The country’s largest telecom operator, Bharti Airtel, on Wednesday posted better-than-expected earnings for the October-December quarter in terms of profitability. However, it missed the estimates for topline growth and operating profit.
The company, which operates in 20 countries across Asia and Africa, saw its India revenue and margins grow in line with estimates, but the Africa business disappointed on all counts with revenues declining by a percent sequentially.
The company’s consolidated total revenue at Rs 23,217 crore was up 1.62% on a sequential basis and 5.8% on a yearly basis. Net profit at Rs 1,436 crore was up 3.9% on a sequential basis and 135.4% on a yearly basis. This was the company’s highest quarterly profit since September 2010.
Operating profit (Ebitda) registered a 1.05% sequential increase to Rs 7,785.7 crore and margin declined 20 basis points to 33.5% during the quarter.
One of the positives was that it continued to sustain its realisation rates, better average revenue (Arpu) per user, check churn and increase data revenue.
Arpu was up 2% sequentially at Rs 202 compared to Rs 198 in the preceding quarter. Voice realisation per minute was flattish sequentially at 37.67 paise. Though Bharti has been withdrawing freebies, discounts and free talk time on its pre-paid vouchers to increase realisation, its churn was lower at 2.7% compared to 3.1% in the preceding quarter.
In another positive, data revenue continued its upswing, accounting for 16.2% of total mobile revenues, up from 14.5% in the previous quarter.
The total data customer base increased by 5% sequentially to around 42 million and those of 3G by 10% to around 17 million. Data Arpu was up 13% sequentially at Rs 170.
Gopal Vittal, MD and CEO, India and South Asia, said: “Airtel’s revenue growth in India has continued to accelerate. Revenue growth of 12.6% in Q3 is the highest in nine quarters. We remain focused on driving topline through stepped up customer acquisitions with continued focus on churn, ensuring pricing stability, and path breaking innovations in mobile data. Our mobile data growth is at 74.3% in Q3. On the regulatory front, the industry has welcomed the announcement of the timetable for the spectrum auctions in March.”
According to a Bharti official, if the company is able to improve its realisable tariff by around 1 paise each month over the next seven to eight months, it should be totally out of the woods. However, whether this is possible or not would largely depend upon the competitive elasticity of the sector.
Going forward, though, larger regulatory risks like the payment of one-time fee for excess spectrum and penalty for intra-circle 3G roaming pacts still exists, Bharti is better placed than its rivals in the upcoming auctions where bids are expected to skyrocket because of limited spectrum. Bharti’s licences are coming up for renewal only in six circles, which contribute around 32% to its overall subscriber base and 37% to its total revenues. Compared to this, Idea Cellular’s renewal is in nine circles, which contribute around 70% to its overall subscriber base and 79% to its revenue base. Vodafone’s licences are up for renewal in seven circles that contribute 54% to its subscriber base and 55% to its revenue base. Bharti had bought sufficient spectrum in the 1800 Mhz band in the February 2014 auctions, so it has a better back-up for the 900 Mhz compared to Idea and Vodafone.