Bharti Airtel's one-time gain from divestment of some of its tower assets in Africa boosts result
The country’s largest telecom operator, Bharti Airtel, on Tuesday beat analysts’ estimates by posting a 23.8% jump on a quarterly basis in net profit at Rs 1,554 crore during April-June, on the back of a one-time gain from the divestment of some of its tower assets in Africa. The bottomline was boosted by a net benefit after tax of Rs 458 crore due to hiving off of tower assets in four African countries for about $1.3 billion. Minus the one-time boost, the bottomline comes down to Rs 1,096 crore which would be lower than Rs 1,255 crore in the preceding quarter.
The company’s growth to an extent during the period was curtailed due to higher tax outgo as the effective rate of taxation during the period was at 31.2% compared to 26.5% during FY15. This was because the various tax holidays in select units had come to an end.
Revenue grew by 2.8% to Rs 23,671 crore, which was slightly higher than estimates. Consolidated Ebitda rose 2.6% quarter-on-quarter to Rs 8,262 crore but margin slightly missed street expectations, down 10 basis points to 34.9%. On a yearly basis, net profit was up 40.2% and revenues grew by 3.1%.
Most of the operating metrics performed on the expected lines, with voice realisations coming down but data average realisation per user rising. For instance, average revenue per user at Rs 198 remained flat compared to the preceding quarter. The average realisation per user (ARPM) was also down 4% on a sequential basis at 34.93 paise. The minutes of usage grew by 1% quarter-on-quarter to 424.
Data as a percentage of mobile revenues was at 19.2% compared to 17.6% in the preceding quarter. Data arpu was up 3% at Rs 181 while data realisation was down 5% at 25.57 paise.
Commenting on the earnings, Gopal Vittal, managing director, India and South Asia, said, “The year has begun on a healthy note, with underlying revenue growth accelerating to 12.7% in India. Our customer base has continued to steadily expand.”
On the regulatory front, there’s not much expected which would help the company in the coming quarters. The spectrum sharing and trading guidelines which are expected to be approved by the Union Cabinet shortly are not expected to benefit Bharti much unless the spectrum caps are relaxed.
In an interview with FE recently, Vittal had expressed hope that the government might relax it as it amounted to doubly capping the limit. However, with the Telecom Regulatory Authority of India (Trai) not recommending it, it seems unlikely.
The company, which was at the receiving end of netizens ever since earlier this year it came out with its zero rating platform, which was a sponsored data plan, has earned a sort of reprieve with the department of telecommunications-appointed committee recommending partial regulation of over-the-top players by licensing domestic VoIP services. It also said that zero-rating plans should be seen on a case-by-case basis by the Trai.
Analysts are waiting to see what kind of impact the launch of commercial services by Reliance Jio in December would have on Bharti. The major apprehension is of a tariff war which might affect the realisations of the company, which have been steadily improving.
The company’s Africa operations continue to be a drag with net losses at $154 million during the quarter, lower than $183 million in the preceding quarter.
The company had earlier this month said it has entered into an agreement with Orange to sell its four subsidiaries in Africa, though there is no certainty of any binding agreement as a result of these discussions. The concerned subsidiaries are in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone.