FE Editorial : Bharti’s Light Continent

Bharti Airtel may have reported a drop in net profits for the sixth straight quarter, but India’s biggest telco delivered an in-line set of numbers—both on top-line and ebitda margins—for the three months to September 2012. A one-time R239 crore boost to the bottom line through a regulatory win was dented because of a one-time higher tax outgo (up nearly 60% over June), but a sharp fall in consolidated other operating expenses (from 22.6% of sales in June to 20.8% in September) which drove up the ebitda to 31.3% means the telco is working smart. The firm also paid out more by way of interest—up 80 basis points as a share of sales – but there’s little it can do to pare its debt right now. While the regulatory overhang—costs of ‘extra’ spectrum and refarming primarily—could disrupt the company’s growth plans, the good news is that Bharti seems to be on the right track in Africa, although it will be a while before the business makes meaningful money. That’s critical given that the business in that continent guzzles as much capital as it does back home—cumulative investments in Africa have crossed R70,000 crore compared to around R75,000 crore for the mobile business in India. Ebitda margins for the African operations rose 140 basis points sequentially to 27.2%, and the play on elasticity seems to be paying off—the 20% rise in September quarter minutes more than offset the 14% cut in tariffs. Bharti’s well on

... contd.