India’s biggest telecommunications company Bharti Airtel on Thursday missed market expectations by reporting a 26.6% decline in net profit for the October-December quarter compared to a quarter earlier, hurt by an increase in network spending, higher finance costs because of an higher spectrum amortization charge.
During the fiscal third-quarter, net profit came in at Rs 1,117 crore, lower than the Rs 1,522 crore during the preceding quarter. Consolidated revenue of the company rose 0.96% sequentially to Rs 24,066 crore from Rs 23,835 crore, the New Delhi-based telecommunications company said in a filing to the stock exchanges.
Net profits and revenue missed expectations of analysts forecast Bharti Airtel’s profit to come in at Rs 1,231 crore on revenue of Rs 24, 446.3 crore during the quarter, according to Bloomberg.
Earnings were mainly hurt due to increased spending on network expansions that rose 9.41% to Rs 5,508 crore; and higher finance costs that rose by Rs 345.9 crores during the quarter to Rs 1,391 crore, because of the higher spectrum related payments. During the quarter, Bharti launched “Project Leap” a program aimed at upgrading its network infrastructure to address call drop issues and offer high-speed internet services.
Bharti Airtel’s profits were boosted by increased usage of high-margin internet services by its subscribers, across its operations in India, South Asia and Africa, which surged 44% from a year earlier to Rs 4135 crore, fuelled by a 80.2% growth in mobile data traffic to 161.3 billion megabytes during the quarter.
“Our focus on acquiring quality customers has resulted in healthy net additions of 8.1 million in mobile. Our strong roll-out of 3G/4G sites has resulted in acceleration of data usage growth to 73.3% along with data ARPU (average revenue per user) reaching Rs 200,” said Gopal Vittal, managing director of Bharti Airtel.
Better data usage helped the company’s Ebidta margin to expand to 35.2% from a year earlier’s 33.7%.
In India, Bharti’s revenue during the quarter grew 8.8% from a year earlier to Rs 17,693.7 crore, after adjusting for the impact in reduction of termination rates.
Airtel, Axiata to merge B’desh ops Bharti Airtel and Malaysia-based Axiata Group will be merging their operations in Bangladesh to form the second largest operator in that country.
Axiata Group Berhad and Airtel on Thursday signed a definitive agreement to merge their respective telecom subsidiaries —Robi Axiata and Airtel Bangladesh — in Bangladesh, Airtel said in a statement. According to industry sources, the enterprise valuation of the merged entity is estimated to be around $2 billion.