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Business News/ Companies / Airtel’s Q4 profit dragged down 31% on forex losses
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Airtel’s Q4 profit dragged down 31% on forex losses

The devaluation of the Nigerian naira continues to haunt India’s second-largest telecom services provider in the March quarter
  • Airtel’s board has proposed dividend of ₹8 per fully paid-up share, and ₹2 per partly paid-up share, for FY24
  • Shares of Bharti Airtel closed 0.7% lower at ₹871.65 ahead of the results. REUTERSPremium
    Shares of Bharti Airtel closed 0.7% lower at 871.65 ahead of the results. REUTERS

    NEW DELHI:Nigeria’s decision in February to devalue its currency for the second time in eight months as part of what are seen as market-friendly reforms have ended up severely hurting Bharti Airtel Ltd.

    Factoring out its African operations, however, India’s second-largest telecom services provider rang in improved financials for the March quarter, as it added nearly 8 million new subscribers while also reducing customer churn.

    Bharti Airtel reported foreign exchange losses of 2,544 crore from its African subsidiary, which contributed to dragging down its fourth-quarter consolidated profit by 31% to 2,071.6 crore. Consolidated revenue grew 4.4% to 37,599 crore.

    “Consolidated performance was impacted primarily by the devaluation of the Nigerian naira," Bharti Airtel managing director Gopal Vittal said, announcing the quarterly results after market hours on Tuesday. The shares ended the day’s trading on NSE nearly unchanged at 1,287.05 each.

    The devaluation of the naira due to policy changes in Nigeria resulted in derivative and forex losses of $770 million in the 2023-24 financial year, Airtel said. The telecom carrier has classified the losses as exceptional.

    A tax ruling compensates

    Apart from the net forex loss, Airtel was also charged 90 crore as indemnity liabilities for past transactions. But it gained from the reversal of a provision amounting to 179 crore after the Supreme Court in Februaryruled against the demand of tax deducted at source (TDS) for selling prepaid SIM cards or recharge vouchers to distributors at discounted rates.

    The net tax benefit added up to 822.6 crore, while the net charge allocated to non-controlling interest was 752.5 crore.

    Also read | Why foreign investors ploughed into India's telecom stocks

    On a standalone basis, the Sunil Mittal-promoted telco posted a profit of 2,488 crore from its India and South Asia operations for the financial fourth quarter, up 16.5% from the same period a year earlier. Revenues jumped 12.9% to 28,513 crore.

    Bharti Airtel’s Africa business reported a 154% fall in net profit to record a loss of 489.4 crore for the three months ended March, while revenue fell to 9,293 crore from 11,031 crore a year earlier.

    Industry leading ARPU

    “India revenue (adjusted for Beetel) grew by 1.7% with ebitda margin expanding to 54.1%, despite one day less in the quarter. We added 7.8 million smartphone customers and delivered an industry leading ARPU of Rs. 209," Vittal said, referring to the company’s average revenue per user, a key metric of profitability. Customer churn reduced 20% during the quarter, he added.

    Bharti Airtel had in January acquired a 97.1% stake in Beetel Teletech along with its 49% stake in Dixon Electro Appliances.

    Also read | Airtel to exit non-core biz for digital growth: Sunil Mittal

    Airtel’s ARPU, helped by the acquisition of high-value customers and improved realizations, remains the highest in the domestic telecom industry. Reliance Jio has the largest customer base but an ARPU of 181.7, while Vodafone Idea ARPU in the December quarter 142.

    “Our efforts on digitizing Airtel are now gathering velocity and is being visibly felt across all parts of our operations. At the same time, our return on capital employed continues to remain low due to the absence of tariff repair in the industry," Vittal said.

    Telecom service providers have been seeking to raise headline tariffs since the previous hike in November 2021. Brokerages expect the next tariff increase, of 20-25%, to be implemented soon after the ongoing parliamentary election.

    Dividend payoutand a 5G expansion

    For FY24, Bharti Airtel’s board has recommended a dividend of 8 per fully paid-up equity share of face value of 5 each, and 2 per partly paid-up equity share of face value of 5 each (paid-up 2.00 per equity share).

    The company managed to reduce the net debt from its India operations to 1.75 trillion from 1.84 trillion in March 2023.

    Mobile services revenues from its India operations rose 13% to 22,065 crore, led by 4G and 5G customer additions of 28.6 million during the year. 4G and 5G customers account for 74% of Airtel’s total customer base of 406.3 million.

    Also read | Coming up in FY25: Tariff hikes, 5G monetization and VI 2.0

    Capital expenditure for the March quarter was at 8,491 crore, as the carrier continued to expand its 5G coverage across the country.

    Airtel rolled out more than 10,500 towers between January and March to strengthen network coverage, taking its number of towers rolled out in the past 12 months to more than 43,000.

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    ABOUT THE AUTHOR
    Gulveen Aulakh
    Gulveen covers both corporate and economy, and policy sections of Mint. She also covers telecom, IT from the corporate side and disinvestment, finance ministry from the economy side. Gulveen finds the rare mix of sectors she covers to be incredibly interesting.
    Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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    Published: 14 May 2024, 08:10 PM IST
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