Bharti Airtel Ltd kept its eye on the ball to avoid a net loss under trying circumstances in the March quarter. A number of analysts had predicted a loss, a first in 15 years. But thanks to cost-cutting measures, it reported a wafer-thin net profit of Rs83 crore, or 0.4% of revenues.

Of course, the struggles in the India wireless business were visible in the company’s financials. The division’s revenues fell 3.7% sequentially and earnings before interest, tax, depreciation and amortization (Ebitda) fell 16.1% to Rs2,943 crore. Before Reliance Jio Infocomm Ltd’s launch, less than two years ago, the India wireless business generated Ebitda of around Rs6,300 crore. The sharp decline in profitability is now resulting in steep losses and negative cash flow.

The silver lining, from an investors’ perspective, is that all of the above was on expected lines. In fact, a look at some of the other metrics, such as voice and data volumes, average revenue per user and mobile broadband network expansion, suggests the company has held its own. “The test of execution for the incumbents at this point is their ability to hold on to their customer base and usage in the backdrop of Jio’s incessant aggression. We believe Bharti Airtel has done reasonably well in the past 4-6 quarters," analysts at Kotak Institutional Equities said in a 24 April note to clients.

Needless to say, investors are desperately hoping that Jio is done with its price cuts. Just when it had seemed that it was done disrupting the market, it went ahead with a fresh round of tariff cuts in January. As such, trying to read its mind is an exercise in futility. Incumbents such as Airtel and Idea Cellular Ltd tend to think that further price cuts by Jio will hurt its own interests more, since it impacts its entire subscriber base. For the incumbents, they point out, the impact will largely be limited to subscribers who have broadband connections. But as past trends show, this is false comfort. If Jio isn’t content with its market share gains, it may well consider further tariff cuts necessary.

Thankfully for Airtel’s investors, while they wait for the India wireless market to recover, the company’s Africa business is doing wonders. Revenues in the region have been more or less flat, but profit margins have improved on the back of the restructuring the company has undertaken. Earnings before interest and tax of the company’s Africa operations stood at Rs1,121 crore last quarter, higher than all of the company’s other operations, a first in Airtel’s history. Companies such as Idea and Vodafone India Ltd don’t have this luxury, and their results are likely to look far worse.

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