Net profit in the three months through December fell to ₹86 crore from ₹306 crore a year earlier
Revenue grew a marginal 1% to ₹20,519 crore in the December quarter from ₹20,319 crore in the year earlier
NEW DELHI: Bharti Airtel Ltd’s profit plunged 72% in the fiscal third quarter, weighed down by a continuing tariff war with Reliance Jio Infocomm Ltd in India.
Net profit in the three months through December fell to ₹86 crore from ₹306 crore a year earlier, New Delhi-based Bharti Airtel said in a statement on Thursday. The profit decline came despite the company recording higher data and voice consumption.
Revenue grew a marginal 1% to ₹20,519 crore in the December quarter from ₹20,319 crore in the year earlier.
Revenue from the India mobile business fell 4.9% to ₹10,053 crore. In comparison, Reliance Jio generated ₹10,383 crore in operating revenue in the December quarter, beating Bharti Airtel on this metric.
The results underscore the sustained struggle of Bharti Airtel and other telecom operators in India to grow profits and revenue following the entry of Reliance Jio in September 2016. The launch of low-cost tariff plans by Reliance Jio, owned by Reliance Industries Ltd, has forced rivals to also drop their rates, affecting profit margins.
Bharti Airtel’s earnings before interest, taxes, depreciation and amortization (Ebitda) from the wireless operations in India fell 44% to ₹1,949.8 crore in the December quarter. Jio, in comparison, posted Ebitda of ₹4,053 crore.
Average revenue per user (Arpu) for Bharti Airtel was ₹104 in the December quarter, falling from ₹123 in the corresponding quarter the year before. Arpu, however, improved from ₹100 from the preceding September quarter, the first such increase after nine straight quarters of decline.
However, the rise in Arpu is merely due to the fact that the company has modified the prepaid customer base definition in order to represent only the customers who transact and generate revenue. Prior period data has not been restated.
“Effective this quarter, we have modified our customer base measurement to represent only transacting and revenue generating customers," said Gopal Vittal, managing director and chief executive, India and South Asia, Bharti Airtel.
With this, Airtel’s customer base for the India mobile business has fallen 14.6% to 284.2 million users in the December quarter from 332.7 million users in the September quarter.
This is significant as it puts Jio, which had 280.1 million users as of 31 December, at almost the same level.
“Airtel has managed to optically show a better Arpu sequentially by not counting the inactive customer base. This quarter, it has not included 48 million inactive users. Say, next quarter, it reduces the customer base further and shows even better Arpu. But for how long can the company keep on doing this? It is in a sticky situation as it has to find ways to increase tariff in the long term, which won’t happen if Jio doesn’t raise tariff," said a Mumbai-based analyst, requesting anonymity.
The data usage per customer almost doubled to 10,528MB in the third quarter from a year earlier.
The silver lining for Bharti Airtel is a more than doubling of its 4G customer base to 77 million users in the December quarter from 36.3 million users a year earlier.
The company’s consolidated net debt stood at ₹1.06 trillion as of the end of December.
Performance of the company’s Africa unit has saved it from some blushes. Africa revenue at $853 million grew by 11.2% from $767 million in the year-ago quarter.
“Airtel Africa’s data traffic grew by 61%, voice minutes increased by 25% and Airtel Money throughput grew by 29% on a year-on-year basis. Consequently, Ebitda margin has expanded by 1.7% year-on- year and stood at 37.2% for the quarter," said Raghunath Mandava, managing director and chief executive, Africa, Bharti Airtel.