New Delhi: India’s largest operator by subscriber base and revenue, Bharti Airtel Ltd, will post its financial results for the March quarter on Tuesday evening. Investors will keenly watch out for the company’s comments on the impact of the current tariff war and the recent cut in the international termination charge.
Some brokerages expect the company to post a net loss, its first in 15 years, an Economic Times report dated 4 April said, adding that the Bank of America-Merrill Lynch has estimated the loss at Rs58.5 crore, while Kotak Securities at Rs377 crore.
A UBS research report on the Indian telecom sector dated 13 April expects the January-March period to be weak for incumbent telecom operators on the back of price cuts implemented by Reliance Jio Infocomm Ltd, ARPU (average revenue per user) down trading and reduction in international termination charges.
Companies in the telecom sector have been facing a brutal tariff war after the entry of Reliance Jio in September 2016 with six months of free services, followed by rock-bottom tariffs.
Airtel has since recorded a fall in net profit for five straight quarters as it cut tariffs to take on Jio.
In the quarter ended December, Airtel’s quarterly profit plunged 39%, missing analysts’ estimates, as India’s telecom regulator more than halved interconnection fees and a pricing war triggered by the entry of Reliance Jio continued unabated.
“Regulatory fiat in the form of a cut in domestic IUC (interconnection usage charges) rates has exacerbated the industry ARPU (average revenue per user) decline in Q3’18. The recent announcement of reduction in international termination rates will further accentuate this decline and benefit foreign operators with no commensurate benefit to customers," Gopal Vittal, managing director and chief executive officer (India and South Asia) at Bharti Airtel, had said in a statement after the company posted results for the December quarter.
The termination charge is payable by an international long-distance operator to the Indian telecom operator on whose network an overseas call terminates. The move is expected to result in an annualized Ebitda hit of Rs500 crore to Bharti Airtel, a report by Kotak Institutional Equities dated 15 January said.
Airtel’s monthly ARPU in India, which fell sharply to Rs123 in the December quarter from Rs172 a year ago, will be another key metric to analysts to assess the company’s revenue generating capabilities in the future.
However, the performance of the Africa unit has saved the company some blushes in the last two quarters.