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Business News/ Companies / Company-results/  Bharti Airtel Q1 profit rises 61% to Rs1,108 crore
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Bharti Airtel Q1 profit rises 61% to Rs1,108 crore

Company cites lower forex and derivative losses and improved operational efficiency for rise in profit

Airtl’s total income rose 13.3% to `22,962 crore from `20,264 crore.r. Photo: Pradeep Gaur/MintPremium
Airtl’s total income rose 13.3% to `22,962 crore from `20,264 crore.r. Photo: Pradeep Gaur/Mint

New Delhi: Bharti Airtel Ltd, the world’s fourth largest communications service provider by subscribers, posted a 61% increase in first-quarter profit because of better price realization from its voice services, higher wireless data revenue and lower finance costs.

Net profit rose to 1,108 crore in the three months ended 30 June from 689 crore in the year-ago quarter, the company said on Tuesday. This is the second straight quarter that Airtel is posting a profit growth, after four years of falling profits. The earnings missed the 1,200 crore median of 24 analysts’ estimates compiled by Bloomberg.

Profit rose as the nation’s largest telecom service provider withdrew discounts offered to customers on reduced competition and cut commissions to dealers. Its mobile voice rate per minute (RPM) rose to 38.08 paisa in the June quarter from 36.60 paisa in the year earlier.

Airtel’s revenue grew 13.3% to 22,962 crore from 20,264 crore as more customers accessed the Internet on their phones.

Airtel’s India and South Asia revenue rose 68.2% to 1,559 crore on account of increasing data customers and higher usage per customer. Mobile data revenue accounted for 12.4% of the company’s India mobile revenue in the June quarter compared with 8.2% in the corresponding quarter last year, the company said.

Overall mobile data revenue rose 74% to 2,204 crore during the quarter, fuelling Airtel’s return to growth and contributing more than one-third of the company’s incremental revenues, a company statement said.

Earnings were also aided by reduced finance costs—which dropped 18% to 957 crore following efforts to convert foreign debt into long-term bonds bearing lower interest—besides lower forex and derivative losses.

Airtel announced on Monday that it had hit the 300-million subscriber mark. Operationally, it saw a 1% increase in average revenue per user (Arpu) to 202 and a 4% drop in minutes of usage (MoU) per customer to 435 minutes. Arpu, RPM and MoU are key performance indicators for telecom companies.

The contribution of non-voice services—that include messaging and data—to total revenue grew to 18.2%, from 16.9% in June 2013 quarter. Airtel’s data customer base also grew 52% to 39.3 million with 12.5 million 3G customers, more than double what it had in June 2013.

“The pace across all segments has been satisfying. Mobile data and DTH (direct-to-home) stood out with growths of 68.2% and 20.7%, respectively. The industry awaits more 3G spectrum being made available, even as we look forward to the implementation of policies relating to spectrum sharing and trading. These have become essential to deliver sustained broadband growth and high quality service," Gopal Vittal, managing director and chief executive officer, India and South Asia, said in the statement on the earnings.

Africa continued to be a drag, despite some improvements in customer usage. The net loss widened to 820 crore in the June quarter from 298.9 crore in the year earlier. Revenue from the continent rose 17.5% to 6,968.5 crore.

Operationally also, Africa seemed to be lagging. While Arpu rose marginally for the quarter from $5.5 to $5.6, churn was up to 7% from 6.7% reported in the same quarter last year. Voice Arpu and voice realization per minute dropped marginally as well. Non-voice revenue contribution to total income rose to 21.5% from 17.4% reported in the June 2013 quarter, in Africa.

The management remained optimistic. “Telecoms are back to growth in Africa, this time spearheaded by Internet and mobile money. Airtel has grown by 12.1% in constant currency terms, with exceptional performance in mobile data (85.5%). Airtel Money transaction values have increased by 4.9 times to $2.2 billion in this quarter. With Niger and Tchad having obtained licences, we will now have 3G presence in all 17 countries. Our investments in licences, networks and marketing are directed towards sustaining double-digit revenue growth," Christian de Faria, managing director and chief executive of Bharti Airtel Africa, said in the statement.

“The India numbers are very good. The mobile revenues, rate increases and margins are the best we have seen in the last four-five years. Even the digital TV business seems to have caught up with the market leaders in that segment. Africa numbers are still a point of concern, but if you remove the exceptional items, they would have posted a 1,300 crore profit for the continent," a Mumbai-based telecom analyst with a multinational brokerage firm said, on the condition of anonymity, as his organization does not authorize him to speak to the media.

Capex during the quarter jumped to 3,985.7 crore from 2,295.4 crore in the year-ago period. Meanwhile, the company’s debt position improved significantly with consolidated net debt dropping to $9.6 billion, resulting in the net debt-to-Ebitda (earnings before interest, taxes, depreciation and amortization) at 2.04 times compared with 2.2 times at the end of the previous quarter.

Shares of Bharti Airtel have gained 7.2% this year, compared to a 23% increase in the benchmark Sensex. The stock markets were shut on Tuesday.

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Published: 29 Jul 2014, 05:00 PM IST
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