In a veiled attack on newcomer Reliance Jio, telecom major Bharti Airtel today said free offers by telcos would hit all stakeholders, including lenders, and government revenue.
“In the short to medium term, free offers will impact all stakeholders including government levies and taxes, lender with debt exposure of over Rs 400,000 crore to the industry,” Bharti Airtel Global Chief Financial Officer Nilanjan Roy said during company’s earning call.
He alleged that “predatory pricing” by new operators has led to “unprecedented drop in the industry revenue table for the first time since its inception, jeopardising the financial health of poster child — the Indian telecom industry”.
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Bharti Airtel, India’s largest mobile services provider, has reported its lowest profit in four years in the third quarter of FY2016-17 as demonetisation and intense competition from Reliance Jio hit revenues.
Consolidated net profit in October-December fell 54 per cent to Rs 503.7 crore as against Rs 1,108.1 crore in the same period a year ago, the company said in a statement.
“To say that we are living in interesting time would be an understatement. In India, the continuation of free pricing by a new operator has led to tsunami of traffic to the network impacting overall data revenue and voice realisation,” Roy said.
He said that the large number of incoming calls on Airtel’s network have been due to anomaly in mobile termination charges.
Roy said that there have also been temporary impact of demonetisation along with larger impact of free offers.
Bharti Airtel’s revenue fell 3 per cent to Rs 23,363.9 crore in the third quarter of FY2016-17. Mobile data revenue slowed to Rs 4,049 crore due to “free voice and data offering by a new operator”.
Data revenues at Rs 3,087 crore de-grew by 3 per cent. Mobile broadband customers increased by 22 per cent. Mobile data revenues now contribute to 22.8 per cent of the company’s mobile revenues in India as compared to 23.1 per cent in the corresponding quarter last year.
“We are also seeing slowdown in data indicator sequentially, more or less entirely, due to free offer by a new operator. for the first it has led to active decline in data customer base by 7.7 million and data usage down by 3.5 per cent quarter and quarter and ARPU down 13 per cent,” Roy said.