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Airtel posts its first quarterly loss in 14 years

  • Bharti Airtel posts 2,866 crore loss in Q1FY20, against 97 crore profit in the year earlier
  • Revenue from India wireless business grew 4.1% year-on-year to 10,724 crore

NEW DELHI: Bharti Airtel Ltd posted its first quarterly loss in 14 years amid a brutal price war unleashed by Reliance Jio Infocomm Ltd that has ravaged its rivals and reshaped India’s telecom market.

New Delhi-based Bharti Airtel swung to a 2,866 crore loss in the quarter ended 30 June from a net profit of 97 crore in the year earlier as finance costs rose and it incurred a one-time loss of 1,445 crore.

Bharti Airtel, which was till last year India’s biggest telecom operator, has been struggling to raise prices and add subscribers because of the tariff war, although a wave of consolidation in India’s telecom market has wiped out smaller telcos and forced Vodafone India Ltd and Idea Cellular Ltd to merge.

“The pressure on Airtel will continue as it has to incur the cost of managing multiple networks given its users are also on 2G and 3G. This hurts Airtel’s economics in the short run," said Mahesh Uppal, director at communications consulting firm ComFirst India.

Bharti Airtel’s consolidated revenue from operations grew 4.7% to 20,738 crore in the June quarter from 19,799 crore a year ago. Revenue from the India wireless business grew 4.1% year-on-year to 10,724 crore.

Reliance Jio generated 11,679 crore in operating revenue in the June quarter, beating Bharti Airtel on this metric. Last week, Jio surpassed Vodafone Idea Ltd, which posted revenue of 11,269.9 crore despite having more users.

With this, Reliance Jio is now the number one telco in terms of revenue, achieving the rare feat of market leadership in the telecom industry in less than three years of starting its operations in September 2016.

The results also underscore the sustained struggle of Bharti Airtel and other Indian telecom operators to stay profitable despite recording higher data and voice consumption. An average Airtel user consumed 12GB of data a month in the June quarter, compared to 7.8GB in the year-ago period.

Consolidated operating profit rose 24.2% to 8,493 crore from a year earlier. The company’s India wireless business posted a loss of 1,242 crore in the June quarter. Airtel’s consolidated net debt was 1.16 trillion as of June-end.

The silver lining for the firm is that its average monthly revenue per user (Arpu) from India mobile services rose to 129 in the June quarter from 123 in the preceding three months. This is also due to the fact that its subscriber base has shrunk.

Airtel’s Arpu is the highest across telcos in the June quarter, with Jio at 122 and Vodafone Idea at 108.

“The India business revenue is stable, Arpu is up and 4G base has also increased. These are positive factors," said a Mumbai-based fundamental analyst, requesting anonymity.

The launch of low-cost tariff plans by Reliance Jio, a unit of Reliance Industries Ltd, forced rivals to drop their rates, hurting profit margins. Smaller companies were forced to either shut shop or get acquired, leaving just Airtel, Jio and the merged entity of Vodafone and Idea to compete in the Indian market.

The performance of the firm’s Africa unit has proved to be a beacon of hope. Airtel Africa posted revenue of $795.9 million, a 6.9% rise from $744.5 million a year earlier, largely driven by growth in Nigeria and East Africa.

The Africa operations posted a profit of $132.2 million in the June quarter.


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