Despite a robust growth in network usage, listed telecom majors like Bharti Airtel, Reliance Communications (RComm) and Idea Cellular reported a marginal increase in revenues and a drop in net profits on a sequential basis for the quarter ended June 30, 2010.
?The June quarter was a mixed bag for the telecom sector in India. The industry recovered faster than expected with increased minutes and stable tariffs. Idea Cellular was the outperformer as growth in revenues was above expectations,? said an analyst with a domestic brokerage.
?Bharti too has put up a good performance with 21% improvement in revenues. However, its margins were under pressure due to the Zain acquisition. RComm was an underperformer with almost 84% decline in net profit,? he added.
Bharti Airtel?s net was down 18% on a quarter-on- quarter (q-o-q) basis, largely driven by a forex loss at Rs 1,681 crore. Its revenue for the quarter stood at Rs 12,230.8 crore in Q1FY11 as compared to Rs 10,055.7 crore in March 20010 quarter. Ebitda margin for the quarter was 36.1%. Its wireless minutes of usage for the June 2010 quarter were 190.4 billion, up13%.
?New subscribers register low average revenue per user (arpu) and mostly opt for prepaid schemes. With various schemes in the market, usage has certainly gone up, but this is not proportionally translating into rise in revenues. While the acquisition cost per subscriber has remained the same or gone up for most operators, profit has seen a decline. Only value-added services (VAS) have the potential to limit the decline in ARPUs,? said Romal Shetty from KPMG.
RComm, which announced its results on Friday, also reported increase in minutes of usage to 94.4 billion, up 13.3%. It recorded 0.3% increase in the revenue to Rs 5,109.2 crore as against Rs 5,092.8 crore in March quarter. Its arpu was lowest among the listed majors at Rs 130 as against Rs 215 and Rs 182 for Bharti and Idea respectively.
Telecom operator Idea Cellular?s first quarter net profit was also down 31% due to operational loss on newly-launched service areas, a provision for higher spectrum charges and falling prices of call rates owing to intense competition. Its realised rate per minute fell 6% to Rs 0.44.
?We believe that the ability of operators across the industry to reduce costs is remote and an incremental burden since 3G payment is building a case for tariff stabilisation. However, the industry structure makes this tricky. But as seven of nine active players will be feeling the burden owing to 3G, the possibility for tariff moderation appears fairly good but may take some time to materialise,? said Rajiv Sharma from HSBC Securities in a report.
