Data drives growth for telecom firms
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New Delhi: Bharti Airtel Ltd and Idea Cellular Ltd reported strong fourth-quarter earnings growth on a surge in data usage as availability of cheap smartphones allowed more users to access the Internet for the first time in the world’s second-largest mobile market by subscribers.
Bharti Airtel, India’s largest telecom service provider, posted a 30.5% profit increase in the three months ended 31 March. Net profit rose to Rs.1,255 crore in the quarter from Rs.962 crore in the year-earlier period, the company said on Tuesday. Revenue rose 3.6% to Rs.23,016 crore.
The company reported a 59.1% rise in data revenue to Rs.3,085 crore with average revenue per user (Arpu) for data rising 32% to Rs.176 in the quarter. Bharti’s mobile data revenue accounted for 17.6% of the company’s India mobile revenue compared with 11.5% in the corresponding quarter last year. Non-voice revenue now makes up as much as 23.7% of total mobile revenue in India.
Smartphones that are now available for as low as Rs.2,000 are driving data usage, allowing people to access the Internet for the first time on their mobile devices. Many of these first-time users are watching videos and listening to songs online, spurring demand for data and boosting earnings of telecom service providers.
Bharti Airtel’s India mobile data revenue rose 70.4% to Rs.2,324 crore, boosted by a 41% increase in average usage per customer to 656 megabytes (MBs) and a 30% increase in data customer base to 46.3 million. The total data used on the Bharti Airtel network rose 82% to 86.6 billion MBs in the fourth quarter. The number of 3G users on the network rose 90% to 19.4 million from a year earlier.
Bharti Airtel’s voice business continued to report marginal growth in volume. Total voice volume rose 5% to 277.9 billion minutes, but the realization per minute, or what it eventually earns for every minute of usage, fell 3% to 36.22 paise.
Bharti’s revenue was marginally lower than the Rs.23,603 crore consensus estimate of 18 analysts compiled by Bloomberg. The company also missed the Rs.1,440 crore profit estimate of 17 analyst polled by Bloomberg.
Idea Cellular, India’s third largest mobile phone company by users, reported a 60% increase in its fourth-quarter profit, beating analysts estimates. Net profit rose to Rs.941.77 crore in the quarter ended 31 March from Rs.589.77 crore a year ago, driven by a significant increase in subscribers as well as increased voice and data volume. The company had been expected to post a 41% increase in net profit at Rs.831 crore, according to a Bloomberg survey.
Net sales rose 20.4% to Rs.8,397.22 crore in the March quarter from Rs.6974.72 crore in the year ago period
Idea’s data Arpu rose 44% to Rs.150 at the end of the fourth quarter, with data contributing 16.9% of the company’s service revenue, up from 10.1% a year ago. Non-voice revenue makes up as much as 24.5% of total revenue for the Mumbai-based telco. Data usage per subscriber rose to 586 MB in the March quarter, up from 410 MB in the same quarter last year. Total data volume more than doubled to 54.5 billion MBs from 27.3 billion MBs reported in the year earlier fourth-quarter. The number of data users rose 32% to 33.42 million, including 14.5 million 3G subscribers.
Idea’s voice business also continued to prosper, with total voice minutes rising. The company added 9.2 million active subscribers and increased voice minutes by 8.4% to 185 billion minutes. Its average voice realization per minute, however, fell 7% to 33.9 paise per minute.
The significant growth in data usage is expected to encourage the telcos to invest more in new technologies, especially for spectrum acquired in the recent auctions, as well as look at various options to monetize the data more effectively. India’s telcos have been lobbying the telecom regulator to include Internet messaging and video services such as WhatsApp and Skype to be treated in the same way as similar services offered by the telcos since they are in direct competition.
The telcos bid as much as Rs.1.1 trillion to retain and improve, in some places, their spectrum holdings across the country in the auction that concluded on 25 March. The telcos had to pay 33% of the bids before 6 April and will now pay the rest in 10 equated annual instalments, starting March 2017.
The robust numbers posted by the two telcos have made analysts optimistic about the sector again.
“Both have done very well with a few exceptions. Bharti had a deeper impact from forex losses than expected. Longer term, we are seeing that the balance sheets have become far healthier. The quarter numbers are very average with nothing extraordinary. But longer term we are very optimistic as even in a relatively weaker economy, both companies have done very well,” a Mumbai-based analyst with a multinational brokerage firm said, declining to be named.
Africa operations continued to weigh on Bharti’s financials. Africa revenue grew by 3.4% over the same quarter last year in constant currency terms, but the reported revenue fell by 12.6% because of unfavourable currency movements in the last 12 months, the company said in a statement.
Idea Cellular stock rose 2.8% to Rs.191.55, while shares of Bharti Airtel rose 2.26% to Rs.400.80 on the BSE on a day the exchange’s benchmark Sensex gained 0.81% to close at 27,396.38 points. Bharti’s earnings were announced after the end of trading on Tuesday.