operator said in a statement on Thursday. Consolidated revenues for the June quarter stood at ₹ 20,080 crore, down from ₹ 21, 958 crore a year ago.
Pricing pressure is evident from the fact that Airtel’s data customer base rose 51.5% during the June quarter from a year earlier to 94.78 million users in India during the quarter.
“Bharti Airtel would have reported loss had it not been for the deferred tax gain in Africa,” said an analyst tracking the telecom sector with a domestic brokerage who didn’t want to be named.
“For Airtel, the mobile wireless business has been a sour point during the quarter, and segments that have held out apart from the African business are the DTH, digital, power and enterprise businesses,” the analyst added.
A Bloomberg poll of 14 analysts had pegged Bharti Airtel’s net sales at ₹ 19,873.4 crore for the quarter. Another Bloomberg poll of seven analysts had estimated the company would report a loss of ₹ 427.1 crore for the quarter.
Telecom operators, reeling from a fierce price war that started with the entry of Reliance Jio in September 2016, were hit hard in the December quarter, and subsequently the June quarter, after the telecom regulator’s decision to slash interconnection usage charges (IUC) levied by mobile networks handling incoming calls from rival networks.
Later, in another blow, the Telecom Regulatory Authority of India (Trai) also cut the international call termination charge from 53 paise a minute to 30 paise a minute, effective 1 February. The termination charge is payable by an international long-distance operator to the Indian telecom operator on whose network an overseas call terminates.
“Our investments have led to some operational expense headwinds in this quarter, but we remain focused on structural cost containment. With consolidation largely done, the secular opportunity of the Indian telecom market continues to excite us and we remain committed to offer best-in-class services to all consumers,” Gopal Vittal, managing director and chief executive of (India and South Asia) at Bharti Airtel, said in a statement.
“Aggressively expanding our 4G capacities and continuing to offer highest data speeds to customers remains a key priority for us, and towards this end, the quarter has seen our highest quarterly capital expenditure of ₹ 7,887 crore,” Vittal added.
Consolidated Ebitda fell to ₹ 6,837 crore in the quarter ended June, down from ₹ 7,823 crore a year ago, Airtel said. Ebitda is earnings before interest, taxes, depreciation and amortization.
Airtel’s June quarter revenues from India fell 13%, year on year, to ₹ 14,930 crore on an underlying basis, primarily due to a drop in the mobile business, the company said.
Airtel’s monthly average revenue per user, or ARPU, in India fell sharply to ₹ 105 in the June quarter from ₹ 154 a year ago. The number of minutes spent on calls on its network, however, grew 62.2% in India during the quarter while the total data usage per customer on its network rose 201.2% from a year earlier.
The company’s consolidated net debt has increased to ₹ 1,02,902.8 crore in the June quarter from ₹ 87,840.4 crore during the year-ago period.
The performance of Airtel’s Africa unit has saved the company some blushes. In constant currency terms, the Africa revenues for the June quarter grew 14%, year on year, as the data customer base grew 45.2% and voice minutes on network increased by 43.8% on a yearly basis, the company said.
In addition to Reliance Jio, Bharti Airtel will now also face intensifying competition from Vodafone-Idea Cellular, whose merger was announced by the department of telecommunications today.
According to Bloomberg data, Bharti Airtel had 344.55 million users as of end-May compared with 273.63 million a year earlier.
On Thursday, shares of Bharti Airtel Ltd rose 1.63%, or ₹ 5.75, to ₹ 357.60 on the BSE while the benchmark Sensex gained 0.34%, or 126.41 points, to end the day at 36,984.64 points.
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